As filed with the Securities and Exchange Commission on October 27, 2010

Registration No. 333-169661

 

 

 

North Carolina		61-1455265
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

 

 

 

 

 

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (“Securities Act”), other than securities offered only in connection with dividend or reinvestment plans,) check the following box. þ

 

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment  filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

 

 

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller Reporting Company þ
				(Do not check if a smaller reporting company)

 

Proposed Maximum

Proposed Maximum

Title of Each Class of Securities to be

Amount to be

Offering Price Per

Aggregate Offering

Amount of

Registered

Registered(1)

Share(2)

Price

Registration Fee(3)

Common Stock, No par value per share

2,247,843

$

0.73

$

1,640,925

$

117.00

(1)	The shares being registered include 2,247,843 shares issuable to Lincoln Park Capital Fund, LLC (“LPC”), including (a) 237,500 outstanding shares of common stock already issued to LPC, (b) 100,000 shares issuable pursuant to warrants to purchase common stock at an exercise price of $1.10 per share, (c) 1,730,343 additional shares to be issued on various dates at various prices pursuant to terms of that certain Purchase Agreement dated June 24, 2010, as amended and restated on September 27, 2010, between us and Lincoln Park Capital Fund, LLC, or the LPC Purchase Agreement, (d) up to 180,000 additional shares that may be issued to LPC pursuant to the terms of the LPC Purchase Agreement and (e) such indeterminate number of additional shares of common stock issuable for no additional consideration by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration, which results in an increase in the number of outstanding shares of our common stock. In the event of a stock split, stock dividend or similar transaction involving our common stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act of 1933.
(2)	Estimated solely for the purpose of computing the registration fee in accordance with Rules 457(c) of the Securities Act based on the average of the high and low prices of  the shares of common stock of the Registrant reported on the NASDAQ Capital Market on October 26, 2010.
(3)	Previously paid.

 

 

 

 

 

SUBJECT TO COMPLETION, DATED OCTOBER 27, 2010

 

 

 

2,247,843 Shares of Common Stock

 

This prospectus relates to the sale of up to 2,247,843 shares of the common stock, no par value, of PokerTek, Inc. (referred to herein as the “Registrant,” the “Company,” “PokerTek,” or “we,” “us,” or “our”) by the “selling shareholder,” Lincoln Park Capital Fund, LLC (“LPC”). Please refer to “Selling Shareholder” beginning on page 29.  The prices at which LPC may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive proceeds from the sale of our shares by LPC.

Our common stock is registered under Section 12(g) of the Securities Exchange Act of 1934 and quoted on the NASDAQ Capital Market under the symbol “PTEK.” On October 15, 2010, the last reported sale price for our common stock as reported on the NASDAQ Capital Market was $0.54 per share. We have applied to have the shares of common stock offered pursuant to this prospectus approved for listing on the NASDAQ Capital Market.

Investing in our common stock involves certain risks. See “Risk Factors” beginning on page 4 for a discussion of these risks.

 

 

 

The date of this prospectus is                 , 2010.

 

 

	Page
Prospectus Summary	1
Summary Financial and Operating Information	3
Risk Factors	4
Special Note Regarding Forward-Looking Statements	15
Use of Proceeds	15
Plan of Distribution	15
Description of Securities to be Registered	17
Interests of Named Experts and Counsel	18
Description of Business	18
Description of Property	25
Legal Proceedings	25
Market for Common Equity and Related Stockholder Matters	25
The Lincoln Park Capital Transaction	26
Selling Shareholder	29
Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Executive Compensation	43
Security Ownership of Certain Beneficial Owners and Management	54
Transactions with Related Persons, Promoters and Certain Control Persons	55
Disclosure of Commission Position on Indemnification of Securities Act Liabilities	56
Where You Can Find More Information	57
Financial Statements	F-1

You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you with information that is different.from that which is contained in this prospectus. This prospectus may only be used where it is legal to sell these securities. The information in this prospectus may only be accurate on the date of this document, regardless of the time of delivery of this prospectus or any sale of securities. Our business, financial condition or results of operations may have changed since that date. This prospectus contains important information about us that you should read and consider carefully before you decide whether to invest in our common stock. If you have any questions regarding the information in this prospectus, please contact Mark D. Roberson, our Chief Executive Officer, at: PokerTek, Inc., 1150 Crews Road, Suite F, Matthews, NC 28105, or by phone at (704) 849-0860.

