CORRESP: A correspondence can be sent as a document with another submission type or can be sent as a separate submission.
Published on August 12, 2008
| John J. Concannon III | |
| Direct Phone: | 617.951.8874 |
| Direct Fax: | 617.951.8736 |
| jack.concannon@bingham.com | |
Via
Federal Express
August
12, 2008
Office of
the Chief Counsel
Division
of Corporation Finance
100 F
Street, NE
Washington,
DC 20549
Attn: Ms.
Rose Zukin
|
|
Re:
|
Access
Pharmaceuticals, Inc. – File No.
333-149633
|
Statement
of Reasons for Eligibility of Registration
Pursuant to Rule
415(a)(1)(i)
Dear Ms.
Zukin:
On behalf of our client, Access
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), set forth
below is the Company's response to your request for additional information
regarding the Company’s request for registration pursuant to Rule
415. In a subsequent phone conversation you requested that the
Company provide the staff (the "Staff") of the
Securities and Exchange Commission (the "Commission")
additional information pertaining to (1) why the convertible promissory notes
(the “Notes”)
listed in Table 1 attached hereto, were exchanged for shares of Series A
Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”), (2)
disclosure of the number of shares of Company Common Stock issuable upon
conversion of the Notes and the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock, and (3) a comparison of the material
terms of the Notes and the Series A Preferred Stock. For ease of
reference, the requests are printed below in bold print, followed by the
Company's responses.
1. Description
of why the Notes were exchanged for shares of Series A Preferred
Stock.
The Company is an emerging
biopharmaceutical company focused on developing products based upon its
nanopolymer chemistry technologies. Currently, the Company has one approved
product, two products in Phase 2 clinical trials and five products in
pre-clinical development. The Company has limited revenues and depends on
outside investment for funding its working capital and capital
expenditures. To further finance on-going operations, the Company
recently offered for sale shares of its newly created Series A Preferred
Stock. A total of 18 investors participated in the first closing of
the Series A preferred stock on November 7, 2007.
Pursuant to the terms of the Preferred
Stock and Warrant Purchase Agreement, dated November 7, 2007 (the “Purchase
Agreement”) all of the holders of the Notes, as a condition to the closing of
the Preferred Stock transaction were required to cancel and exchange
those Notes for shares of Series A Preferred Stock. The Note holders
agreed to this exchange to assist the Company in its sale of its Series A
Preferred Stock. The Note holders, knowing that the Company would
have a substantially more difficult time selling shares of Series A Preferred
Stock, or any other equity of the Company, if the Notes were still outstanding
and senior to the Series A Preferred Stock, agreed upon a request by the Company
(and as required by the new investors) to the exchange. As a result
of the exchange, the Note holders gave up significant seniority, including a
security interest in the assets of the Company, and other rights in an effort to
assist the Company is obtaining additional financing. Had the Note
holders not exchanged their Notes for Series A Preferred Stock, the Company
likely would not have been able to raise additional funds through the sale of
Series A Preferred Stock or through any other equity financing. At
the time of the exchange and Preferred Stock financing, the Company did not have
funds adequate to continue its planned operations.
Office of
the Chief Counsel
Division
of Corporation Finance
100 F
Street, NE
Washington,
DC 20549
August
12, 2008
Page
2
As noted in our correspondence letter
dated July 2, 2008, a total of 7,577,868 shares of the common stock issuable
upon conversion of the Notes were previously registered (see attached Table 1
for applicable registration statements). In an effort to assist the Company in
raising the additional funds it needed to meet its working capital obligations,
the holders of the Notes agreed to exchange the Notes for shares of Series A
Preferred Stock. The Notes were convertible into shares of common
stock and would have been senior in rights to the shares of Series A Preferred
Stock. However, as mentioned, the holders of the Notes agreed to this
exchange and since the common stock underlying the Notes were previously
registered, we believe they should also be entitled to register the shares on
common stock underlying the Series A Preferred Stock for which the notes were
exchanged.
2. Disclosure
of the number of shares of Common Stock issuable upon conversion of the Notes
and the number of shares of Common Stock issuable upon conversion of the Series
A Preferred Stock.
As noted in Table 2 attached hereto,
the Notes and accrued interest thereon were convertible into a total of
7,577,868 shares of Common Stock at the time they were exchanged for shares of
Series A Preferred Stock. In addition, the Series A Preferred Stock
issued in exchange for the Notes were convertible into 7,577,868 shares of
Common Stock at the time of the exchange.
