Espre may be in default under Dalcor agreement, jeopardizing all company assets

By Devika Patel

Knoxville, Tenn., Jan. 16 - Espre Solutions, Inc. received a default notice from Dalcor, Inc. in regard to a $5 million 6% convertible secured promissory note, which was sold in an August private placement, according to an 8-K filed Friday with the Securities and Exchange Commission.

The filing said the default does not specify why Dalcor believes the company to be in default under the note. However, on Jan. 6, the company's president, advised Dalcor of matters that the company believes constitute violations of the note agreement.

These include failing to comply with state blue sky exemptions from the registration requirements of those states in connection with the company's private offerings; paying finders' fees to individuals who were not registered representatives of licensed broker-dealers; and failing to disclose the payment of these finders' fees to investors.

The company also advised Dalcor of other possible violations, which include failing to disclose a material contract with Media Distributions Solutions, LLC and All Link Live for use of Espre technology in the live adult entertainment industry; paying an employee to assist in selling company shares; awarding stock grants and options without board approval and officers and directors improperly selling restricted shares among other violations.

As a consequence of the discovery of these items, the company could not complete the audit of its financial statements for the year ended Sept. 30 and it consequently was unable to file its 10-K for that year by the proper deadline.

The failure to file the 10-K on time constitutes a default under the note.

If Dalcor chooses to accelerate the amount due under the note, the company said it will be unable to pay that amount.

It also said that Dalcor has a first security interest in substantially all of the company's assets.

Accordingly, if Dalcor forecloses on its security interest, the company will in all probability be unable to continue, or it may be forced to seek protection under federal bankruptcy statutes.

Espre is a Dallas-based video media solutions and technology company.

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