On May 1, 2014 the Company disclosed in the default notice (the "Default Notice") that, for reasons disclosed in the Default Notice, there would be a delay in the filing of its annual financial statements, accompanying Management Discussion and Analysis and related CEO and CFO certifications of annual filings for the financial year ended January 7, 2014 (collectively, the "Required Filings").
As a result of this delay in filing the Required Filings, a management cease trade order was granted to the Company. The MCTO restricts all trading on the securities of the Company, whether direct or indirect, by the Chief Executive Officer and the Chief Financial Officer of the Company until such time as the Required Filings have been filed by the Company. The MCTO does not affect the ability of all other shareholders who are insiders of the Corporation to trade their securities.
Below is the update on the status of the financing and a corporate update.
As announced on May 23, 2014, the Company was unable to obtain an immediate bridge of three hundred thousand dollars which would have allowed for the payment of current obligations. As a result, a first secured lender whose one million dollar loan was due April 17, 2014, has filed a notice of default. In addition, another secured lender, owed four hundred thousand dollars which matured on April 21, 2014 and an unsecured lender, owed one million dollars which matured on October 31, 2013 have filed notices of default. The Company is diligently working to cure the defaults.
As a result of the Company's financial circumstances, its stock price has reacted negatively and its ability to complete the conversion of US$6,959,987 in debt to equity and its ability to raise additional equity or debt has been greatly inhibited.
The Company has continued to advance the sale of the assets of Reno Wilson Inc. (Gatorz Eyewear) to a third party for gross proceeds of approximately $1.2M which is subject to fluctuations based on the value of the inventory and accounts receivable. The purchaser has completed the first draft of the legal agreements but the documents and structure will need to change as a result of the notice of default from the secured lender.
On May 28th, the Company's wholly owned subsidiary PVH DNA Inc. entered into a rescission agreement (the "Agreement") with DNA LLC, which is the company that owns the Alien Workshop, Habitat and Reflex skateboard brands.
The Agreement rescinds PVH DNA's 51% interest in DNA LLC and cancels the license that PVH DNA had to sell those brands.
Under the Agreement, the Company has 6 months to sell its current inventory of Alien Workshop, Habitat and Reflex skateboard branded products. In exchange Dyrdek Enterprises, the second largest shareholder which owned 46.5% of DNA LLC, has agreed to take over stewardship of DNA LLC and pay the final payroll for the PVH DNA employees.
The Company also closed its only retail location in New Mexico bringing the total number of retail locations closed since March to 19. The Company continues to have 15 retail locations in operation.
About Pacific Vector
Pacific Vector is a premier action sports retail and consumer brands company.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. Pacific Vector assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to Pacific Vector.
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