450 Lexington Ave., 15th Floor | |
New York, New York 10017 | |
212.850.2800 Phone | |
212.850.2929 Fax | |
andrewskurth.com |
July 14, 2008
Ms. Peggy Fisher
Assistant Director
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street NE, Mail Stop 6010
Washington, D.C. 20549-7010
Re: | Advance Nanotech, Inc. |
Amendment No. 1 to Registration Statement on Form S-3 | |
Filed April 3, 2008 | |
File No. 333-148780 |
Dear Ms. Fisher:
On behalf of Advance Nanotech, Inc., a Delaware corporation (the “Registrant”), we enclose the responses of the Registrant to the comments received from the staff of the Division of Corporation Finance of the United States Securities and Exchange Commission by letter dated April 16, 2008, with respect to the Registrant’s Amendment No. 1 to Registration Statement on Form S-3 filed April 3, 2008 (File No. 333-148780). For your convenience, the response is prefaced by the exact text of the Staff’s corresponding comment.
Please let us know if you have any questions or if we can provide additional information or otherwise be of assistance in expediting the review process.
Sincerely, | ||
/s/ Scott L. Olson | ||
Scott L. Olson | ||
cc: | Thomas Finn | |
Richard Kronthal |
Austin Beijing Dallas Houston London Los Angeles New York The Woodlands Washington, DC
Advance Nanotech, Inc.
Amendment No. 1 to Registration Statement on Form S-3
(File No. 333-148780)
Registrant’s Responses to
SEC Comment Letter dated April 16, 2008
General
1. | We note your response to prior comment 1 and form eligibility. Please note that Form S-3 General Instruction I.B.4(a)(3) applies to registration statements filed to register securities to be issued upon conversion to existing holders of the convertible securities. By contrast, your filing appears to be registering shares for resale by selling stockholders after they convert their notes and/or exercise their warrants. You are ineligible to register a selling shareholder offering on Form S-3 because the registrant’s securities are not listed and registered on a national securities exchange or quoted on the automated quotation system of a national securities association. |
Response: We have refiled the registration statement on Form S-1 (in connection with the Staff’s guidance about converting a Form SB-2—on which this registration statement was originally filed—to another registration statement form).
2. | In view of the facts that (1) you are seeking to register more than 100% of the total number of outstanding shares currently held by non-affiliates and (2) a significant number of those shares are held by selling shareholders who are broker dealers (Ingalls & Snyder LLC and Paragon Capital LP) and major shareholders, assuming full exercise and conversion (Michael Hildesley, LC Capital Master Fund, Ltd. and BEME Capital Limited), we cannot conclude that an offering of this magnitude constitutes a secondary transaction that can be made on a shelf basis under Rule 415(a)(1)(i). Also, we note that the registrant is not eligible to conduct a primary offering on a delayed or continuous basis under Rule 415(a)(1)(x) because it is not eligible to use Form S-3. In view of these factors, you should withdraw this registration statement and file a Form S-1 to register each “resale” offering at the time of each conversion when the selling shareholders have actually acquired the shares. Because each of those offerings will be a primary offering, you should identify the selling shareholders as underwriters in the registration statement and include the fixed price at which they will sell the securities for the duration of the offering. |
1
Advance Nanotech, Inc.
Amendment No. 1 to Registration Statement on Form S-3
(File No. 333-148780)
Registrant’s Responses to
SEC Comment Letter dated April 16, 2008
Response: We have refiled the registration statement on Form S-1 and are registering for resale only 30% of the outstanding securities held by non-affiliates, which we understand in oral conversations with the Staff to be a permissible number of shares (based on a percentage of the shares outstanding) that can be registered on a shelf. As of July 7, 2008, the Company had 36,667,686 shares of common stock outstanding, of which non-affiliates held 228,760 shares. Accordingly, we are registering 10,913,678 shares of common stock on the Form S-1. In addition, we have removed the two broker-dealers as selling stockholders in response to your comment. Accordingly, we respectfully submit that the shares of common stock included in the Form S-1 are eligible to be registered on a shelf basis under Rule 415.
