Business Context and Reporting Period
This Form 8-K was filed by Trey Resources, Inc. on November 8, 2010, reporting events occurring on November 1, 2010. The filing discloses the entry into a Material Definitive Agreement regarding the amendment of existing secured convertible debentures.
Key Financial Metrics and Debt Obligations
The filing details the restructuring of three specific secured convertible debentures issued to YA Global Investments, L.P.:
- First Debenture: Original principal of $1,159,057 (dated December 30, 2005).
- Second Debenture: Original principal of $600,000 (dated December 30, 2005).
- Third Debenture: Original principal of $600,000 (dated May 5, 2006).
- Total Original Principal: $2,359,057.
The filing does not provide current revenue, profit, cash flow, or liquidity metrics beyond the specific debt terms outlined below.
Material Changes and Agreement Terms
Pursuant to the Amendment Agreement dated November 1, 2010, the following changes were made to the debt instruments:
- Extension: The expiration dates for all three debentures were extended to December 31, 2011.
- Installment Payments: The Company agreed to pay $175,000 on January 28, 2011, followed by $10,000 monthly installments from February 1, 2011, through December 1, 2011.
- Balloon Payment: The remaining outstanding principal is due as a balloon payment on December 31, 2011.
- Interest Waiver: If the balloon payment is made by the maturity date, the Holder agreed to waive all outstanding interest and penalties, accepting the principal payment as full satisfaction of obligations.
- Conversion Restriction: The Holder agreed not to convert any portion of the debentures into equity as long as the Company remains current on the specified installment payments.
Guidance, Outlook, and Risks
The filing contains no forward-looking guidance, management commentary on future operations, or specific risk factors beyond the contingent nature of the debt waiver. The primary contingency is the Company's ability to meet the monthly installment schedule to prevent conversion and secure the interest waiver.
Investor Verification Checklist
- Verify the current outstanding principal balance of the three debentures as of the filing date.
- Confirm the Company's cash position to ensure it can meet the $175,000 payment due January 28, 2011, and subsequent monthly installments.
- Review the original debenture agreements to understand the conversion price and potential dilution if the installment payments are missed.
- Check for any subsequent filings indicating whether the January 2011 payment was made as scheduled.