3. Provide
a comparison of the material terms of the Notes and Series A Preferred
Stock.
Table 3 attached hereto contains a
summary of the material terms of the Notes and the Series A Preferred
Stock. This summary is not meant to be comprehensive and does not
modify, replace, or describe all of the actual terms of the Notes or Series A
Preferred Stock. Each of the Notes and the Certificate of Designation
were previously filed as exhibits to the Company’s periodic filings and, for
your convenience, we have attached copies of these filings to this
letter.
Office of
the Chief Counsel
Division
of Corporation Finance
100 F
Street, NE
Washington,
DC 20549
August
12, 2008
Page
3
Summary
The Company respectfully submits that
the transaction being registered under Form S-1, filed with the Commission on
March 11, 2008, is eligible to be made on a shelf basis under Rule 415(a)(1)(i),
as such securities are currently held by, or are issuable to, entities other
than the Company, none or which are subsidiaries of the Company, and to none of
which the Company is a subsidiary.
The Company wishes to register
18,170,747 shares of common stock. These shares consist of shares
underlying convertible Series A Preferred Stock, shares issuable upon the
exercise of certain Company warrants and shares issuable by the Company as
dividends on the Series A Preferred Stock, with such dividends to be issued at
the Company’s option in lieu of cash dividends. Of the total number of shares
being registered, 9,428,749 relate to shares (including warrants) issued to
three separate entities (and their affiliates) in exchange for previously issued
convertible notes, none of these entities are either a subsidiary, or the parent
of the Company:
|
1.
|
Oracle
Partners and affiliates,
|
|
2.
|
Lake
End Capital LLC and affiliates, and
|
|
3.
|
SCO
Capital Partners and affiliates.
|
The facts and circumstances surrounding
the requested registration, as highlighted through the benefit of hindsight,
indicate that this is not a primary offering. Since the initial sale
of Series A Preferred Stock on November 9, 2007, there has only been one sales
of Series A Preferred Stock. This sale was for a total of 20 shares
of Series A Preferred Stock. In addition, only three separate
entities have requested conversion of their Series A Preferred
Stock. As a result only 45 shares of Series A Preferred Stock have
been converted into 150,000 shares of common stock. Even if all of
these 150,000 shares were sold by the converting entities, it certainly does not
appear to be substantial enough to suggest that this transaction is a primary
offering.
We would also like to reiterate that a
significant number of the shares the Company is seeking to register in this
transaction (approximately 42%) are effectively shares that were already
registered in previous registration statements. The holders of the
Notes were entitled to convert those notes for shares of common
stock. Those holders have now exchanged those Notes for a new
convertible security. Since the common stock underlying the Notes
were previously registered, we believe it is appropriate to register at this
time the shares pursuant to Rule 415(a)(1)(i).
Office of
the Chief Counsel
Division
of Corporation Finance
100 F
Street, NE
Washington,
DC 20549
August
12, 2008
Page
4
Amendment
to Prior Table
In addition to the points above, we are
attaching an amended Table 1 to our response letter dated July 2, 2008 and filed
as correspondence on July 23, 2008. This table has been revised to
correct a misclassification of “Common Shares Acquired.” In the
original table, an additional 709,734 shares were included in the “Series A
Purchase” total on 11/9/2007. These shares were actually acquired
through the exchange of a note, and not a cash purchase, and should have been
included in the row titled “Series A Purchase/Exchange of Note.” This
reclassification does not change the number of shares the Company is seeking to
register.
If you
have any questions regarding this matter or require any additional information,
please contact me at (617) 951-8874. If the Staff disagrees with any
of the conclusions set forth above, please contact the undersigned prior to the
issuance of a written response.
| Very truly yours, | |
| /s/ John J. Concannon | |
| John J. Concannon III, Esq. | |
| Bingham McCutchen, LLP |
cc: Mr.
