TORONTO, June 16,
2023 /CNW/ - SQI Diagnostics Inc. ("SQI" or the
"Company") (TSXV: SQD) (OTCQB: SQIDF) today announced that
the Company's board of directors (the "Board") has received
a notice of intention (the "Notice") to enforce
security issued by its senior secured creditor, Pivot Financial I
Limited Partnership ("Pivot"), under Section 244(1) of the
Bankruptcy and Insolvency Act (the "Act").
As previously announced, there has been significant doubt about
the Company's ability to continue as a going concern for several
months. As at the date of this news release, the Company does
not currently have sufficient cash to repay its Indebtedness (as
defined below) owing to Pivot under the terms of the credit
agreement (the "Credit Agreement") entered into between
Pivot and the Company dated February 11,
2022, as amended, and the Board does not expect to be able
to raise sufficient capital in the short term to repay the
Indebtedness by the deadline noted in the Notice. Further, the
Board believes that it has exhausted all feasible options to
continue the Company as a going concern and/or repay the
Indebtedness and that it is now in the best interest of the Company
and its stakeholders to work cooperatively with Pivot. As such,
while the enforcement of the Notice is subject to a 10-day notice
period, the Board has made the decision to consent to the early
enforcement of security by Pivot. As a result of providing such
consent, the Board has also received a foreclosure notice from
Pivot under Section 65(2) of the Personal Property Security
Act (Ontario) in connection
with the enforcement of Pivot's security under the Credit
Agreement. The Company will proceed with a voluntary assignment in
bankruptcy pursuant to the provisions of the Act and upon
completion of the filing will announce that such filing is complete
and that a trustee has been formally retained.
In connection with the anticipated filing under the Act, the
remaining members of the Board, including each of Gerald Connor, Clive
Beddoe, Wilmot Matthews,
Claude Ricks and Eric Zwisler, and the Company's sole remaining
executive officer, Morlan Reddock,
CFO, will tender their resignations as directors or officers of the
Company effective immediately upon completion of the filing.
As at the date of the Notice, the Company has approximately
$8,790,000 owing to Pivot, inclusive
of $8 million of principal and
accrued and unpaid interest, fees, legal expenses and disbursements
(collectively, the "Indebtedness") under the terms of
the Credit Agreement. Of the Indebtedness, an aggregate of
approximately $3.75 million of
principal (the "Insider Indebtedness"), excluding accrued
and unpaid interest, is owing to the three insider directors of the
Company, who are also control persons of the Company, who
participated in the Credit Facility under the terms of certain
participation agreements (collectively, the "Participation
Agreements") dated February 11,
2022, as amended. The decision to issue the Notice was made
solely by Pivot, as the Insider Indebtedness is subordinate to
Pivot's interest in the Indebtedness and Pivot retained all
decision-making authority pursuant to the terms of the
Participation Agreements.
The Company also confirms that it has been in discussions with
the TSX Venture Exchange (the "Exchange") in connection
with its proposed filing under the Act and that it expects its
common shares to continue to be halted from trading on the Exchange
following this announcement and ultimately suspended and delisted
following completion of the filing.
Contact:
Chief Financial Officer
Morlan Reddock
437-235-6563
mreddock@sqidiagnostics.com
FORWARD-LOOKING INFORMATION
This press release contains certain words and statements,
which may constitute "forward-looking statements" within the
meaning of applicable securities laws relating to future events or
future performance and reflect the current expectations and
assumptions of the Company regarding its growth, results of
operations, performance, business prospects and opportunities.
These statements generally can be identified by use of
forward-looking words such as "may", "would", "could", "will",
"should", "expect", "plan", "estimate", "anticipate", "intends",
"believe", "potential", or "continue" or the negative thereof or
similar variations. The Company's actual results and performance
discussed herein could differ materially from those expressed or
implied by such statements. Such statements are qualified in their
entirety by the inherent risks and uncertainties surrounding future
expectations. Important factors that could cause actual results to
differ materially from expectations include, among other things,
general economic and market factors, competition, the effect of the
global pandemic and consequent economic disruption, and the factors
detailed in the Company's ongoing filings with the securities
regulatory authorities, available at www.sedar.com. Although the
forward-looking statements contained herein are based on what we
consider to be reasonable assumptions based on information
currently available to us, there can be no assurance that actual
events, performance or results will be consistent with these
forward looking statements, and our assumptions may prove to be
incorrect. Readers are cautioned not to place undue reliance on
these forward-looking statements. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements either as a result of new information, future events or
otherwise, except as required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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SOURCE SQI Diagnostics Inc.