Selling Stockholders, page 14
3. | We note that you provided information in Annex A, B, C, and D in response to prior comments 4, 5, 6 and 7; however, you did not submit the annexes as correspondence on the EDGAR system. Please submit Annex A through D on EDGAR as correspondence or, in the alternative, expand the disclosure to include and explain them. |
Response: In response to this comment, we have filed via EDGAR with this response letter the information in Annexes A, B, C and D provided in response to our prior comments.
Exhibit 5.1
4. | Please confirm to us in writing that counsel concurs with our understanding that the reference and limitation to “Delaware General Corporation Law” includes the statutory provisions and also all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting these laws. Also, please submit this written confirmation as correspondence on the EDGAR system. |
Response: We have refiled Exhibit 5.1 with the Form S-1, which specifically states that the limitation to “Delaware General Corporation Law” includes the statutory provisions, all applicable provisions of the Delaware constitution and reported judicial decisions interpreting the foregoing.
5. | Given the statement in the penultimate paragraph that the opinion speaks as of the date of the opinion, please file an opinion prior to effectiveness that is dated as of the date that the registration statement becomes effective. |
Response: We have refiled Exhibit 5.1 with the Form S-1, which removes the clause about the opinion speaking as of the date of the opinion.
2
[A] | [B] = [A x 8% / 12] | [C] = [A x 1%] | [D] = [(B + C) x 12] | [E] = [(B x 36) + (C x 12)] | [F] = [A - E] | ||||||||||||||
Maximum payments to | Maximum payments | ||||||||||||||||||
Interest Payments | Liquidated Damages | selling stockholders | to selling stockholders | ||||||||||||||||
per month | per month for | 12 months following | during 36-month term | ||||||||||||||||
Selling Stockholder | Gross Proceeds | of Conv Note | late registraton | sale of notes | of the notes | Net Proceeds | |||||||||||||
Chestnut Ridge Partners, LP | $ | 300,000 | $ | 2,000 | $ | 3,000 | $ | 60,000 | $ | 108,000 | $ | 192,000 | |||||||
David W. Raisbeck | $ | 125,000 | $ | 833 | $ | 1,250 | $ | 25,000 | $ | 45,000 | $ | 80,000 | |||||||
MHJ Holdings Co. | $ | 100,000 | $ | 667 | $ | 1,000 | $ | 20,000 | $ | 36,000 | $ | 64,000 | |||||||
Ingalls & Snyder LLC | $ | 250,000 | $ | 1,667 | $ | 2,500 | $ | 50,000 | $ | 90,000 | $ | 160,000 | |||||||
Ingalls & Snyder LLC | $ | 750,000 | $ | 5,000 | $ | 7,500 | $ | 150,000 | $ | 270,000 | $ | 480,000 | |||||||