 

 

 

 

 

 

 

Through our amusement business, we market our Heads-Up Challenge™ product to coin-op amusement operators, distributors, bars, and restaurants. Heads-Up Challenge is an innovative amusement platform that enables two players to compete head-to-head against each other for entertainment purposes in non-gambling venues such as bars and restaurants. We introduced Heads-Up Challenge in late 2007 as a Texas Hold’em Poker amusement game and later added Bocce as a second game on the platform. For Heads-Up Challenge, we place product on a recurring license basis directly to operators and bars in the United States. We continued to sell the product in international markets and in certain other circumstances in the United States; however, the market for amusement products continues to be challenging. In light of the downturn in the Amusement industry and the significant decline in demand and pricing power for our Heads-Up Challenge, in August 2010 we approved a plan to discontinue our amusement business to focus on our higher-margin gaming business.

 

On June 24, 2010, we executed a purchase agreement, as amended and restated on September 27, 2010 (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with LPC pursuant to which LPC has purchased and we have issued 100,000 shares of our common stock together with warrants to purchase an equivalent number of shares at an exercise price of $1.10 per share, for total consideration of $100,000. The warrants have a term of five years. Under the Purchase Agreement, we also have the right to sell to LPC up to an additional $4,900,000 of our common stock at our option as described below. The original purchase agreement dated June 24, 2010 was amended and restated on September 27, 2010 to make clear that LPC does not have the ability to make an investment decision after the filing of this registration statement and that LPC is irrevocably bound to purchase the securities underlying the put. In addition, under the amended and restated purchase agreement LPC does not have the right to terminate the agreement upon the occurrence of an event of default.

 

Pursuant to the Registration Rights Agreement, we have filed a registration statement that includes this prospectus with the Securities and Exchange Commission (the “SEC”) covering the shares that have been issued or may be issued to LPC under the Purchase Agreement. We do not have the right to commence any additional sales of our shares to LPC until the SEC has declared effective the registration statement of which this prospectus is a part. Thereafter, over approximately 30 months, generally we have the right to direct LPC to purchase up to an additional $4,900,000 of our common stock in amounts up to $50,000 as often as every two business days under certain conditions. We can also accelerate the amount of our stock to be purchased under certain circumstances. No sales of shares may occur below $0.25 per share. The purchase price of the shares will be based on the market prices of our shares at the time of sale as computed under the Purchase Agreement without any discount. We may at any time in our sole discretion terminate the Purchase Agreement without fee, penalty or cost upon one business day’s notice. We issued 137,500 shares of our stock to LPC as a commitment fee for entering into the agreement, and we may issue up to 180,000 shares pro rata as LPC purchases up to an additional $4,900,000 of our stock as directed by us.

 

As of October 15, 2010, there were 15,068,080 shares outstanding (6,981,030 shares held by non-affiliates). The 2,247,843 offered shares consist of 100,000 shares we have issued, and 100,000 shares underlying an accompanying warrant, which together we have sold to LPC for $100,000; 1,730,343 additional shares that we may sell to LPC; 137,500 shares we have issued as a commitment fee; and 180,000 shares that we may issue as a commitment fee pro rata as up to an additional $4,900,000 of our stock is purchased by LPC. If all of the 2,247,843 shares offered by LPC hereby was issued and outstanding as of the date hereof, such shares would represent 13.16% of the total common stock outstanding or 25% of the non-affiliates shares outstanding, as adjusted, as of the date hereof.

 

Under the Purchase Agreement and the Registration Rights Agreement, we are required to register and have included in the offering pursuant to this prospectus (1) 237,500 shares which have already been issued; (2) an additional 180,000 shares which we may issue in the future as a commitment fee pro rata as we receive the $4,900,000 of future funding; (3) at least 1,730,343 shares which we may sell to LPC after this registration statement is declared effective; and (4) 100,000 shares underlying a warrant. All 2,247,843 shares, or 13.16% of our outstanding shares of common stock on October 15, 2010, are being offered pursuant to this prospectus. Under the Purchase Agreement, we have the right but not the obligation to sell more than the 2,247,843 shares to LPC. As of the date hereof, we do not currently have any plans or intent to sell to LPC any shares beyond the 2,247,843 shares offered hereby. However, if we elect to sell more than the 2,247,843 shares (which we have the right but not the obligation to do), we must first register under the Securities Act any additional shares we may elect to sell to LPC before we can sell such additional shares. This could cause substantial dilution to our shareholders. In addition, in the event that we decide to issue more than 19.99% of our outstanding shares of common stock to LPC, we would first be required to seek shareholder approval in order to be in compliance with the NASDAQ Capital Market rules. The number of shares ultimately offered for sale by LPC is dependent upon the number of shares purchased by LPC under the Purchase Agreement.

