SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
Amendment No. 2
(Mark One)
x ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
Commission File No. 011-15499
ADVANCE NANOTECH, INC.
(Exact name of registrant as specified in its charter)
Delaware | 20-1614256 |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
600 Lexington Avenue, 29th Floor
New York, NY, 10022
(212) 583-0080
(Address and telephone number of principal executive offices)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class | Name of each exchange on which registered |
None | None |
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company x | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant: $13,946,482 (based upon the average bid and asked price of the registrant’s common stock, $.001 par value, as of June 30, 2007). The aggregate estimated market value was determined by multiplying the approximate number of shares of common stock (35,760,207) held by non-affiliates by the average bid and asked price of such stock ($0.39), as of June 30, 2007, as quoted on the OTCBB by the National Association of Securities Dealers (the "NASD").
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 36,667,686 at March 26, 2008.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
EXPLANATORY NOTE
The purpose of this Amendment No. 2 to the Annual Report on Form 10-K of Advance Nanotech, Inc. (the “Company”) for the year ended December 31, 2007 (the “Original Form 10-K”) is solely (i) to update the number of shares outstanding as of March 26, 2008 on the cover page and in Item 12 and (ii) to add to the Summary Compensation Table under "All Other Compensation" fees paid in January 2008 to Messrs. Gittins, Finn and Goncalves for serving as directors of one of the Company's majority-owned subsidiaries during 2007.
This Amendment No. 2 amends and restates in its entirety Part III, Item 11 and Item 12 of the Original Form 10-K. The remaining items, including Item 8. Financial Statements, of the Original Form 10-K have not been amended. This Amendment No. 2 continues to reflect circumstances as of the date and time of the filing of the Original Form 10-K and does not reflect events occurring after the filing of the Original Form 10-K or modify or update those disclosures in any way.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table sets forth a summary of annual and long-term compensation awarded to, earned by, or paid for the fiscal years ended December 31, 2006 and 2007 to our Chief Executive Officer and each of the next two most highly compensated executive officers (as defined in Rule 3b-7 under the Exchange Act) serving at the end of 2007 (referred to as the named executive officers):
Principal Position | Year | Salary ($) (1) | Bonus ($) (2) | Stock Awards ($) (3) | Option Awards ($) (4) | Non-Equity Incentive Plan Compensation ($) (5) | All Other Compensation ($) (6) | Total ($) | |||||||||||||||||
Magnus R. E. Gittins | 2007 | $ | 158,144 | $ | - | $ | 37,779 | $ | 38,723 | $ | - | $ | 64,666 | $ | 299,312 | ||||||||||
Executive Chairman and | 2006 | $ | 183,333 | $ | - | $ | 114,178 | $ | 255,613 | $ | - | $ | 71,320 | $ | 624,444 | ||||||||||
Chairman of the Board | |||||||||||||||||||||||||
Antonio Goncalves | 2007 | $ | 252,083 | $ | - | $ | 22,433 | $ | 38,723 | $ | - | $ | 73,116 | $ | 386,355 | ||||||||||
Chief Executive Officer | 2006 | $ | 109,145 | $ | - | $ | 167,127 | $ | - | $ | - | $ | 3,864 | $ | 280,136 | ||||||||||
Thomas P. Finn | 2007 | $ | 240,833 | $ | - | $ | 52,134 | $ | 38,723 | $ | - | $ | 73,116 | $ | 404,806 | ||||||||||
Chief Financial Officer and Secretary | 2006 | $ | 195,000 | $ | - | $ | 137,537 | $ | 76,684 | $ | - | $ | 10,700 | $ | 419,921 |
(1) | Per SEC rules, the salary column represents the amount of actual gross wages paid in 2006 and 2007 to the named executive officer. |
(2) | The Company did not pay discretionary cash bonuses during 2006 and 2007. Any bonuses paid were performance-based and paid through our 2005 Equity Incentive Plan and included in the “Stock Awards” column. |
(3) | For 2007, reflects awards of our common stock on May 17, 2007 to Messrs. Gittins, Goncalves and Finn who received 104,941, 62,313 and 144,817 stock awards, respectively. Each stock award is reflected as the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with SFAS No. 123 (revised 2004), “Share-Based Payment.” Under the terms of the 2005 Equity Incentive Plan, which was implemented on December 30, 2005, 3,000,000 shares of common stock were reserved for issuance upon stock awards and stock options to be granted. The 2005 Equity Incentive Plan is a non-qualified plan and will expire on December 22, 2010, but options may remain outstanding past this date. The Board authorizes the grant of options to purchase stock as well as the grant of shares of stock under this plan. Grants cancelled or forfeited are available for future grants. The amounts shown above reflect the value of the stock award based on the grant date fair value of the stock expensed at the time of the appropriate service period during the year. In addition, Messrs. Gittins, Goncalves and Finn were each awarded 650,000 shares of restricted common stock to be vested quarterly, pro rata, over two years commencing on August 13, 2007. These shares have not yet been issued because a sufficient number of authorized shares are not available under the 2005 Equity Incentive Plan. |