Provco Ventures I, LP | $ | 500,000 | $ | 3,333 | $ | 5,000 | $ | 100,000 | $ | 180,000 | $ | 320,000 | |||||||
Richard Molinsky | $ | 50,000 | $ | 333 | $ | 500 | $ | 10,000 | $ | 18,000 | $ | 32,000 | |||||||
Michael H. Weiss | $ | 250,000 | $ | 1,667 | $ | 2,500 | $ | 50,000 | $ | 90,000 | $ | 160,000 | |||||||
Michael E. Hildesley | $ | 600,000 | $ | 4,000 | $ | 6,000 | $ | 120,000 | $ | 216,000 | $ | 384,000 | |||||||
Iroquois MasterFund Ltd. | $ | 100,000 | $ | 667 | $ | 1,000 | $ | 20,000 | $ | 36,000 | $ | 64,000 | |||||||
Harborview MasterFund LP | $ | 350,000 | $ | 2,333 | $ | 3,500 | $ | 70,000 | $ | 126,000 | $ | 224,000 | |||||||
LC Capital Master Fund, Ltd. | $ | 1,000,000 | $ | 6,667 | $ | 10,000 | $ | 200,000 | $ | 360,000 | $ | 640,000 | |||||||
The Black Diamond Fund, LLLP | $ | 500,000 | $ | 3,333 | $ | 5,000 | $ | 100,000 | $ | 180,000 | $ | 320,000 | |||||||
Scot Cohen | $ | 100,000 | $ | 667 | $ | 1,000 | $ | 20,000 | $ | 36,000 | $ | 64,000 | |||||||
Alpha Capital Anstaldt | $ | 500,000 | $ | 3,333 | $ | 5,000 | $ | 100,000 | $ | 180,000 | $ | 320,000 | |||||||
Mariner Tricadia Credit Strategies Master Fund, Ltd. | $ | 200,000 | $ | 1,333 | $ | 2,000 | $ | 40,000 | $ | 72,000 | $ | 128,000 | |||||||
Mariner LDC | $ | 50,000 | $ | 333 | $ | 500 | $ | 10,000 | $ | 18,000 | $ | 32,000 | |||||||
BEME Capital Limited | $ | 600,000 | $ | 4,000 | $ | 6,000 | $ | 120,000 | $ | 216,000 | $ | 384,000 | |||||||
Paragon Capital LP | $ | 250,000 | $ | 1,667 | $ | 2,500 | $ | 50,000 | $ | 90,000 | $ | 160,000 | |||||||
Alla Pasternack | $ | 50,000 | $ | 333 | $ | 500 | $ | 10,000 | $ | 18,000 | $ | 32,000 | |||||||
Leon Frenkel | $ | 50,000 | $ | 333 | $ | 500 | $ | 10,000 | $ | 18,000 | $ | 32,000 | |||||||
Robert & Rosalyn Brody | $ | 25,000 | $ | 167 | $ | 250 | $ | 5,000 | $ | 9,000 | $ | 16,000 | |||||||
Totals | $ | 6,700,000 | $ | 44,667 | $ | 67,000 | $ | 1,340,000 | $ | 2,412,000 | $ | 4,288,000.00 | |||||||
(See Note 1) | (See Note 2) |
Note 1: | Liquidated damages computed as 1% per month of the principal amount of the notes plus the purchase price of the shares underlying the notes (i.e., the difference between the market price and the conversion price). Market price of the common stock of $0.16 as of April 2, 2008 was used for purposes of this computation, which was less than the conversion price of the notes. |
Note 2: | Assumes liquidated damages are not paid for more than 12 months. |
Annex B
[A] | [B] | [C] = [A + B] | [D] | [E] = [ A x $0.33] | [F] = [A x $0.31] | [G] = [B x $0.21] | [H] = [E + F + G] | [I] = [C * D] | [J] = [H - I] | ||||||||||||||||||||||||||||||||||
Market Price | $ 0.33 | $ 0.31 | $ 0.21 | �� | |||||||||||||||||||||||||||||||||||||||