Jeffrey B. Davis
Mr. Stephen B. Thompson
|
Table
1
|
|
Note
holder
|
Principle
Amount
|
Original
Date of Note
|
Original
Interest Rate
|
Original
Converion Price
|
Prior
common stock registration number
|
|
|
Beach
Capital LLC
|
$ 500,000
|
2/16/2006
|
7.50%
|
$0.22
|
(1)
|
333-135734
|
|
Lake
End Capital LLC
|
$ 500,000
|
2/16/2006
|
7.50%
|
$0.22
|
(1)
|
333-135734
|
|
Lake
End Capital LLC
|
$ 100,000
|
10/24/2006
|
7.50%
|
$0.22
|
(1)
|
N/A
|
|
Lake
End Capital LLC
|
$ 100,000
|
12/6/2006
|
7.50%
|
$0.22
|
(1)
|
N/A
|
|
SCO
Capital Partners LLC
|
$ 4,000,000
|
2/16/2006
|
7.50%
|
$0.22
|
(1)
|
333-135734
|
|
SCO
Capital Partners LLC
|
$ 400,000
|
10/24/2006
|
7.50%
|
$0.22
|
(1)
|
N/A
|
|
SCO
Capital Partners LLC
|
$ 400,000
|
12/6/2006
|
7.50%
|
$0.22
|
(1)
|
N/A
|
|
Oracle
Institutional Partners LP
|
$ 698,500
|
9/13/2000
|
7.00%
|
$5.50
|
(2)
|
333-135734
& 333-92210
|
|
Oracle
Offshore Ltd
|
$ 132,000
|
9/13/2000
|
7.00%
|
$5.50
|
(2)
|
333-135734
& 333-92210
|
|
Oracle
Partners, LP
|
$ 2,524,500
|
9/13/2000
|
7.00%
|
$5.50
|
(2)
|
333-135734
& 333-92210
|
|
SAM
Oracle Investments, Inc.
|
$ 660,000
|
9/13/2000
|
7.00%
|
$5.50
|
(2)
|
333-135734
& 333-92210
|
| Notes: |
| (1) - Notes were convertible at $1.10 per share at the time of exchange. |
| (2) - Notes were convertible at $1.00 per share at the time of exchange, however |
| pursuant to the terms of the exchange these notes were exchanged for Series A |
| Preferred Stock assuming a conversion rate of $3.00 per share. |
|
Table
2
|
||||||||
|
Note
holder
|
Amount
|
Notes
Convertible
Into
Common
Stock
|
||||||
|
SCO
Capital LLC (1)
|
Principal
|
$ | 4,800,000 | 4,363,636 | ||||
|
Interest
due
|
585,750 | 532,500 | ||||||
|
Total
SCO Capital LLC Notes
|
$ | 5,385,750 | 4,896,136 | |||||
|
Lake
End Capital LLC (1)
|
Principal
|
700,000 | 636,363 | |||||
|
Interest
due
|
80,709 | 73,371 | ||||||
|
Total
Lake End Capital LLC Notes
|
$ | 780,709 | 709,734 | |||||
|
Beach
Capital LLC (1)
|
Principal
|
500,000 | 454,545 | |||||
|
Interest
due
|
65,729 | 59,754 | ||||||
|
Total
Beach Capital LLC Notes
|
$ | 565,729 | 514,299 | |||||
|
Oracle
Related Notes (2)
|
Principal
|
4,015,000 | 1,338,333 | |||||
|
Interest
due
|
358,104 | 119,366 | ||||||
|
Total
Oracle Capital LLC Notes
|
$ | 4,373,104 | 1,457,699 | |||||
|
Total
|
$ | 11,105,292 | 7,577,868 | |||||
| Notes: |
| (1) - Comprised on 7.5% notes convertible at $1.10 per share at the time of exchange. |
| (2) - Comprised of 7.7% notes (originally 7% notes) convertible at $1.00 per share at |
| the time of exchange, however pursuant to the terms of the exchange these notes |
| were exchanged for Series A Preferred Stock assuming a conversion rate of $3.00 |
| per share. |
Table
3
|
7.0% (Subject to
Adjustment) Convertible
Promissory Notes
(collectively, the “7.0%
Notes”)2
|
7.5 % Secured
Convertible Promissory
Notes (collectively, the
“7.5% Notes”)1
|
Series
A Cumulative Convertible
Preferred
Stock
(the
“Series A Preferred Stock”)
|
||||||||
|
Interest
& Repayment
/Dividends
|
Company
shall pay interest at the rate of 7.0% per annum. Pursuant to
the terms of the note, the rate subsequently increased to 7.7% per
annum. Rate increases to 10% per annum on any overdue
amounts.
|
Company
shall pay interest at the rate of 7.5% per annum, compounded
quarterly.
|
Company
shall pay cumulative dividends at the rate per share of 6% per annum,
payable semi-annually on June 30 and December 31 of each
year.