For 2006, each named executive officer received stock awards as follows as accounted for in the financial statements for fiscal year end December 31, 2007:
Name | Grant Date April 13, 2006 | Grant Date July 31, 2006 | Grant Date November 28, 2006 | Grant Date January 23, 2007 | Totals for 2006 | ||||||||||||||||||||||||||
Grant Date Fair Value Per Share | Shares Received | Grant Date Fair Value Per Share | Shares Received | Grant Date Fair Value Per Share | Shares Received | Grant Date Fair Value Per Share | Shares Received | Total Fair Value of Stock Awards | Total Shares Received | ||||||||||||||||||||||
Magnus R. E. Gittins | $ | 1.84 | 16,652 | $ | 0.84 | 20,021 | $ | 0.84 | 45,375 | (b) | $ | 0.71 | 40,290 | $ | 114,178 | 122,238 | |||||||||||||||
Antonio Goncalves | - | - | - | - | $ | 0.84 | 20,173 | $ | 0.71 | 211,523 | $ | 167,127 | 231,696 | ||||||||||||||||||
Thomas P. Finn | $ | 1.84 | 12,489 | $ | 0.84 | 39,422 | (a) | $ | 0.84 | 71,419 | (c) | $ | 0.71 | 30,218 | $ | 137,537 | 153,548 |
(a) | Of the total shares received, 24,406 shares represented a performance based bonus. | |
(b) | Of the total shares received, 9,064 shares represented a performance based bonus. | |
(c) | Of the total shares received, 44,186 shares represented a performance based bonus. |
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(4) | The values shown reflect the dollar amounts relating to option awards recognized for financial statement reporting purposes for the fiscal years ended December 31, 2006 and 2007, as applicable, in accordance with SFAS No. 123 (revised 2004), “Share-Based Payment.” Assumptions used in the calculation of these amounts for the fiscal year ended December 31, 2006 are included in Note I to our audited financial statements for the fiscal year ended December 31, 2006, included in our Annual Report on Form 10-KSB filed with the SEC on March 30, 2007. For 2007, these values include amounts from options awarded on August 13, 2007; however, these options have not yet been issued because a sufficient number of authorized shares are not available under the 2005 Equity Incentive Plan. Assumptions used in the calculation of these amounts for the fiscal year ended December 31, 2007 are included in Note I to our audited financial statements for the fiscal year ended December 31, 2007. |
(5) | The Company did not pay any cash bonuses in 2006 or 2007. |
(6) | All Other Compensation consists of commuting allowance, gross-up for payment of taxes, housing allowance and fees for serving as a director of one of the Company's majority-owned subsidiaries as follows: |
Name | Commuting Allowance ($) | Housing Allowance ($) | Gross-up for taxes ($) | Director Fees ($) | Total Other Compensation ($) | |||||||||||
Magnus R. E. Gittins | ||||||||||||||||
2007 | $ | 2,250 | $ | - | $ | - | $ | 62,416 | $ | 64,666 | ||||||
2006 | $ | - | $ | 44,400 | $ | 26,920 | $ | - | $ | 71,320 | ||||||
Antonio Goncalves | ||||||||||||||||
2007 | $ | 6,000 | $ | - | $ | 4,700 | $ | 62,416 | $ | 73,116 | ||||||
2006 | $ | 2,167 | $ | - | $ | 1,697 | $ | - | $ | 3,864 | ||||||
Thomas P. Finn | ||||||||||||||||
2007 | $ | 6,000 | $ | - | $ | 4,700 | $ | 62,416 | $ | 73,116 | ||||||
2006 | $ | 6,000 | $ | - | $ | 4,700 | $ | - | $ | 10,700 |
Each of the above named executive officers entered into Amended and Restated Employment Agreements with the Company on August 13, 2007. The terms of their agreements are identical except as described herein. The base salary for Mr. Gittins is $270,000 per annum; Mr. Goncalves’ base salary is $260,000; and Mr. Finn’s base salary is $250,000. The initial term of their employment agreements are for two years and continue during such time until terminated by either party pursuant to the terms summarized under “Employment, Termination and Change-in-Control Arrangements” on page 35. Each employment agreement renews automatically for a one-year period at the end of its term unless either party provides notice to the other party at least 90 days prior to the expiration date. Each named executive officer receives a $500 commuting allowance as a non-accountable reimbursement for commuting expenses. Each named executive officer is entitled according to their employment agreements to receive options for 350,000 shares of our common stock with a cashless exercise provision, an exercise price of $0.25 and a vesting schedule of 87,500 options per quarter commencing on August 13, 2007. Each named executive officer is also entitled according to their employment agreements to 650,000 shares of restricted common stock which vest quarterly pro-rata over two years commencing on August 13, 2007. These options and restricted shares have not yet been issued because a sufficient number of authorized shares are not available under the 2005 Equity Incentive Plan. The Company accrues these equity awards accordingly until such time as a new equity plan is approved and implemented by the Board of Directors. Each employment agreement contains a provision prohibiting the named executive officer from competing with the Company for a period of at least six months after his employment is terminated. The foregoing descriptions of the employment agreements are qualified in their entirety by the actual agreements, copies of which have previously been filed with the SEC.