per share | 12/19/2007 | 12/21/2007 | 2/15/2008 | CLOSING 1 | CLOSING 2 | CLOSING 3 | |||||||||||||||||||||||||||||||||||||
CLOSING 1 | CLOSING 2 | CLOSING 3 | NOTE | Marke Value of | Marke Value of | Marke Value of | AGGRAGATE | TOTAL POSSIBLE | |||||||||||||||||||||||||||||||||||
12/19/2007 | 12/21/2007 | 2/15/2008 | CLOSING 1 & 2 | CLOSING 3 | TOTAL POSSIBLE | CONVERSION | Securities Underlying | Securities Underlying | Securities Underlying | MARKET PRICE | AGGREGATE | DISCOUNT TO THE | |||||||||||||||||||||||||||||||
Selling Stockholder | Gross Proceeds | NOTES | NOTES | NOTES | SHARES | SHARES | SHARES/NOTES | PRICE (FIXED) | Convertible Notes | Convertible Notes | Convertible Notes | CONV NOTES | CONVERSION PRICE | MARKET PRICE | |||||||||||||||||||||||||||||
Chestnut Ridge Partners, LP | $ | 300,000 | $ | 177,000 | $ | 123,000 | 708,000 | 492,000 | 1,200,000 | $ | 0.25 | $ | 233,640 | $ | - | $ | 103,320 | $ | 336,960 | $ | 300,000.00 | $ | 36,960.00 | ||||||||||||||||||||
David W. Raisbeck | $ | 125,000 | $ | 73,750 | $ | 51,250 | 295,000 | 205,000 | 500,000 | $ | 0.25 | $ | 97,350 | $ | - | $ | 43,050 | $ | 140,400 | $ | 125,000.00 | $ | 15,400.00 | ||||||||||||||||||||
MHJ Holdings Co. | $ | 100,000 | $ | 59,000 | $ | 41,000 | 236,000 | 164,000 | 400,000 | $ | 0.25 | $ | 77,880 | $ | - | $ | 34,440 | $ | 112,320 | $ | 100,000.00 | $ | 12,320.00 | ||||||||||||||||||||
Ingalls & Snyder LLC | $ | 250,000 | $ | 147,500 | $ | 102,500 | 590,000 | 410,000 | 1,000,000 | $ | 0.25 | $ | 194,700 | $ | - | $ | 86,100 | $ | 280,800 | $ | 250,000.00 | $ | 30,800.00 | ||||||||||||||||||||
Ingalls & Snyder LLC | $ | 750,000 | $ | 442,500 | $ | 307,500 | 1,770,000 | 1,230,000 | 3,000,000 | $ | 0.25 | $ | 584,100 | $ | - | $ | 258,300 | $ | 842,400 | $ | 750,000.00 | $ | 92,400.00 | ||||||||||||||||||||
Provco Ventures I, LP | $ | 500,000 | $ | 295,000 | $ | 205,000 | 1,180,000 | 820,000 | 2,000,000 | $ | 0.25 | $ | 389,400 | $ | - | $ | 172,200 | $ | 561,600 | $ | 500,000.00 | $ | 61,600.00 | ||||||||||||||||||||
Richard Molinsky | $ | 50,000 | $ | 29,500 | $ | 20,500 | 118,000 | 82,000 | 200,000 | $ | 0.25 | $ | 38,940 | $ | - | $ | 17,220 | $ | 56,160 | $ | 50,000.00 | $ | 6,160.00 | ||||||||||||||||||||
Michael H. Weiss | $ | 250,000 | $ | 147,500 | $ | 102,500 | 590,000 | 410,000 | 1,000,000 | $ | 0.25 | $ | 194,700 | $ | - | $ | 86,100 | $ | 280,800 | $ | 250,000.00 | $ | 30,800.00 | ||||||||||||||||||||
Michael E. Hildesley | $ | 600,000 | $ | 354,000 | $ | 246,000 | 1,416,000 | 984,000 | 2,400,000 | $ | 0.25 | $ | 467,280 | $ | - | $ | 206,640 | $ | 673,920 | $ | 600,000.00 | $ | 73,920.00 | ||||||||||||||||||||
