Business Context and Reporting Period
This Form 8-K Current Report was filed by Duos Technologies Group, Inc. on May 23, 2016, regarding events occurring on May 23 and May 24, 2016. The filing addresses significant legal disputes involving convertible notes held by Greentree Financial Group, Inc.
Key Financial Metrics
The filing does not provide specific financial statements, revenue, profit, cash flow, or liquidity metrics. The only financial obligation mentioned is the principal and interest due under two convertible notes held by Greentree Financial Group, Inc.
Material Changes and Legal Developments
- Lawsuit Filed by Company: On May 23, 2016, Duos Technologies filed a lawsuit against Greentree Financial Group, Inc. The suit alleges that Greentree's officers and directors failed to disclose prior federal criminal charges and guilty pleas related to tax fraud and conspiracy. The Company asserts that had this information been disclosed, it would not have entered into agreements allowing the conversion of loans into common stock.
- Lawsuit Filed by Holder: On May 24, 2016, the Company learned that Greentree had filed a suit against Duos on May 12, 2016, alleging default on one of the notes. The Company states it was not notified or served until the date of this report.
- Dispute Over Conversion: A disagreement exists regarding the mechanics of converting notes to stock. The Company previously determined conversion notices issued by Greentree (one in the prior quarter and one recently) to be invalid. Greentree's suit alleges failure to issue shares and has elected to accelerate the note.
- Payment Offer: The Company states it owes the principal and interest and attempted to pay the amount due on the first note, but the offer was rejected by the holder.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance or management commentary on future operations. The primary risk identified is the ongoing litigation with Greentree Financial Group, Inc., which involves allegations of fraud, default, and disputes over the validity of stock conversion mechanics. The Company highlights the risk posed by the holder's history of securities law violations.
Investor Verification Checklist
- Verify the status of the two convertible notes and the total principal and interest amounts owed.
- Confirm the validity of the Company's claim that Greentree's officers failed to disclose criminal convictions.
- Review the specific terms of the convertible notes regarding conversion mechanics and default triggers.
- Monitor the progress of both the lawsuit filed by Duos against Greentree and the lawsuit filed by Greentree against Duos.
- Check for any subsequent filings regarding the resolution of the payment offer rejection.