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Outstanding Equity Awards at 2007 Fiscal Year-End
The following table provides certain information as of December 31, 2007, concerning unexercised options and stock awards including those that had been granted but not yet vested as of such date for each of the named executive officers.
Option Awards(2) | Stock Awards(2) | |||||||||||||||||||||||||||
Equity Incentive Plan Awards | Equity Incentive Plan Awards | Equity Incentive Plan Awards | ||||||||||||||||||||||||||
Number of Securities Underlying Un-exercised Options (#) (1) | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Unearned | Option Exercise Price | Option Expiration | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Number of Unearned Shares, Units or Other Rights That Have Not Vested | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | ||||||||||||||||||||
Name | Exercisable | Un-exercisable | Options (#) | ($) | Date | (#) | ($) | (#) | ($) | |||||||||||||||||||
Magnus R. E. Gittins | 400,000 | - | - | $ | 2.03 | 1/5/2011 | - | - | - | $ | - | |||||||||||||||||
Antonio Goncalves | - | - | - | $ | - | - | - | - | - | $ | - | |||||||||||||||||
Thomas P. Finn | 120,000 | - | - | $ | 2.03 | 1/5/2011 | - | - | - | $ | - |
(1) | Represents the number of options to purchase shares of our common stock. The options were issued on January 5, 2006 and have a five-year term. The options were immediately vested 100% on the date of grant. The options were issued at fair market value determined by the closing stock price on the day preceding the grant date. We record the straight-line expense of the options over a three-year service period. |
(2) | These numbers do not include stock options and stock awards that were awarded on August 13, 2007, which have not been issued because we do not have sufficient shares available under our 2005 Equity Incentive Plan. |
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Employment, Termination and Change-in-Control Arrangements
Each of Messrs. Gittins, Goncalves and Finn have two-year employment agreements with us dated August 13, 2007, which provide for payments by us under various circumstances after termination of their employment as described below.
Termination by Executive Without Good Reason. An executive may terminate his employment with us for any reason or no reason by giving us at least 180 days prior written notice. We, at our election, may either require the executive to continue to perform his duties for the full 180-day notice period or terminate his employment at any time during such 180-day notice period. An election by us to terminate an executive’s employment at any time during such 180-day notice period will not be deemed to be a termination of the executive’s employment by us without cause or a termination of the executive’s employment by us for cause, but will be treated as a termination of employment by the executive without good reason. If an executive’s employment is terminated by us before the 180-day notice period has expired without cause, the executive shall continue to receive his base salary and bonus, and we will continue to provide medical and dental benefits for the executive and the executive’s family, by paying the premium for health insurance continuation coverage under COBRA to the extent he elects COBRA coverage (or continue to contribute the employer portion of the premium normally paid by us for our current employees), for the unexpired balance of the 180-day notice period.
Termination by Executive for Good Reason. Upon 180 days’ written notice to us of an executive’s intent to terminate his employment agreement, the executive has the right to terminate his employment for “good reason,” which is one the following reasons: either our material breach of his employment agreement or relocation of our headquarters and/or the executive’s regular work address to a location which is more than 40 miles from the current principal address at which he is required to perform his duties without his prior written consent. If an executive terminates his employment for good reason, he will continue to receive his base salary and bonus, and we will continue to provide medical and dental benefits for him and his family, by paying the premium for health insurance continuation coverage under COBRA to the extent he elects COBRA coverage (or continue to contribute the employer portion of the premium normally paid by us for our current employees), for period of the lesser of 180 days from the earlier to occur of the date notice of termination is given or the date on which employment actually terminates.
