Business Context and Reporting Period
This Form 8-K filing by Duos Technologies Group, Inc. reports on events occurring between May 22, 2017, and July 17, 2017. The filing details amendments to a material definitive agreement regarding a promissory note issued to JMJ Financial.
Key Financial Metrics
- Debt Obligation: The company owes a principal balance of $1,627,632 to JMJ Financial under the amended Note.
- Financing Terms: The original funding was $1,650,000, interest-free, with a 5% original issue discount. The total planned repayment amount is approximately $1,736,842.
- Liquidity Status: The filing indicates the company failed to meet original repayment deadlines, necessitating extensions and waivers of default.
- Revenue and Profit: The filing text does not provide a clear value for revenue, profit, cash flow, or margins.
Material Changes
The company has extended the maturity date of its debt obligation twice since the original due date of May 15, 2017:
- Amendment No. 1 (May 22, 2017): Extended the maturity date from May 15, 2017, to June 15, 2017.
- Amendment No. 2 (July 12, 2017): Extended the maturity date from June 15, 2017, to July 31, 2017.
- Default Waiver: JMJ Financial conditionally waived defaults and penalties associated with the missed original maturity dates, contingent on the company not breaching terms subsequent to July 12, 2017.
Outlook, Risks, and Contingencies
- Conversion Risk: If the company fails to repay the balance by the closing of a Public Offering, JMJ Financial has the right to convert the Note into common stock.
- Default Risk: The waiver of defaults is conditional. If the company triggers an event of default or breaches any term of the Note or Securities Purchase Agreement after July 12, 2017, JMJ Financial may issue a notice of default for the original missed deadlines.
- Immediate Repayment: All amounts due become immediately payable upon the occurrence of an event of default.
Investor Verification Checklist
- Verify whether the company successfully repaid the $1,627,632 principal by the July 31, 2017, deadline.
- Confirm the status of the "Public Offering" referenced in the Note, as this triggers the conversion right if repayment is not made.
- Check for any subsequent filings indicating a breach of the conditional waiver granted in Amendment No. 2.
- Review the company's current liquidity position to assess the ability to meet the July 31, 2017, obligation.