Item 1.03 Bankruptcy or Receivership.
Chapter 11 Filing
On October 8, 2020 (the "Petition Date"), SITO Mobile, Ltd. (the "Company") and
its direct and indirect domestic subsidiaries SITO Mobile Solutions, Inc., and
SITO Mobile R&D IP, LLC (collectively with the Company, the "Debtors"), filed
voluntary petitions in the United States Bankruptcy Court for the District of
New Jersey (the "Bankruptcy Court") seeking relief under Chapter 11 of Title 11
of the United States Code (the "Bankruptcy Code"). The Chapter 11 cases are
being administered under Case No. 20-21435, Case No. 20-21436 and Case No.
20-21437 (the "Chapter 11 Cases"). The Debtors continue to operate their
businesses and manage their properties as "debtors-in-possession" under the
jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
In connection with the Chapter 11 Cases, the Debtors will be filing motions
seeking Bankruptcy Court approval to continue borrowing under certain existing
Senior Secured Convertible Promissory Notes issued by the Company on March 31,
2020 (the "Notes") to certain investors (the "Note Investors"). Subject to the
Bankruptcy Court's approval, the Company would have the ability to borrow up to
a total of $9,500,000. The Notes accrue simple interest on any unpaid principal
at the rate of twelve percent (12.0%) per annum. A portion of the principal
amount and accrued interest outstanding under the Notes is convertible at the
election of the holder into shares of the Company's common stock, par value
$0.001 per share ("Common Stock"), at $.18 per share. The Notes were issued
pursuant to a certain Note and Warrant Purchase Agreement, dated as of March 31,
2020, between the Company and the Note Investors (the "Note Purchase
Agreement"). Pursuant to the Note Purchase Agreement, the Company also issued
warrants (the "Warrant") to the Note Investors at an exercise price of $0.63 per
share. The Warrant expires on the one-year anniversary of the date of issuance
or upon the Company's entering into certain fundamental transactions.
Item 7.01 Regulation FD Disclosure.
Additional information on the Chapter 11 Cases, including access to documents
filed with the Bankruptcy Court and other general information about the Chapter
11 Cases, is available with the New Jersey Bankruptcy Court.
The information in this Item 7.01 shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, except as shall be expressly set forth by specific reference in such
filing. The filing of this Item 7.01 of this report shall not be deemed an
admission as to the materiality of any information herein that is required to be
disclosed solely by reason of Regulation FD.
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Cautionary Information Regarding Trading in the Company's Securities
The Company cautions that trading in the Company's securities during the
pendency of the Chapter 11 Cases is highly speculative and poses substantial
risks. Trading prices for the Company's securities may bear little or no
relationship to the actual recovery, if any, by the holders of the Company's
securities in the Chapter 11 case.
Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements
within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, as amended, based on our current expectations,
estimates and projections about our operations, financial condition, results of
operations, and liquidity. Statements containing words such as "may," "believe,"
"anticipate," "expect," "intend," "plan," "project," "estimate," or similar
expressions constitute forward-looking statements. These forward-looking
statements include, but are not limited to, statements regarding expectations
and beliefs about the timing and execution of the Company's strategic
transactions; the Company's strategy, risks, and uncertainties associated with
the Chapter 11 Cases; and the operating expectations during the pendency of the
Chapter 11 Cases. The Company's expectations and beliefs regarding these matters
may not materialize. Actual outcomes and results may differ materially from
those contemplated by these forward-looking statements as a result of
uncertainties, risks, and changes in circumstances, including, but not limited
to, risks and uncertainties related to: the decisions of the Bankruptcy Court?
negotiations with the Company's creditors and any committee approved by the
Bankruptcy Court?the Company's ability to obtain Bankruptcy Court approval of
motions filed in the Chapter 11 Cases; the effects of the Chapter 11 Cases on
the Company and on the interests of various constituents; the outcome of the
Chapter 11 Cases; the length of time the Company will operate under the Chapter
11 Cases; risks associated with third-party motions in the Chapter 11 Cases;
uncertainty associated with evaluating and completing any strategic or financial
alternative as well as the Company's ability to implement and realize any
anticipated benefits associated with any alternative that may be pursued; the
consequences of the acceleration of the Company's debt obligations; the trading
price and volatility of the Company's common stock; and the risks related to
trading on the OTC Pink Market. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect management's
analysis only as of the date hereof. Such forward-looking statements are not
guarantees of future performance or results and involve risks and uncertainties
that may cause actual performance and results to differ materially from those
predicted. Reported results should not be considered an indication of future
performance. Except as required by law, the Company undertakes no obligation to
publicly release the results of any revision to these forward-looking statements
that may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
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