Termination by Us for Cause. If the executive’s employment is terminated for “cause,” the executive will not be entitled to and shall not receive any compensation or benefits of any type following the effective date of termination, except such benefits as may be required to be extended under applicable state or federal law. The term “cause” includes, but is not limited to, (i) conviction of a felony or a crime involving moral turpitude; (ii) engagement in conduct which has the effect, or might reasonably be expected to have the effect of bringing disrepute to our reputation or hold us or the executive up to public ridicule; (iii) fraud on or misappropriation of any funds or property of us, any affiliate, customer or vendor; (iv) wilful violation of any securities law, rule or regulation (other than minor traffic violations or similar offenses); (v) personal dishonesty, or breach of fiduciary duty which involves personal profit; (vi) gross incompetence in the performance of the executive’s duties; (vii) wilful misconduct in connection with the executive’s duties; (viii) habitual absenteeism or inattention to the executive’s duties; (ix) chronic use of alcohol, drugs or other similar substances (other than pursuant to medical prescriptions and under doctors’ supervision for treatment of legitimate illnesses or conditions) which affects the executive’s work performance; (x) wilful violation of any of our rules, regulations, procedures or policies which has, or may reasonably be expected to have, a material adverse effect on us; (xi) engaging in behavior that would constitute grounds for liability for harassment (as proscribed by the U.S. Equal Employment Opportunity Commission Guidelines or any other applicable state or local regulatory body) or other egregious conduct that violates laws governing the workplace; or (xii) material breach of any material provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by the executive for our benefit or of any of our material policies, all as determined by the Board, which determination will be conclusive. Notwithstanding anything to the contrary, employment may not be terminated for “cause” in the event that the executive becomes permanently disabled.
Termination by Us Without Cause. We retain the right to terminate an executive without cause or prior written notice, in which case he will continue to receive his base salary and bonus, and we will continue to provide medical and dental benefits for him and his family, by paying the premium for health insurance continuation coverage under COBRA to the extent he elects COBRA coverage (or continue to contribute the employer portion of the premium normally paid by us for our current employees), for period of the lesser of 180 days from the earlier to occur of the date notice of termination is given or the date on which employment actually terminates.
Termination by Virtue of a Change in Control. An executive may elect in writing to declare that he has been terminated as a result of a “change in control” (as hereafter defined), at which time he shall be entitled to a lump sum severance payment equal to his base salary earned over the preceding twelve-month period and a sum sufficient to pay for the continuation of his medical and dental insurance with all of his then-current benefits for a like twelve-month period. The term “change in control” includes: (i) a buy-out of us whereby more than 50% in the aggregate of our ownership interests becomes beneficially owned by persons not now holding an ownership interest; (ii) our liquidation or dissolution; or (iii) the sale or other disposition of all or substantially all of our assets.
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Termination for Executive’s Permanent Disability. To the extent permissible under applicable law, in the event an executive becomes permanently disabled during employment, we may terminate his employment agreement by giving 30 days notice to the executive of our intent to terminate, and unless the executive resumes performance of his duties within five days of the date of the notice and continues performance for the remainder of the notice period, his employment agreement will terminate at the end of the 30- day period. “Permanently disabled” means the inability, due to physical or mental ill health, to perform the essential functions of the executive’s job, with a reasonable accommodation, for 90 days during any one employment year irrespective of whether such days are consecutive. If an executive’s employment is terminated by us because of his permanent disability, the executive shall continue to receive his base salary and bonus, and we will continue to provide medical and dental benefits for him and his family, by paying the premium for health insurance continuation coverage under COBRA to the extent the executive elects COBRA coverage (or continue to contribute the employer portion of the premium normally paid by us for our current employees), for 180 days from the date on which employment actually terminates.
Termination Due to Executive’s Death. An executive’s employment agreement will terminate immediately upon his death, and we shall not have any further liability or obligation to him, his executors, heirs, assigns or any other person claiming under or through his estate, except as set forth in this paragraph. We will pay any accrued but unpaid salary or bonuses through the date of termination to the executive’s estate. If the executive’s employment is terminated by us because of the executive’s death, his estate will continue to receive the executive’s base salary and bonus, and we will continue to provide medical and dental benefits for the executive’s family, by paying the premium for health insurance continuation coverage under COBRA to the extent the executive’s estate elects COBRA coverage (or continue to contribute the employer portion of the premium normally paid by us for our current employees), for 180 days from the date on which employment actually terminates.
Non-Employee Director Compensation
Members of the Board of Directors who are not employees of the Company receive a retainer of $5,000 per quarter and a fee of $1,000 for attending each Board or stockholder meeting held in person. Directors who are employees, such as Mr. Gittins, do not receive compensation for serving as directors or for attending Board of Directors, committee or stockholder meetings. In addition, Mr. Cole does not receive any compensation for serving as a director or for attending Board of Directors, committee or stockholder meetings because he received a special grant of stock options in 2006 to acknowledge his role as a founder of the Company. We maintain a written compensation policy for our non-employee directors. We do not provide additional compensation for service on any of our Board committees. There is one family relationship between a director and an executive officer of the Company, which was disclosed on the day the director was elected: Virgil Wenger, a director of the Company, is the father-in-law of Thomas Finn, Chief Financial Officer.