Dividends
may be paid in cash or, if certain conditions are met, shares of the
Company’s Common Stock. Such conditions to payment of dividends
in shares of Common Stock includes that such shares are covered by an
effective registration statement.
Entitled
to receive any dividends or distributions (other than dividends payable
solely in additional Common Stock) declared by the Board and paid to the
holders of Common Stock, pari passu on an as-converted
basis.
|
|||||||
|
Events
of
Default
|
Holder
may declare 7.0% Note immediately due and payable.
Upon
an event of default as a result of bankruptcy or insolvency immediately
due and payable without any declaration of a holder.
|
To
the extent permitted by law, the Company will pay interest at the rate of
12% per annum, payable on demand, on the outstanding principal balance of
the note from the date of the event of default until payment in
full.
|
Dividends
not paid within three (3) trading days of a dividend payment date shall
continue to accrue and shall be entitled to a late fee of 18% per
annum.
|
|||||||
|
Voting
Rights
|
N/A
|
N/A
|
Votes
together, on an as converted basis, with the holders of Common Stock as a
single class.
Subject
to a beneficial ownership cap of 4.99%. Cap may be waived by
the holder of Series A Preferred Stock.
|
|||||||
Office of
the Chief Counsel
Division
of Corporation Finance
100 F
Street, NE
Washington,
DC 20549
August
12, 2008
Page
2
|
Liquidation
Rights
|
Unsecured
creditor in liquidation or bankruptcy with priority over
equity.
|
The
7.5% Notes are secured pursuant to the terms of a separate security
agreement.
Company
shall repay in full the entire principal balance then outstanding, plus
all accrued and unpaid interest in the event of a sale or complete
liquidation of the Company, unless the successor or acquiring corporation
is to assume the 7.5% Notes.
|
Junior
to any debt in any liquidation or bankruptcy. Upon a liquidation,
dissolution or winding up of the Company, prior to any distributions to
holders of the Common Stock or any other class of preferred stock, the
holders of the Series A Preferred Stock shall be entitled to receive
payment out of the Company’s assets in an amount equal to the greater of
(i) the “Liquidation Preference” for the Series A Preferred Stock
($10,000.00 per share of Series A Preferred Stock), plus any accumulated
and unpaid dividends thereon (whether or not declared), or (ii) the cash
or other property distributable with respect to the shares of Common Stock
into which shares of Series A Preferred Stock, including any accrued
dividends thereon, could have been converted immediately prior to such
payment.
|
|||||||
|
Consent
Rights
|
N/A
|
N/A
|
So
long as 20% of the shares of Series A Preferred Stock remain outstanding,
the consent of the holders of at least 66% of the Series A Preferred Stock
at the time outstanding shall be necessary for effecting or validating any
major corporate actions.
|
Office of
the Chief Counsel
Division
of Corporation Finance
100 F
Street, NE
Washington,
DC 20549
August
12, 2008
Page
3
|
Conversion
other than upon Merger, Consolidation or Disposition of
Assets
|
Optional
Conversion: The holder has the option, at any time on or
after September 13, 2002 and before the close of business on September 13,
2005, to convert a 7.0% Note into fully paid and nonassessable shares of
the Company’s Common Stock. The 7.0% Notes shall be convertible
at the rate of 1,000 shares of Common Stock for each $5,500 principal
amount surrendered (the “Conversion Rate”).
Pursuant
to the terms of amendment on November 3, 2005 the conversion price of the
7.0% Note was subsequently changed from $5.50 to $1.00.
The
Conversion Rate shall be adjusted upon the payment of a dividend or other
distribution of a class stock payable in shares of Common Stock, or if the
Company issues rights, options or warrants to all holders of its Common
Stock entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the current market price per share of the
Common Stock, or if the Company by dividend or otherwise issues to holders
of Common Stock evidences of indebtedness, shares of any class of capital
stock, or other property, or upon the combination or consolidation of the
outstanding shares of Common Stock by reclassification or otherwise into a
greater or lesser number of
|
Optional
Conversion: The holder has the option, at any time, to
convert the principal amount plus accrued and unpaid interest thereon into
such number of fully paid and non-assessable shares of the Company’s
Common Stock as is determined by dividing (i) the portion of the principal
amount to be converted plus accrued and unpaid interest thereon by (ii)
the conversion rate which shall initially be $0.22. Such rate
subject to adjustment upon the issuance of dividends on common stock which
are paid in common stock, or the combination or consolidation of the
outstanding shares of common stock by reclassification or otherwise into a
greater or lesser number of shares of common stock. The
conversion rate was subsequently amended to $1.10 pursuant to a 1 for 5
stock split.
