Wherify receives another notice of default on convertible debentures

By Devika Patel

Knoxville, Tenn., May 22 - Wherify Wireless, Inc. said in an 8-K filing with the Securities and Exchange Commission Thursday that Yorkville Advisors, LLC notified the company that it is in default on its convertible debentures, which were issued to YA Global Investments, LP (formerly Cornell Capital Partners, LP) in March 2006.

Wherify had negotiated its way out of an earlier notice of default in February, but has since failed to make payments again, resulting in the current default notice.

The company said it received this notice on March 19.

As of May 14, the company said in the filing, the debentures have an outstanding balance of $4,776,125 in principal and $714,681.02 in interest.

The company said in the filing that it entered into a forbearance agreement on May 19 in which Yorkville Advisors has agreed to refrain from exercising its rights under the notes pending Wherify's efforts to complete a restructuring of its unsecured debt and a reverse merger of another company into Wherify.

During this period, Wherify has agreed to sign a letter of intent by May 30 for the reverse merger, and establish an interim bridge loan for enough capital to allow it to stay in operation.

By June 30, Wherify has agreed to have taken all steps necessary to begin the recapitalization financing required to close the reverse merger and satisfy its restructured obligations to YA Global and its unsecured creditors.

Wherify also must complete all required agreements necessary to complete these transactions in a timely manner by Sept. 30.

The debentures were first issued in March 2006 in principal of $5 million. The three-year debentures bear interest at 7% annually and are convertible at the lesser of $1.60 or the lowest closing bid price for the 15 trading days before the registration statement was filed with the Securities and Exchange Commission.

Based in Redwood Shores, Calif., Wherify develops wireless infrastructure products.

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