The following table provides information on compensation awarded or paid to our non-employee directors for the fiscal year ended December 31, 2007.
Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Total ($) | |||||||
Lee J. Cole (1) | $ | - | $ | - | $ | - | ||||
Peter Rugg (2) | $ | 27,500 | $ | - | $ | 27,500 | ||||
Virgil E. Wenger (3) | $ | 28,500 | $ | - | $ | 28,500 | ||||
John Robertson (4) | $ | 27,500 | $ | - | $ | 27,500 | ||||
Douglas Zorn (5) | $ | 17,500 | $ | - | $ | 17,500 |
(1) As of December 31, 2007, there were 120,000 stock options granted to Mr. Cole that were still outstanding.
(2) As of December 31, 2007, there were 20,000 stock options granted to Mr. Rugg that were still outstanding.
(3) As of December 31, 2007, there were 20,000 stock options granted to Mr. Wenger that were still outstanding.
(4) As of December 31, 2007, there were 20,000 stock options granted to Mr. Robertson that were still outstanding. Mr. Robertson resigned as a director on January 22, 2008. Mr. Peters became a director on January 22, 2008.
(5) As of December 31, 2007, there were zero stock options granted to Mr. Zorn that were still outstanding.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
EQUITY INCENTIVE PLAN INFORMATION
We presently have a single plan for the granting of equity incentives to directors, employees and consultants - the 2005 Equity Incentive Plan, or the Plan. Stock grants and options to purchase common stock may be issued under the Plan. The Plan is intended to be a broad-based, long-term retention program that is intended to attract and retain talented employees, directors and consultants and align their interests with stockholder interests. The purpose of the Plan is to promote the success, and enhance the value, of the Company by aligning the interests of participants with those of our stockholders. Our Board adopted the Plan on December 22, 2005.
We have reserved 3,000,000 shares of our common stock for issuance pursuant to grants under the Plan. Under the Plan, participants may be granted shares of our common stock or options to purchase common stock. The Plan contains provisions allowing net exercise, cashless exercise and a holdback election for taxes payable upon grant of these awards. The Board delegated administration of the Plan to the Compensation Committee consisting of directors Lee Cole and Virgil Wenger. The Compensation Committee will be responsible for approving all grants made under the Plan.
Information about our 2005 Equity Incentive Plan information as of December 31, 2007 is as follows:
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||
(a) | (b) | (c) | ||||||||
Equity compensation plans approved by security holders | ||||||||||
Equity compensation plans not approved by security holders | 820,000 | $ | 2.14 | 240 | ||||||
Total | 820,000 | $ | 2.14 | 240 |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of our common stock as of March 24, 2008 by each person known by us to be the beneficial owner of more than five percent (5%) of our common stock, by each director, by each named executive officer, and by all directors and executive officers as a group. As of March 26, 2008, we had 36,667,686 shares of common stock outstanding.
Except as otherwise indicated in the footnotes to the table, we believe that each of the persons or entities named in the table exercises sole voting and investment power over the shares of common stock that each of them beneficially owns, subject to community property laws where applicable. A person is deemed to be the beneficial owner of securities owned or which can be acquired by such person within 60 days of the measurement date upon the exercise of stock options or warrants. Each person’s percentage ownership is determined by assuming that stock options, or warrants, beneficially owned by such person (but not those owned by any other person) have been exercised.