Iroquois MasterFund Ltd. | $ | 100,000 | $ | 59,000 | $ | 41,000 | 236,000 | 164,000 | 400,000 | $ | 0.25 | $ | 77,880 | $ | - | $ | 34,440 | $ | 112,320 | $ | 100,000.00 | $ | 12,320.00 | ||||||||||||||||||||
Harborview MasterFund LP | $ | 350,000 | $ | 206,500 | $ | 143,500 | 826,000 | 574,000 | 1,400,000 | $ | 0.25 | $ | - | $ | 256,060 | $ | 120,540 | $ | 376,600 | $ | 350,000.00 | $ | 26,600.00 | ||||||||||||||||||||
LC Capital Master Fund, Ltd. | $ | 1,000,000 | $ | 590,000 | $ | 410,000 | 2,360,000 | 1,640,000 | 4,000,000 | $ | 0.25 | $ | 778,800 | $ | - | $ | 344,400 | $ | 1,123,200 | $ | 1,000,000.00 | $ | 123,200.00 | ||||||||||||||||||||
The Black Diamond Fund, LLLP | $ | 500,000 | $ | 295,000 | $ | 205,000 | 1,180,000 | 820,000 | 2,000,000 | $ | 0.25 | $ | 389,400 | $ | - | $ | 172,200 | $ | 561,600 | $ | 500,000.00 | $ | 61,600.00 | ||||||||||||||||||||
Scot Cohen | $ | 100,000 | $ | 59,000 | $ | 41,000 | 236,000 | 164,000 | 400,000 | $ | 0.25 | $ | 77,880 | $ | - | $ | 34,440 | $ | 112,320 | $ | 100,000.00 | $ | 12,320.00 | ||||||||||||||||||||
Alpha Capital Anstaldt | $ | 500,000 | $ | 295,000 | $ | 205,000 | 1,180,000 | 820,000 | 2,000,000 | $ | 0.25 | $ | 389,400 | $ | - | $ | 172,200 | $ | 561,600 | $ | 500,000.00 | $ | 61,600.00 | ||||||||||||||||||||
Mariner Tricadia Credit Strategies Master Fund, Ltd. | $ | 200,000 | $ | 118,000 | $ | 82,000 | 472,000 | 328,000 | 800,000 | $ | 0.25 | $ | 155,760 | $ | - | $ | 68,880 | $ | 224,640 | $ | 200,000.00 | $ | 24,640.00 | ||||||||||||||||||||
Mariner LDC | $ | 50,000 | $ | 29,500 | $ | 20,500 | 118,000 | 82,000 | 200,000 | $ | 0.25 | $ | 38,940 | $ | - | $ | 17,220 | $ | 56,160 | $ | 50,000.00 | $ | 6,160.00 | ||||||||||||||||||||
BEME Capital Limited | $ | 600,000 | $ | 354,000 | $ | 246,000 | 1,416,000 | 984,000 | 2,400,000 | $ | 0.25 | $ | 467,280 | $ | - | $ | 206,640 | $ | 673,920 | $ | 600,000.00 | $ | 73,920.00 | ||||||||||||||||||||
Paragon Capital LP | $ | 250,000 | $ | 147,500 | $ | 102,500 | 590,000 | 410,000 | 1,000,000 | $ | 0.25 | $ | 194,700 | $ | - | $ | 86,100 | $ | 280,800 | $ | 250,000.00 | $ | 30,800.00 | ||||||||||||||||||||
Alla Pasternack | $ | 50,000 | $ | 29,500 | $ | 20,500 | 118,000 | 82,000 | 200,000 | $ | 0.25 | $ | 38,940 | $ | - | $ | 17,220 | $ | 56,160 | $ | 50,000.00 | $ | 6,160.00 | ||||||||||||||||||||
Leon Frenkel | $ | 50,000 | $ | 29,500 | $ | 20,500 | 118,000 | 82,000 | 200,000 | $ | 0.25 | $ | 38,940 | $ | - | $ | 17,220 | $ | 56,160 | $ | 50,000.00 | $ | 6,160.00 | ||||||||||||||||||||
Robert & Rosalyn Brody | $ | 25,000 | $ | 14,750 | $ | 10,250 | 59,000 | 41,000 | 100,000 | $ | 0.25 | $ | 19,470 | $ | - | $ | 8,610 | $ | 28,080 | $ | 25,000.00 | $ | 3,080.00 | ||||||||||||||||||||