Mandatory
Conversion: Upon the election of the Company following
the occurrence of certain conversion triggering events, including an
effective registration statement, a minimum trading price and the
availability of a sufficient number of authorized and unissued shares of
Common Stock.
Optional
and Mandatory Conversion are subject to a Beneficial Ownership Cap (as
defined in the 7.5% Notes) of 4.99%.
|
Optional
Conversion: Holders may convert all or any lesser
portion of such holder’s shares of Series A Preferred Stock into such
number of fully paid and non-assessable shares of Common Stock as is
determined by dividing (i) the aggregate liquidation preference plus
accrued and unpaid dividends thereon by (ii) $3.00 per share subject to
adjustment. Dollar amount is subject to full adjustment to the
price of any additional the issuances of shares of Common Stock or common
stock equivalents at a price below $3.00 per share. Price is
also subject to additional adjustments for the issuance of dividends on
Common Stock which are paid in Common Stock, or the combination or
consolidation of the outstanding shares of Common Stock by
reclassification or otherwise into a greater or lesser number of shares of
Common Stock.
Mandatory Conversion:
The Company may, with the prior written consent of the holders of not less
than a majority of the Series A Preferred Stock at such time outstanding,
and following the occurrence of a conversion triggering event consisting
of an effective registration statement and a minimum daily market price or
a qualified financing with aggregate proceeds of at least $10,000,000,
convert all of the shares of Series A Preferred Stock into such number of
fully paid and non-assessable shares of Common Stock
Optional
and Mandatory Conversion are subject to a Beneficial Ownership Cap of
4.99%.
|
Office of
the Chief Counsel
Division
of Corporation Finance
100 F
Street, NE
Washington,
DC 20549
August
12, 2008
Page
4
|
shares
of Common Stock, or if the Company makes a cash distribution, or if the
Company makes an excess purchase payment (pursuant to a tender offer for
shares of its Common Stock), or as the Company deems advisable in order to
avoid or diminish any income tax to any holders of shares of Common Stock
resulting from any dividend or distribution of stock or issuance of rights
or warrants or from any event treated as such for income tax
purposes.
|
||||||||||
|
Conversion
upon Merger, Consolidation or Disposition of Assets
|
The
surviving entity shall deliver to the holders of the 7.0% Notes a
supplemental agreement providing that such holder shall have the right
thereafter, during the period a 7.0% Note is convertible, to convert a
7.0% Note into the securities, cash and property receivable upon the
consolidation, merger or other disposition into which the note may have
been converted immediately prior to such event, subject to certain
qualifications.
|
If
a successor or acquiring entity in a sale transaction, or if an entity
different from the successor or acquiring entity, the entity whose capital
stock or assets the holders of the Common Stock are entitled to receive as
a result of such sale transaction, (a) is to assume the 7.5% Notes and the
transaction documents and (b) the assuming entity is a publicly traded
corporation, the assuming corporation shall expressly assume the due and
punctual observance and performance of each and every covenant and
condition contained in the 7.5% Notes and the transaction
documents.
|
Upon
a change of control pursuant to which shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities of the successor or acquiring corporation are to be received by
the holders of the Company’s Common Stock, the successor corporation shall
expressly assume the due and punctual observance and performance of each
and every covenant and condition to be performed and observed by the
Company pursuant to, and all obligations and liabilities contained in, the
Certificate of Designation.
|
|||||||
|
Participation
Rights
|
N/A
|
N/A
|
Entitled
to participate, up to such holder’s pro rata amount with respect to new
issuance by the Company of any future equity or equity-linked securities
or debt convertible into equity or in which there is an equity component,
on the same terms and conditions as offered to the other purchasers
thereof.
|
|||||||
Office of
the Chief Counsel
Division
of Corporation Finance
100 F
Street, NE
Washington,
DC 20549
August
12, 2008
Page
5
|
Prepayment/
Redemption
|
Company Option: Subject
to redemption at any time on or after December 31, 2001 (the “Redemption
Commencement Date”), at the election of the Company, at a redemption price
of 100% of the principal amount thereof, together with accrued interest;
provided that the 7.0% Notes may not
be redeemed on or after September 30, 2001 unless the closing price of the
Company exceeds 1.5 times the conversion price of $5.50 for any period of
10 consecutive trading days commencing on or after August 30, 2001 and
ending not less than two trading days prior to the Company’s giving notice
of such redemption to the holder thereof.