Shares of Common Stock Beneficially Owned | Percentage of Total Shares Outstanding | ||||||||||||
Name and Address of Owner (1) | Shares | Options / Warrants | Total | ||||||||||
5% or Greater Stockholders: | |||||||||||||
LC Capital Master Fund, Ltd. (2) | — | 6,000,000 | 6,000,000 | 14.1 | % | ||||||||
Ingalls & Snyder LLC (3) | — | 6,000,000 | 6,000,000 | 14.1 | % | ||||||||
Michael E. Hildesley (4) | — | 3,600,000 | 3,600,000 | 8.9 | % | ||||||||
BEME Capital Limited (5) | — | 3,600,000 | 3,600,000 | 8.9 | % | ||||||||
MacBay Partners, LP (6) | — | 4,500,000 | 4,500,000 | 10.9 | % | ||||||||
MacBay Partners, LLC (6) | — | 4,500,000 | 4,500,000 | 10.9 | % | ||||||||
Provco Ventures I, LP (7) | — | 3,000,000 | 3,000,000 | 7.6 | % | ||||||||
The Black Diamond Fund (8) | — | 3,000,000 | 3,000,000 | 7.6 | % | ||||||||
Alpha Capital Anstaldt (9) | — | 3,000,000 | 3,000,000 | 7.6 | % | ||||||||
Harborview Master Fund LP (10) | — | 2,100,000 | 2,100,000 | 5.4 | % | ||||||||
Directors: | |||||||||||||
Magnus Gittins (11) | 340,470 | 575,000 | 915,470 | 2.5 | % | ||||||||
Lee Cole (12) | — | 120,000 | 120,000 | * | |||||||||
Virgil Wenger (13) | 38,379 | 20,000 | 58,379 | * | |||||||||
Peter Rugg (14) | 19,190 | 20,000 | 39,190 | * | |||||||||
Douglas Zorn (15) | — | — | — | * | |||||||||
Joseph Peters (16) | — | — | — | * | |||||||||
Named Executive Officers: | |||||||||||||
Magnus Gittins (See above) | |||||||||||||
Antonio Goncalves, Jr. (17) | 246,325 | 175,000 | 421,325 | 1.1 | % | ||||||||
Thomas Finn (18) | 232,613 | 295,000 | 527,613 | 1.4 | % | ||||||||
All Directors and Named Executive Officers as a Group (8 persons) | 876,977 | 1,205,000 | 2,081,977 | 5.4 | % |
* Less than 1%
(1) | Unless otherwise indicated in the footnotes below, the address of each stockholder is c/o Advance Nanotech, Inc., 600 Lexington Avenue, 29th Floor, New York, New York 10022. |
(2) | Represents (1) 4,000,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $1,000,000 and (2) 2,000,000 shares of common stock issuable upon exercise of warrants. The stockholder shares voting and dispositive power with others, including MacBay Partners, LP and MacBay Partners, LLC, under accounts that it manages under investment advisory contracts. The address of the stockholder is 680 Fifth Avenue, 12th Floor, New York, New York 10019. |
(3) | Represents (1) 4,000,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $1,000,000 and (2) 2,000,000 shares of common stock issuable upon exercise of warrants. H. Shepard Boone exercises voting and dispositive power with respect to the shares of common stock. The address of the stockholder is 61 Broadway, 31st Floor, New York, New York 10006. |
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(4) | Represents (1) 2,400,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $600,000 and (2) 1,200,000 shares of common stock issuable upon exercise of warrants. The address of the stockholder is 23 Woodlands Rd., London SW13 0JZ, UK. |
(5) | Represents (1) 2,400,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $600,000 and (2) 1,200,000 shares of common stock issuable upon exercise of warrants. Angela Harris exercises voting and dispositive power with respect to the shares of common stock. The address of the stockholder is Suite 834, P.O. Box 1419, Europort, Gibraltar. |
(6) | Represents (1) 3,000,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $750,000 and (2) 1,500,000 shares of common stock issuable upon exercise of warrants. The stockholder has shared voting and dispositive power over all of the shares. MacBay Partners, LP, is an investment partnership managed under an investment advisory contract by Ingalls & Snyder LLC, a registered broker dealer and a registered investment advisor. MacBay Partners, LLC, is the general partner of MacBay Partners, LP, the address of the stockholder is c/o Ingalls & Snyder, LLC, 61 Broadway, New York, New York, 10006. |
(7) | Represents (1) 2,000,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $500,000 and (2) 1,000,000 shares of common stock issuable upon exercise of warrants. Gary R. Dilella exercises on behalf of the stockholder voting and dispositive power with respect to the shares of common stock. The address of the stockholder is 79 E. Lancaster Ave., Suite 200, Villanova, Pennsylvania 19085. |
(8) | Represents (1) 2,000,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $500,000 and (2) 1,000,000 shares of common stock issuable upon exercise of warrants. Brandon S. Goulding exercises on behalf of the stockholder voting and dispositive power with respect to the shares of common stock. The address of the stockholder is 155 Revere Drive, Suite 10, Northbrook, Illinois 60062. |
(9) | Represents (1) 2,000,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $500,000 and (2) 1,000,000 shares of common stock issuable upon exercise of warrants. Konrad Ackerman exercises on behalf of the stockholder voting and dispositive power with respect to the shares of common stock. The address of the stockholder is 160 Central Park South, Suite 2701, New York, New York 10019. |