TOTALS | $ | 6,700,000 | $ | 3,746,500 | $ | 206,500 | $ | 2,747,000 | 15,812,000 | 10,988,000 | 26,800,000 | $ | 4,945,380 | $ | 256,060 | $ | 2,307,480 | $ | 7,508,920 | $ | 6,700,000 | $ | 808,920 | ||||||||||||||||||||
$ | 6,700,000 |
[A] | [B] | [C] | [D] | [E] = [A x $0.33] | [F] = [A x $0.31] | [G] = [B x $0.21] | [H] = [E + F + G] | [I] = [C x D] | [J] = [H - I] | ||||||||||||||||||||||
$ 0.33 | $ 0.31 | $ 0.21 | MARKET PRICE | ||||||||||||||||||||||||||||
WARRANT | CLOSING 1 | CLOSING 2 | CLOSING 3 | AGGRAGATE | TOTAL POSSIBLE SHARES | TOTAL POSSIBLE | |||||||||||||||||||||||||
CLOSING 1 & 2 | CLOSING 3 | TOTAL POSSIBLE | EXERCISE | Market Value of Securities | Market Value of Securities | Market Value of Securities | MARKET PRICE | X | DISCOUNT TO THE | ||||||||||||||||||||||
Selling Stockholder | WARRANTS | WARRANTS | SHARES | PRICE (FIXED) | Underlying WARRANTS | Underlying WARRANTS | Underlying WARRANTS | WARRANTS | EXERCISE PRICE | MARKET PRICE | |||||||||||||||||||||
Chestnut Ridge Partners, LP | 354,000 | 246,000 | 600,000 | $ | 0.30 | $ | 116,820 | $ | - | $ | 51,660 | $ | 168,480 | $ | 180,000 | $ | (11,520 | ) | |||||||||||||
David W. Raisbeck | 147,500 | 102,500 | 250,000 | $ | 0.30 | $ | 48,675 | $ | - | $ | 21,525 | $ | 70,200 | $ | 75,000 | $ | (4,800 | ) | |||||||||||||
MHJ Holdings Co. | 118,000 | 82,000 | 200,000 | $ | 0.30 | $ | 38,940 | $ | - | $ | 17,220 | $ | 56,160 | $ | 60,000 | $ | (3,840 | ) | |||||||||||||
Ingalls & Snyder LLC | 295,000 | 205,000 | 500,000 | $ | 0.30 | $ | 97,350 | $ | - | $ | 43,050 | $ | 140,400 | $ | 150,000 | $ | (9,600 | ) | |||||||||||||
Ingalls & Snyder LLC | 885,000 | 615,000 | 1,500,000 | $ | 0.30 | $ | 292,050 | $ | - | $ | 129,150 | $ | 421,200 | $ | 450,000 | $ | (28,800 | ) | |||||||||||||
Provco Ventures I, LP | 590,000 | 410,000 | 1,000,000 | $ | 0.30 | $ | 194,700 | $ | - | $ | 86,100 | $ | 280,800 | $ | 300,000 | $ | (19,200 | ) | |||||||||||||
Richard Molinsky | 59,000 | 41,000 | 100,000 | $ | 0.30 | $ | 19,470 | $ | - | $ | 8,610 | $ | 28,080 | $ | 30,000 | $ | (1,920 | ) | |||||||||||||
Michael H. Weiss | 295,000 | 205,000 | 500,000 | $ | 0.30 | $ | 97,350 | $ | - | $ | 43,050 | $ | 140,400 | $ | 150,000 | $ | (9,600 | ) | |||||||||||||
Michael E. Hildesley | 708,000 | 492,000 | 1,200,000 | $ | 0.30 | $ | 233,640 | $ | - | $ | 103,320 | $ | 336,960 | $ | 360,000 | $ | (23,040 | ) | |||||||||||||
Iroquois MasterFund Ltd. | 118,000 | 82,000 | 200,000 | $ | 0.30 | $ | 38,940 | $ | - | $ | 17,220 | $ | 56,160 | $ | 60,000 | $ | (3,840 | ) | |||||||||||||
