Item 1.03. Bankruptcy or Receivership.
As previously disclosed, 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 for relief under chapter 11
of title 11 ("Chapter 11") of the United States Code (the "Bankruptcy Code") in
the United States Bankruptcy Court for the District of New Jersey (the
"Bankruptcy Court"). The Chapter 11 cases are being jointly administered under
Case No. 20-21435, Case No. 20-21436 and Case No. 20- 21437 (the "Chapter 11
Confirmation of Joint Plan of Reorganization
On September 15, 2021 (the "Confirmation Date"), the Bankruptcy Court entered an
Order (the "Confirmation Order") Confirming the Second Amended Joint Plan of
Reorganization of the Debtors (together will all exhibits thereto, the "Plan").
The Confirmation Order is attached as Exhibit 99.1 to this Current Report on
Form 8-K and is incorporated herein by reference. A copy of the Plan as
confirmed by the Bankruptcy Court is attached as Exhibit 2.1 to this Current
Report on Form 8-K and is incorporated herein by reference. The Plan is not yet
effective. The "Effective Date" of the plan is expected to be September 30,
2021, subject to the closing and Debtors' receipt of the Plan Funding, and
provided that no stay of the Confirmation Order is in effect. The Company can
make no assurances as to when, or ultimately if, the Plan will become effective.
It is also possible that technical amendments could be made to the Plan prior to
the Effective Date.
Material Features of the Plan
The following is a summary of the material terms of the Plan as approved and
confirmed by the Bankruptcy Court pursuant to the Confirmation Order. This
summary highlights only certain substantive provisions of the Plan and is not
intended to be a complete description of the Plan. This summary is qualified in
its entirety by reference to the full text of the Plan and Confirmation Order,
copies of which are attached hereto as Exhibit 2.1 and 99.1, respectively, and
which are incorporated herein by reference. Any capitalized terms not defined in
this Current Report on Form 8-K have the meanings given to them in the Plan.
The Debtors have secured promises from various parties ("Plan Funders") to
provide $5,500,000 in Plan Funding to help fund the Plan. The Plan provides that
the Plan Funding be allocated as follows:
? $500,000 will be set aside for disputed Claims and earn a rate of 6% interest
until all disputed Claims are resolved;
? Payment in full of Administrative and U.S. Trustee fees and expenses;
? DIP Funding: approximately $1.1million was taken in through DIP loans on a
superpriority administrative basis to pay the Company's operating expenses
through the Chapter 11 process. The DIP loans will be converted to common
stock at $.18 per share.
? Payment in full of Priority Tax Claims and Class 1 Allowed Other Priority
? Payment of 20% of the Allowed Amount of Class 3 Unsecured Claims
? The remaining Plan Funding will be used as a reserve for the Debtors' operating
expenses and the payment of fees to the Plan Administrator.
Approximately $2.4 million of the Allowed Amount of Class 2 Noteholder Claims
shall be converted to Common Stock of SITO Mobile, Ltd., on a pro rata basis, at
a price of $0.18 per share.
The Plan also provides that Net Litigation Proceeds realized from current and
future IP Litigation Claims will be allocated as follows:
? Repayment of the Plan Funding to the Plan Funders;
? Following repayment of the Plan Funding:
(i) First, payment of an additional 40% of the Allowed Amount of Class 3
Unsecured Claims; and
(ii) Second, approximately $2.5 million towards full payment of the balance of
the Allowed Amount of Class 2 Noteholder Claims;
? Remaining Net Litigation Proceeds will be distributed evenly between the
reorganized Debtors and the holders of Class 3 Unsecured Claims until the
Allowed Amount of Class 3 Unsecured Claims have been repaid in full.
Each Plan Funder will also receive a warrant to purchase shares of SITO Mobile
Ltd.'s Common Stock at a ratio of three (3) shares of Common Stock per one
dollar ($1.00) of Plan Funding.
The Plan provides that holders of Allowed Class 4 Interests shall retain the
same stock ownership in SITO Mobile, Ltd., as they owned as of the Petition
Additional information regarding the classification and treatment of claims can
be found in the Plan.
Certain Information Regarding Assets and Liabilities of the Debtors
Information as to the Company's assets and liabilities as of the most recent
practicable date is contained in the Company's Chapter 11 Monthly Operating
Report for the period beginning July 1, 2021 and ending July 31, 2021 ("July
2021 Monthly Report"), which was filed with the Bankruptcy Court on September 7,
2021. A copy of the July 2021 Monthly Report is attached hereto as Exhibit 99.2
and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
Exhibit No. Description
2.1 Second Amended Joint Plan of Reorganization and Funding Agreement of
SITO Mobile Solutions, Inc., SITO Mobile, Ltd., and SITO Mobile R&D
99.1 Order Confirming Joint Plan of Reorganization.
99.2 Monthly Operating Report for the period beginning July 1, 2021 and
ending July 31, 2021.
Cautionary Statement Regarding 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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