(10) | Represents (1) 1,400,000 shares of common stock issuable upon conversion of convertible notes in the aggregate principal amount of $350,000 and (2) 700,000 shares of common stock issuable upon exercise of warrants. Harborview Master Fund L.P. is a master fund in a master-feeder structure whose general partner is Harborview Advisors LLC. Richard Rosenblum and David Stefansky are the managers of Harborview Advisors LLC and have ultimate responsibility for trading with respect to Harborview Master Fund L.P. Messrs. Rosenblum and Stefansky disclaim beneficial ownership of the shares. The address of the stockholder is 850 Third Avenue, Suite 1801, New York, New York 10022. |
(11) | Includes 575,000 shares of common stock options, 400,000 of which are issuable upon exercise of stock options that are immediately exercisable at an exercise price of $2.03 per share and 175,000 shares of common stock that are immediately exercisable at an exercise price of $0.25 per share. The 400,000 stock options were granted to Mr. Gittins in his role as a founder of the Company and the 175,000 stock options were granted to Mr. Gittins as part of his employment agreement. |
(12) | Includes 120,000 shares of common stock issuable upon exercise of stock options that are immediately exercisable at an exercise price of $2.03 per share. These stock options were granted to Mr. Cole in his role as a founder of the Company. |
(13) | Includes 12,500 shares of common stock issuable upon exercise of warrants that are immediately exercisable at $1.25. The Company issued these warrants to Mr. Wenger in connection with his participation in a private placement by us in 2005. Also includes an option to purchase 20,000 shares of common stock at $3.50 for participation on the Board of Directors. |
(14) | Includes 6,450 shares of common stock issuable upon exercise of warrants that are immediately exercisable at an exercise price of $1.25 per share. The Company issued these warrants to Mr. Rugg in connection with his participation in a private placement by us in 2005. Also includes an option to purchase 20,000 shares of common stock at $3.50 for participation on the Board of Directors. |
(15) | Douglas Zorn joined the Board of Directors on March 6, 2007 and did not beneficially own common stock as of the date of the table. |
(16) | Joseph Peters joined the Board of Directors on January 22, 2008 and did not beneficially own common stock as of the date of the table. |
(17) | Includes 175,000 shares of common stock issuable upon exercise of stock options that are immediately exercisable at an exercise price of $0.25 per share. These stock options were granted to Mr. Goncalves as part of his employment agreement. |
(18) | Includes 295,000 shares of common stock options, 120,000 of which are issuable upon exercise of stock options that are immediately exercisable at an exercise price of $2.03 per share and 175,000 shares of common stock that are immediately exercisable at an exercise price of $0.25 per share. The 120,000 stock options were granted to Mr. Finn in his role as an early employee of the Company and the 175,000 stock options were granted to Mr. Finn as part of his employment agreement. |
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Financial Statements, Financial Statement Schedules and Exhibits.
(1) See Index to Financial Statements located on page F-1.
All consolidated financial statement schedules have been omitted because they are not required, and are not applicable, or the required information has been included elsewhere within this Form 10-K.
(3) Exhibits
Exhibit No. | Document Description | |
2.1 | Agreement and Plan of Merger, dated as of May 11, 2006, by and between Advance Nanotech Inc., a Colorado corporation, and Advance Nanotech Inc., a Delaware corporation (incorporated by reference to Exhibit 2.1 to Form 8-K dated June 19, 2006 and filed June 20, 2006). | |
2.2+ | Exchange Agreement, dated December 19, 2007, by and among Bret Bader, Mark Brennan, Paul Boyle, Andrew Koehl, David Ruiz-Alonso and the Company. | |
2.3+ | Agreement, dated December 18, 2007, between the Company, the other vendors party thereto and Bilcare Singapore Pte Limited. | |
3.1+ | Certificate of Incorporation of the Company. | |
3.2 | Certificate of Amendment of Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to Form 8-K dated February 12, 2007 and filed February 15, 2007). | |
3.3 | Company’s Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K dated June 19, 2006 and filed June 20, 2006). |
4.1 | Forms of Investor Warrant (incorporated by reference to Exhibit 10.7 to Form 8-K dated January 20, 2005 and filed January 26, 2005, and to Exhibit 10.12 to Form 8-K dated February 28, 2005 and filed March 4, 2005). | |
4.2 | Form of Placement Agent Warrant (incorporated by reference to Exhibit 10.8 to Form 8-K dated January 20, 2005 and filed January 26, 2005, and to Exhibit to 10.13 to Form 8-K dated February 28, 2005 and filed March 4, 2005). | |