Harborview MasterFund LP | 413,000 | 287,000 | 700,000 | $ | 0.30 | $ | 128,030 | $ | 60,270 | $ | 188,300 | $ | 210,000 | $ | (21,700 | ) | |||||||||||||||
LC Capital Master Fund, Ltd. | 1,180,000 | 820,000 | 2,000,000 | $ | 0.30 | $ | 389,400 | $ | - | $ | 172,200 | $ | 561,600 | $ | 600,000 | $ | (38,400 | ) | |||||||||||||
The Black Diamond Fund, LLLP | 590,000 | 410,000 | 1,000,000 | $ | 0.30 | $ | 194,700 | $ | - | $ | 86,100 | $ | 280,800 | $ | 300,000 | $ | (19,200 | ) | |||||||||||||
Scot Cohen | 118,000 | 82,000 | 200,000 | $ | 0.30 | $ | 38,940 | $ | - | $ | 17,220 | $ | 56,160 | $ | 60,000 | $ | (3,840 | ) | |||||||||||||
Alpha Capital Anstaldt | 590,000 | 410,000 | 1,000,000 | $ | 0.30 | $ | 194,700 | $ | - | $ | 86,100 | $ | 280,800 | $ | 300,000 | $ | (19,200 | ) | |||||||||||||
Mariner Tricadia Credit Strategies Master Fund, Ltd. | 236,000 | 164,000 | 400,000 | $ | 0.30 | $ | 77,880 | $ | - | $ | 34,440 | $ | 112,320 | $ | 120,000 | $ | (7,680 | ) | |||||||||||||
Mariner LDC | 59,000 | 41,000 | 100,000 | $ | 0.30 | $ | 19,470 | $ | - | $ | 8,610 | $ | 28,080 | $ | 30,000 | $ | (1,920 | ) | |||||||||||||
BEME Capital Limited | 708,000 | 492,000 | 1,200,000 | $ | 0.30 | $ | 233,640 | $ | - | $ | 103,320 | $ | 336,960 | $ | 360,000 | $ | (23,040 | ) | |||||||||||||
Paragon Capital LP | 295,000 | 205,000 | 500,000 | $ | 0.30 | $ | 97,350 | $ | - | $ | 43,050 | $ | 140,400 | $ | 150,000 | $ | (9,600 | ) | |||||||||||||
Alla Pasternack | 59,000 | 41,000 | 100,000 | $ | 0.30 | $ | 19,470 | $ | - | $ | 8,610 | $ | 28,080 | $ | 30,000 | $ | (1,920 | ) | |||||||||||||
Leon Frenkel | 59,000 | 41,000 | 100,000 | $ | 0.30 | $ | 19,470 | $ | - | $ | 8,610 | $ | 28,080 | $ | 30,000 | $ | (1,920 | ) | |||||||||||||
Robert & Rosalyn Brody | 29,500 | 20,500 | 50,000 | $ | 0.30 | $ | 9,735 | $ | - | $ | 4,305 | $ | 14,040 | $ | 15,000 | $ | (960 | ) | |||||||||||||
TOTALS | 7,906,000 | 5,494,000 | 13,400,000 | $ | 2,472,690 | $ | 128,030 | $ | 1,153,740 | $ | 3,754,460 | $ | 4,020,000 | $ | (265,540 | ) |
[A] | [B] = [Annex A column E] | [C] = [A - B] | [D] = [Annex B column J] | [E] = [Annex C column J] | [F] = [D + E] | ||||||||||||||
Maximum payments to | |||||||||||||||||||
selling stockholders | Total Possible | Total Possible | Total | ||||||||||||||||
during 36-month term | Discount of Notes | Disccount of Warrants | Possible | ||||||||||||||||
Selling Stockholder | Gross Proceeds | of the notes | Net Proceeds | to Market Price | to Market Price | Profit | |||||||||||||
Chestnut Ridge Partners, LP | $ | 300,000 | $ | 108,000 | $ | 192,000 | $ | 36,960 | $ | (11,520 | ) | $ | 25,440 | ||||||
