"The Recapitalization strengthens Xplore's balance sheet and improves its position at what we believe is an exciting inflection point for the Company and the market for rugged Tablet PCs as a whole"
The Recapitalization and financing, which were previously announced, involved the conversion of approximately $9.5 million of subordinated indebtedness into shares of Series D Participating Convertible Preferred Stock, which included approximately $2 million in cash received by the Company beginning in August 2010 under amendments to an existing note purchase agreement. The Recapitalization significantly improves Xplore's balance sheet and net worth and provides additional liquidity.
"The Recapitalization strengthens Xplore's balance sheet and improves its position at what we believe is an exciting inflection point for the Company and the market for rugged Tablet PCs as a whole," stated Mr. Philip Sassower, Chairman and Chief Executive Officer. "The upcoming launch in 2011 of a new and improved family of devices, the increased awareness of the tablet PC form factor generated by Apple's iPad and other similar products and our foray into the military market are expected to position Xplore's award-winning line of rugged tablet PCs with increased opportunities. Xplore is a company that is proud of its strong and deep ties with it partners and Fortune 500 customers. The feature-set of our new line of Tablet PCs is a direct result of input from partners and customers alike, and proof that Xplore remains an agile company delivering best-in-class, customer-driven products. Our expectation is that the Recapitalization will allow Xplore to maximize its chances of success in a market that we believe is accelerating."
The Series D Preferred Stock issued in the Recapitalization will rank senior to all outstanding shares of Xplore capital stock in terms of dividends, liquidation preferences and other special rights. The Series D Preferred Stock will be convertible into the Company's common stock at an initial conversion price of $0.04 per share.
As a result of the Recapitalization, the combined beneficial ownership of the Company's common stock by Phoenix and Mr. Sassower decreased from approximately 54.3% to 49.7%.
The Recapitalization was previously approved by a Special Committee of the Company's Board of Directors and the entire Board. On December 16, 2010 at an annual meeting of stockholders, the Company's stockholders approved amendments to the Company's certificate of incorporation to allow for the closing of the Recapitalization.