4.3 | Form of Investor and Placement Agent Warrant Agreement consent letter to amend the exercise price pursuant to the Securities and Purchase Agreement dated as of October 13, 2006 (incorporated by reference to Exhibit 10.22 to Form 10-KSB filed by the Company on March 30, 2007). | |
4.4+ | Form of Common Stock Purchase Warrant. | |
4.5+ | Form of Senior Secured Convertible Note. | |
10.1 | Loan Management Account Agreement, by and between the Company and Merrill Lynch Bank USA (incorporated by reference to Exhibit 10.1 to Form 10-QSB filed by the Company on November 14, 2007). | |
10.2 | Facility Agreement, dated November 6, 2006, by and between NAB Ventures Limited and Advance Display Technologies plc (incorporated by reference to Exhibit 10.24 to Form 10-QSB filed by the Company on November 14, 2006). | |
10.3 | Amended and Restated Senior Secured Grid Note, dated August 14, 2006, by the Company in favor of Jano Holdings Limited (cancelled) (incorporated by reference to Exhibit 10.2 to Form 8-K filed by the Company on August 16, 2006). | |
10.4 | Security Agreement, dated August 14, 2006, by the Company in favor of Jano Holdings Limited (cancelled) (incorporated by reference to Exhibit 10.3 to Form 8-K filed by the Company on August 16, 2006). | |
10.5* | 2005 Equity Incentive Plan and related agreements (incorporated by reference to Exhibit 10.1 to Form 8-K dated and filed by the Company on December 29, 2005). | |
10.6* | Amended and Restated 2005 Equity Incentive Plan and related agreements (incorporated by reference to Exhibit 10.8 to Form 10-QSB filed by the Company on May 15, 2006). |
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Exhibit No. | Document Description | |
10.7* | Company’s Director Compensation and Confidential Information Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K dated March 6, 2007 and filed by the Company on March 9, 2007). | |
10.8* | Service Agreement, dated November 13, 2006, by and between Advance Display Technologies plc and Magnus Gittins (incorporated by reference to Exhibit 10.3 to Form 8-K dated November 13, 2006 and filed by the Company on December 1, 2006). | |
10.9 | Facility Agreement, dated March 28, 2007, by and between Conquistador Investments Limited and Advance Homeland Security PLC (incorporated by reference to Exhibit 10.24 to Form 10-KSB filed by the Company on March 30, 2007). | |
10.10 | Debenture, dated March 28, 2007, between Conquistador Investments Limited and Advance Homeland Security PLC (incorporated by reference to Exhibit 10.25 to Form 10-KSB filed by the Company on March 30, 2007). | |
10.11* | Amended and Restated Employment Agreement, dated August 13, 2007, by and between the Company and Thomas Finn (incorporated by reference to Exhibit 10.26 to Form 10-QSB filed by the Company on August 14, 2007). | |
10.12* | Amended and Restated Employment Agreement, dated August 13, 2007, by and between the Company and Magnus Gittins (incorporated by reference to Exhibit 10.27 to Form 10-QSB filed by the Company on August 14, 2007). | |
10.13* | Amended and Restated Employment Agreement dated, August 13, 2007, by and between the Company and Antonio Goncalves, Jr. (incorporated by reference to Exhibit 10.28 to Form 10-QSB filed by the Company on August 14, 2007). | |
10.14+ | Form of Subscription Agreement, dated December 19 and 21, 2007, between the Company and the subscribers thereto. | |
10.15+ | Escrow Agreement, dated August 20, 2007, between the Company, Axiom Capital Management, Inc. and HSBC Bank USA, National Association. | |
10.16+ | Pledge and Security Agreement, dated December 19, 2007, between the Company and Axiom Capital Management, Inc. | |
10.17+ | Collateral Agent Agreement, dated December 19, 2007, among Axiom Capital Management, Inc. and the parties thereto. | |
21.1 | Subsidiaries of the Registrant (Direct or Indirect) Advance Homeland Security plc (a UK corporation) Advance Display Technologies plc (a UK corporation) Advance Nanotech Limited (a UK corporation) Advance Nanotech Singapore Pte. Limited (a Singapore corporation) Owlstone Nanotech, Inc. (a Delaware corporation) Owlstone Limited (a UK corporation) Bio-Nano Sensium Technologies Limited (a UK corporation) Cambridge Nanotechnology Limited (a UK corporation) Nano Solutions Limited (a UK corporation) NanoFed Limited (a UK corporation) |
23.1+ | Consent of Mendoza Berger & Company, LLP | |
31.1w | Certification of Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended. | |
31.2w | Certification of Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended. | |
32.1+ | Certification by Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2+ | Certification by Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Management contract or compensation plan, contract or arrangement. |
+ | Previously filed. |
w | Filed herewith. |
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 24th day of April, 2008.
ADVANCE NANOTECH, INC.
/S/ ANTONIO GONCALVES, JR. ANTONIO GONCALVES, JR PRINCIPAL EXECUTIVE OFFICER |
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