David W. Raisbeck | $ | 125,000 | $ | 45,000 | $ | 80,000 | $ | 15,400 | $ | (4,800 | ) | $ | 10,600 | ||||||
MHJ Holdings Co. | $ | 100,000 | $ | 36,000 | $ | 64,000 | $ | 12,320 | $ | (3,840 | ) | $ | 8,480 | ||||||
Ingalls & Snyder LLC | $ | 250,000 | $ | 90,000 | $ | 160,000 | $ | 30,800 | $ | (9,600 | ) | $ | 21,200 | ||||||
Ingalls & Snyder LLC | $ | 750,000 | $ | 270,000 | $ | 480,000 | $ | 92,400 | $ | (28,800 | ) | $ | 63,600 | ||||||
Provco Ventures I, LP | $ | 500,000 | $ | 180,000 | $ | 320,000 | $ | 61,600 | $ | (19,200 | ) | $ | 42,400 | ||||||
Richard Molinsky | $ | 50,000 | $ | 18,000 | $ | 32,000 | $ | 6,160 | $ | (1,920 | ) | $ | 4,240 | ||||||
Michael H. Weiss | $ | 250,000 | $ | 90,000 | $ | 160,000 | $ | 30,800 | $ | (9,600 | ) | $ | 21,200 | ||||||
Michael E. Hildesley | $ | 600,000 | $ | 216,000 | $ | 384,000 | $ | 73,920 | $ | (23,040 | ) | $ | 50,880 | ||||||
Iroquois MasterFund Ltd. | $ | 100,000 | $ | 36,000 | $ | 64,000 | $ | 12,320 | $ | (3,840 | ) | $ | 8,480 | ||||||
Harborview MasterFund LP | $ | 350,000 | $ | 126,000 | $ | 224,000 | $ | 26,600 | $ | (21,700 | ) | $ | 4,900 | ||||||
LC Capital Master Fund, Ltd. | $ | 1,000,000 | $ | 360,000 | $ | 640,000 | $ | 123,200 | $ | (38,400 | ) | $ | 84,800 | ||||||
The Black Diamond Fund, LLLP | $ | 500,000 | $ | 180,000 | $ | 320,000 | $ | 61,600 | $ | (19,200 | ) | $ | 42,400 | ||||||
Scot Cohen | $ | 100,000 | $ | 36,000 | $ | 64,000 | $ | 12,320 | $ | (3,840 | ) | $ | 8,480 | ||||||
Alpha Capital Anstaldt | $ | 500,000 | $ | 180,000 | $ | 320,000 | $ | 61,600 | $ | (19,200 | ) | $ | 42,400 | ||||||
Mariner Tricadia Credit Strategies Master Fund, Ltd. | $ | 200,000 | $ | 72,000 | $ | 128,000 | $ | 24,640 | $ | (7,680 | ) | $ | 16,960 | ||||||
Mariner LDC | $ | 50,000 | $ | 18,000 | $ | 32,000 | $ | 6,160 | $ | (1,920 | ) | $ | 4,240 | ||||||
BEME Capital Limited | $ | 600,000 | $ | 216,000 | $ | 384,000 | $ | 73,920 | $ | (23,040 | ) | $ | 50,880 | ||||||
Paragon Capital LP | $ | 250,000 | $ | 90,000 | $ | 160,000 | $ | 30,800 | $ | (9,600 | ) | $ | 21,200 | ||||||
Alla Pasternack | $ | 50,000 | $ | 18,000 | $ | 32,000 | $ | 6,160 | $ | (1,920 | ) | $ | 4,240 | ||||||
Leon Frenkel | $ | 50,000 | $ | 18,000 | $ | 32,000 | $ | 6,160 | $ | (1,920 | ) | $ | 4,240 | ||||||
Robert & Rosalyn Brody | $ | 25,000 | $ | 9,000 | $ | 16,000 | $ | 3,080 | $ | (960 | ) | $ | 2,120 | ||||||
TOTALS | $ | 6,700,000 | $ | 2,412,000 | $ | 4,288,000 | $ | 808,920 | $ | (265,540 | ) | $ | 543,380 | ||||||
(See Note 1) |
Note 1: For purposes of this computation, we have assumed the liquidated damages would be paid for no more than 12 months. |
Percentage [(B + D) / C] | 75% | 25% |