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SOURCE: rVue Holdings, Inc.
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SOURCE: rVue Holdings, Inc.
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May 10, 2017 13:48 ET
CHICAGO, IL--(Marketwired - May 10, 2017) - rVue Holdings, Inc. (
Roche Note 1 Default
As previously reported in the Company's Current Report on Form 8-K filed October 11, 2016, on that date the Company executed documentation with Roche Enterprises pursuant to which Roche Enterprises provided the Company with short-term bridge financing in the form of a Senior Secured Convertible Promissory Note ("Roche Note 1") in the principal amount of $201,000 as the Company sought additional financing. The Company's obligations under Roche Note 1 are secured by a pledge of all of the Company's assets. Roche Note 1 matured on December 1, 2016. The Company was unable to repay Roche Note 1 at maturity and was not successful in negotiating a forbearance with Roche Enterprises. The loan is now in default.
Roche Note 2 Default
As previously reported in the Company's press release issued on January 31, 2017, on that date the Company executed documentation with Roche Enterprises pursuant to which Roche Enterprises provided the Company with additional short-term bridge financing in the form of a Senior Secured Convertible Promissory Note ("Roche Note 2") in the principal amount of $80,000 as the Company sought additional financing. The Company's obligations under Roche Note 2 are secured by a pledge of all of the Company's assets. Roche Note 2 matured on April 30, 2017. The Company was unable to repay Roche Note 2 at maturity and was not successful in negotiating a forbearance with Roche Enterprises. The loan is now in default.
Roche Note 3
On April 28, 2017, the Company executed documentation with Roche Enterprises pursuant to which Roche Enterprises provided the Company with additional short-term bridge financing in the form of a Secured Promissory Note and Security Agreement ("Roche Note 3" and together with Roche Note 1 and Roche Note 2, the "Roche Notes") in the principal amount of $135,000. The Company's obligations under Roche Note 3 are secured by a pledge of all of the Company's assets. Roche Note 3 is payable upon demand. The Company expects that the proceeds of Roche Note 3 will permit it to continue its operations through the end of May 2017. Mr. Roche recused himself from the Board of Directors' consideration and approval of Roche Note 3.
Financial Status of the Company
The Company has continued to experience severe difficulties in executing on its business plan and securing debt or equity financing beyond the equity financing provided by Roche Enterprises during late 2015 and in 2016, and the Roche Notes, notwithstanding management's efforts to secure it. Given that Roche Enterprises has declined to offer additional financing beyond the proceeds of Roche Note 3, and in light of the Company's difficulty in securing additional financing, the Company's management has concluded that the Company's continued operation of the rVue business beyond the end of May 2017 is not feasible.
Notice of Default and Demand for Payment
On May 3, 2017, the Company received a notice of default and demand for payment (the "default notice") from Roche Enterprises, (a) stating that the Company was in default under the Roche Loans, and (b) demanding payment in full of the Roche Loans, with a total amount due to Roche Enterprises of $460,558.73 as of the date of the default notice, inclusive of accrued interest, attorney's fees and expenses (the "Secured Debt"). The default notice further stated that Roche Enterprises intends, if the Company is unable to pay in full its obligations under the Roche Notes, to foreclose upon and sell the Company's assets, and to pursue other remedies available to it, under the Uniform Commercial Code and other applicable law.
Company Response
The Board held a special meeting on May 3, 2017 to discuss the default notice. All directors participated, including Mr. Roche. It is the Company's current understanding that Roche Enterprises intends to conduct a public UCC sale of the Company's assets, on or about May 31, 2017, after first publishing notice thereof in appropriate trade publications, and that at that sale, Roche Enterprises intends to bid the entire amount of the Secured Debt for such assets. If there is no higher bidder, then Roche Enterprises would obtain title to the Company's assets in return for cancellation of the Secured Debt, and there would be no remaining proceeds for distribution to the Company's shareholders. If there is a higher bidder, then such bidder would obtain title to the Company's assets, pay the Secured Debt to Roche Enterprises, and any remaining proceeds, net of sale expenses, would be available for distribution to the Company's shareholders. The Company further understands that if Roche Enterprises is the successful bidder, it intends to continue the rVue brand and business as its sole owner.
The Company's Board of Directors (the "Board") convened a special meeting on May 3, 2017 to review the notice of default and its impact on the future direction of the Company. At that meeting, the Board discussed a variety of issues, including (a) the implications for the Company and the shareholders of the notice of default and the likely resulting foreclosure, (b) the feasibility of raising the funds required to repay the Secured Debt prior to the likely foreclosure sale, whether by selling assets to, or by obtaining new financing from, a third party, (c) the likely net proceeds of a sale of the Company to a third party after taking into account (i) ranges of value provided by business brokers familiar with the industry, and (ii) marketing and sale processes and expenses as outlined by counsel and by restructuring consultants consulted by the Company, (c) the feasibility of alternatives that might permit the preservation of shareholder value, and (d) whether or not Roche Enterprises, in its capacity as the Company's majority shareholder, and Mr. Roche, in his capacity as a director, would be supportive of such alternatives, if available.
The Board continues to consider these matters and to engage in discussions with Roche Enterprises. However, at this time, the Board believes it unlikely that the Company has any viable means to stop the foreclosure sale, in which all remaining shareholder value is likely to be lost. The Board remains vigilant for means of potentially preserving shareholder value, but can provide no assurance in this regard.
The Company's CEO, Mark Pacchini, had this to say about the situation: "We are disappointed by Roche Enterprises' decision to foreclose on the notes, but the board of directors and I fully understand the business reasons for such a move. Robert Roche and Roche Enterprises have been rVue's biggest advocates. We greatly appreciate them and all investors for their capital contributions, patience and support. The rVue team has worked diligently to keep costs in line with revenue, including the decision to go dark. And we've explored various new business strategies and sought other reasonable methods of financing, but we recognize the company can no longer continue to operate under its current revenue stream and in its current form."
About rVue
rVue Holdings, Inc. is an advertising technology company providing the digital distribution platform for the Digital Place-Based Advertising industry. The Company connects approximately one million digital screens across 175 networks delivering access to 250 million daily impressions in one simple platform. Backed by the industry's most intuitive and intelligent platform, rVue has the technology, data and expertise to connect brands and targeted consumers where and when it matters most. For more information, please visit http://www.rvue.com.
Forward Looking Statements
This press release contains "forward looking statements." The statements contained in this press release that are not purely historical are forward-looking statements. Forward-looking statements give the Company's current expectations or forecasts of future events. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company's control, and could cause the Company's results to differ materially from those described. The Company is providing this information as of the date of this press release and does not undertake any obligation to update any forward looking statements contained in this press release as a result of new information, future events or otherwise. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Important factors that could cause such differences include, but are not limited to, the Risk Factors and other information set forth in the Company's 2015 Annual Report on Form 10-K, in our other filings with the Securities and Exchange Commission and in our press releases.
