Page 9 of 14 – SEC Filing
| CUSIP No. 253862 10 6 | 13D | Page 9 of 14 Pages |
| Item 4. | Purpose of the Transaction. |
On June 2, 2017, the maturity date of the
Convertible Note occurred and the Company failed to pay the amounts outstanding under the Convertible Note. Consequently, as of
the time of this filing the Convertible Note remains outstanding, a default has occurred under the Convertible Note and all amounts
outstanding under Convertible Note are currently overdue. The Reporting Persons reserve the right to take any actions they deem
appropriate in connection with such default, including without limitation, taking legal action, at the expense of the Issuer (as
permitted by the terms and conditions of the Convertible Note) to obtain a cash payment of all of the Issuer’s obligations
under the Convertible Note. As the permitted amount of legal expense reimbursement under the Convertible Note is unlimited, the
aggregate maximum liability of the Issuer in connection with an enforcement action to obtain a cash payment of all of the Issuer’s
obligations under the Convertible Note is impossible to determine as of the time of this filing and may exceed the $125,000 aggregate
principal amount, plus interest thereon, of the Convertible Note.
On June 2, 2017, the maturity date of the
Convertible Note, Iroquois Master Fund delivered a letter to Amos Kohn, President and Chief Executive Officer of the Issuer, which
served as Notice of Default under the terms of the Convertible Note, a copy of which is filed as Exhibit 99.9 hereto and is incorporated
by reference herein.
Although none of the Reporting Persons has
any specific plan or proposal to acquire or dispose of the shares of Common Stock, each Reporting Person at any time and from time
to time may (i) acquire additional securities of the Issuer, (ii) dispose of any or all of its securities of the Issuer, (iii)
enter into privately negotiated derivative transactions with institutional counterparties to hedge the market risk of some or all
of its positions in the securities of the Issuer, depending upon the factors described below and/or other investment considerations,
or (iv) exercise their rights, if any, as holders of the Notes and Warrants in connection with a bankruptcy case of the Issuer.
In addition, the Reporting Persons intend
to review their investment in the Issuer on a continuing basis and may seek to influence or change the Issuer’s operations
or business development plans, business strategy, management or directors, competitive position, capital structure or capital management
policy, including, without limitation, through potential discussions with management, directors, other shareholders and noteholders,
existing or potential strategic partners or competitors of the Issuer, industry analysts, investment and financing professionals
and/or other third parties. Such matters and discussions may materially affect, and result in, the Reporting Persons modifying
their investment in the Issuer, exchanging information with any of such persons pursuant to appropriate confidentiality or similar
agreements or otherwise, working together with any of such persons pursuant to joint agreements or otherwise, proposing changes
in the Issuer’s operations, governance, capitalization or strategic plans, or in proposing or engaging in one or more other
actions set forth under subsections (a) through (j) of Item 4 of Schedule 13D. Factors that may influence the Reporting Persons’
actions include, but are not limited to, their views regarding the Issuer’s operations, business strategy, prospects, financial
position and/or strategic direction, the outcome of the discussions and actions referenced herein, price levels of the Common Stock,
availability of funds, subsequent developments affecting the Issuer, other investment and business opportunities available to the
Reporting Persons, conditions in the securities market, general economic and industry conditions and other factors that the Reporting
Persons may deem relevant from time to time.
Except as described herein, none of the Reporting
Persons has any plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (a) through
(j), inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting Persons may, at any time and from time to time, review
or reconsider their position and/or change their purpose and/or formulate plans or proposals with respect thereto.
| Item 5. | Interest in Securities of the Issuer. |
The aggregate percentage of Shares reported
herein is based upon 11,059,301 Shares outstanding as of June 8, 2017, which includes (1) 9,216,853 Shares outstanding as of May
15, 2017, as reported in the Issuer’s quarterly report on Form 10-Q filed with the SEC on May 17, 2017; plus (2) 1,842,448
Shares issued pursuant to a Share Exchange Agreement, dated April 28, 2018, by and among the Issuer, Microphase Corporation and
certain shareholders thereof, that closed on June 8, 2017, as reported in the Issuer’s Current Report on Form 8-K filed with
the SEC on June 8, 2017. In addition, the percentage of Shares owned by the Reporting Persons includes Shares issuable upon the
exercise of Warrants and/or conversion of the Convertible Note beneficially owned by such Reporting Persons. All of the Warrants
are subject to beneficial ownership limitations as described in Item 3 hereunder.