Holder’s
Option: Upon a change in control, the holder of shall
have the right, subject to the holders of the senior indebtedness to
require the Company to repurchase the 7.0% Note, at a purchase price equal
to 105% of the principal amount of the note, plus interest accrued to the
repurchase date. The Company may repurchase the note in cash
or, upon fulfillment by the Company of certain conditions, by delivery of
shares of Common Stock.
|
Company
may not prepay the outstanding principal or interest prior to the maturity
date without the written consent of the Payee, unless the Company provides
notice at least 60, but not more than 90, days prior to the date on which
the Company intends to make such prepayment.
|
Holder
may demand that its shares of Series A Preferred Stock be redeemed upon
any willful refusal by the Company to convert such holder’s Series A
Preferred Stock..
The
Company shall pay cash for each such share to be redeemed an amount equal
to the greater of (i) all accrued but unpaid dividends as of the date on
which demand for redemption is made, plus 100% of the liquidation
preference, or (ii) the total number of shares of Common Stock into which
such share is convertible, multiplied by the current market price at the
time of the redemption triggering event.
|
|
Subordination
|
Subordinated
in right of payment to the prior payment in full of all senior
indebtedness.
|
N/A
|
N/A
|
|||||||
|
Registration
Rights
|
Entitled
to resale registration rights.
|
Entitled
to resale registration rights.
|
Entitled
to resale registration rights. Stock dividends paid in lieu of
cash dividends shall be registered unless holder of Series A Preferred
Stock may sell such dividend shares pursuant to Rule 144.
|
Amended
Table 1 to Correspondence dated July 2, 2008
|
Event
Type
|
Form
of Consideration
|
Date
Acquired
|
Common
Shares Acquired
|
Price
per Share
|
Consideration
Paid
|
Market
Price
|
Market
Value
|
In-the-Money/(out-of-the-Money)
value of shares acquired
|
||
|
Prior
Placement Warrants
|
Unexercised
Warrant
|
10/26/2006
|
386,364
|
$ 1.32
|
N/A
|
$ 1.10
|
$ 425,000
|
(85,000)
|
||
|
Prior
Placement Warrants
|
Unexercised
Warrant
|
12/6/2006
|
386,364
|
$ 1.32
|
N/A
|
$ 1.80
|
$ 695,455
|
185,455
|
||
|
Sub-Total
Prior Warrants being Registered
|
772,728
|
1,120,456
|
100,455
|
|||||||
|
Series
A Purchase
|
Cash
|
11/9/2007
|
3,179,996
|
$ 3.00
|
$ 9,540,001
|
$ 3.11
|
$ 12,097,060
|
427,870
|
||
|
Series
A Purchase/Exchange of Note
|
Exchange
of Note
|
11/9/2007
|
7,577,868
|
$ 3.00
|
$ 21,468,927
|
(1)
|
$ 3.11
|
$ 21,359,897
|
755,495
|
|
|
Series
A Purchase Warrant
|
Unexercised
Warrant
|
11/9/2007
|
3,649,880
|
$ 3.50
|
N/A
|
(2)
|
$ 3.11
|
$ 11,351,127
|
(1,423,453)
|
|
|
Series
A Purchase
|
Cash
|
2/4/2008
|
908,331
|
$ 3.00
|
$ 2,725,000
|
$ 2.80
|
$ 2,543,327
|
(181,666)
|
||
|
Series
A Purchase - Warrant
|
Unexercised
Warrant
|
2/4/2008
|
499,584
|
$ 3.50
|
N/A
|
(2)
|
$ 2.80
|
$ 1,398,835
|
(349,709)
|
|
|
Other
- Paid in Kind Dividends
|
Possible
dividends (value at time of dividend date equal to 20 day moving
average)
|
N/A
|
1,582,360
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
||
|
Total
|
18,170,747
|
$ 33,733,928
|
$ 49,870,701
|
(3)
|
$ (671,009)
|
|||||
Notes:
(1)
- - The Company is exchanging convertible notes for shares of Series A Convertible
Preferred Stock. The
9,121,179
shares of Common Stock underlying these notes were previously registered (see
response Number 12
to
the Comment Letter).
(2)
- - Included placement agent warrants listed on Table 3.
(3)
- - The Company received $14,254,800 of the "Market Value" in the form of
cash. The remainder is comprised
of
exchanged convertible notes and warrants.