will routinely monitor the Issuer’s operations, prospects, business development, management, competitive and strategic matters, capital structure, and prevailing market conditions, as well as alternative investment opportunities, liquidity requirements of the Reporting Person and other investment considerations. Consistent with its investment research methods and evaluation criteria, the Reporting Person may discuss such matters with management or directors of the Issuer, other shareholders, industry analysts, existing or potential strategic partners or competitors, investment and financing professionals, sources of credit and other investors. Such factors and discussions may materially affect, and result in, the Reporting Person’s increasing or decreasing its ownership of Common Shares and/or securities convertible into or exercisable for Common Shares, exchanging information with the Issuer pursuant to appropriate confidentiality or similar agreements, proposing changes in the Issuer’s operations, governance or capitalization, or in proposing one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D. In particular, the Reporting Person currently believes the Issuer would benefit from a more sustainable capital structure and is in negotiations with the Issuer, Sapinda Holding B.V. (“Sapinda Holding”) and third-party investors regarding potential transactions to refinance the Issuer’s capital structure, which transactions may include the issuance to the Reporting Person and one or more third-party investors, including Sapinda Holding, of debt convertible into Common Shares, thus potentially increasing the Reporting Person’s, Sapinda Asia’s and/or other third-party investors’ equity ownership in the Issuer. Recently the Reporting Person was involved in negotiations with the Issuer to invest up to an additional $16 million in the Issuer through a combination of loans and convertible debt. Such negotiations are currently ongoing and may (or may not) result in an agreement with the Issuer. The Reporting Person reserves the right to formulate other plans and/or make other proposals, and take such actions with respect to their investment in the Issuer, including any or all of the actions set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D, or acquire additional Common Shares or securities convertible into or exercisable for Common Shares or dispose of all the Common Shares and/or securities convertible into or exercisable for Common Shares in each case beneficially owned by it, in the public market or privately negotiated transactions. The Reporting Person may at any time reconsider and change its plans or proposals relating to the foregoing. On July 26, 2012, the Reporting Person agreed pursuant to an Assignment of Rights to acquire from Sapinda UK Limited (“Sapinda UK”) Sapinda UK’s rights under a Share Purchase Agreement with the Issuer to acquire 31,140,625 Common Shares for $1,033,000. Closing of the issuance and sale of Common Shares by the Issuer to the Reporting Person is pending. |
On April 20, 2012, the Reporting Person invested $1,000,000 in the Issuer pursuant to a secured Convertible Debenture (the “Convertible Debenture”). This investment is convertible into 33,333,333 Common Shares. On August 31, 2012, the Reporting Person purchased a $500,000 interest in the Convertible Debenture from Laemi Real Estate, Inc. This investment is convertible into 16,666,666 Common Shares. On September 24, 2012, the Reporting Person purchased a $500,000 interest in the Convertible Debenture from Sapinda Holding. This investment is convertible into 16,666,666 Common Shares. Sapinda Holding beneficially owns 2.9% of the Common Shares after this sale to the Reporting Person. Upon the closing of the issuance and sale of Common Shares by the Issuer to the Reporting Person, discussed in Item 4 above, the Reporting Person will own an additional 31,140,625 Common Shares. The Reporting Person will then beneficially own, on an as-converted basis, 97,807,290 Common Shares representing 14.3% of the Common Shares (based on the 618,509,470 Common Shares stated to be outstanding as of June 30, 2012 by the Issuer in the Issuer’s Form 10-Q filed with the Securities and Exchange Commission on August 14, 2012 and adjusting for conversion). The Reporting Person will have sole voting power and dispositive power over all 97,807,290 Common Shares. Sapinda Holding is filing a separate Schedule 13D reporting beneficial ownership of Common Shares. Sapinda Holding and the Reporting Person are not affiliated entities. Sapinda Holding and the Reporting Person know each other well and have often co-invested and pursued similar interests with regard to their mutual investments. Both entities regularly consult one another with regard to their mutual investment strategies. The entities may (or may not) pursue a common investment strategy with regard to the Issuer. Sapinda Holding and the Reporting Person do not acknowledge group status for purposes of Schedule 13(d) of the Securities Exchange Act of 1934. |
As discussed in Item 5, Sapinda Holding and the Reporting Person may (or may not) pursue a common investment strategy with regard to the Issuer. As discussed in Item 5, on April 20, 2012, the Reporting Person invested $1,000,000 in the Issuer pursuant to the Convertible Debenture. This investment is convertible into 33,333,333 Common Shares. The Convertible Debenture was to expire on July 31, 2012, but pursuant to Amendment No. 1 to the Convertible Debenture the expiration was extended to August 31, 2012, and pursuant to Amendment No. 2 to the Convertible Debenture was further extended to October 15, 2012. A copy of the Convertible Debenture is attached hereto as Exhibit 99.1, a copy of Amendment No. 1 is attached hereto as Exhibit 99.2 and a copy of Amendment No. 2 is attached hereto as Exhibit 99.3. |