 

 

Common stock to be offered		2,247,843 shares consisting of:
by the selling shareholder
		●  100,000 shares issued;
		●  1,730,343 additional shares issuable to LPC under the Purchase Agreement;
		●  137,500 initial commitment shares issued to LPC; and
		●  100,000 shares issuable to LPC under the Warrants.
		●  180,000 additional commitment shares to be issued pro rata to LPC.
Common stock outstanding prior to this offering		15,068,080 shares (including 237,500 shares already issued to LPC)
Use of Proceeds		We will receive no proceeds from the sale of shares of common stock by LPC in this offering. However, we may receive up to an additional $4,900,000 under the Purchase Agreement with LPC pursuant to the sale of 1,730,343 shares of our common stock. Any proceeds that we receive from sales to LPC under the Purchase Agreement will be used to fund our working capital needs and our new business strategy. See “Use of Proceeds.”
NASDAQ Capital Market symbol		PTEK

 

 

We have experienced net losses for each quarterly and annual period since our inception in August 2003. We have incurred annual operating losses of $(5,278,390), $(7,281,583) and $(13,414,216), respectively, during the 2009, 2008 and 2007 fiscal years. As a result, at June 30, 2010 we had an accumulated deficit of $(42,896,154). We have incurred losses from operations of $(5,674,211) and $(7,638,773) for the fiscal years ending 2009 and 2008. We may continue to incur losses and cash flow deficits. It is possible that we may not generate significant revenues or profits in the foreseeable future or at all. Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis, and our failure to do so would adversely affect our business and the market price of our common stock and may require us to raise additional capital, which may not be available on terms acceptable to us or at all.

 

We may direct LPC to purchase up to an additional $4,900,000 worth of shares of our common stock under our agreement over a 30 month period generally in amounts of up to $50,000 every 2 business days. However, LPC shall not have the right or the obligation to purchase any shares of our common stock on any business day that the market price of our common stock is less than $0.25. Since we are registering 1,730,343 additional purchase shares for sale by LPC pursuant to this prospectus, the selling price of our common stock to LPC will have to average at least $2.83 per share for us to receive the maximum proceeds of $4,900,000. The price of our common stock has ranged from a high of $6.30 to a low of $0.37 over the preceding 24 month period. Since December 31, 2008, the highest reported sales price of our common stock was $1.82, which is below the $2.83 price required to have access to the full $4,900,000.  Accordingly, the market price for our common stock would have to rise considerably to have access to the full $4,900,000.

We chose $4,900,000 as the maximum purchase amount based on historical prices over the past two years and in anticipation that our share price may react favorably to improving business performance over the term of the agreement.  Our historical stock price has been volatile and we cannot predict where our stock may trade in the future.  If our stock price does not rise considerably from current levels, we will not have access to the full $4,900,000. For example, assuming a share price of $0.54 per share (the closing price of our common stock on October 15, 2010), we would only be able to raise $934,385 by issuing the 1,730,343 additional purchase shares being registered in this registration statement, which may impair our ability to grow the business or we may have to seek alternative financing arrangements that may be on less attractive terms.

Subject to approval by our Board of Directors, we have the right but not the obligation to sell more than 2,247,843 to LPC. In the event we elect to sell more than 2,247,843 shares offered hereby, we will be required to file a new registration statement and have it declared effective by the SEC. In addition, in the event that we decide to issue more than 19.99% of our outstanding shares of common stock to LPC, we would first be required to seek shareholder approval in order to be in compliance with the NASDAQ Capital Market rules.

 

The extent we rely on LPC as a source of funding will depend on a number of factors, including the prevailing market price of our common stock, cash provided by or used in our operations and the extent to which we are able to secure working capital from other sources. LPC shall not have the right or the obligation to purchase any shares of our common stock on any business days that the market price of our common stock is less than $0.25. If obtaining sufficient funding from LPC were to prove unavailable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working capital needs. Even if we sell all $5,000,000 under the purchase agreement to LPC, we may still need additional capital to fully implement our business, operating and development plans. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could have a material adverse effect on our business, operating results, financial condition and prospects.

 

 

●	general economic conditions;

 

●	levels of disposable income of casino patrons;

 

●	downturn or loss in popularity of the gaming industry in general, and table and slot games in particular;

 

 

●	the relative popularity of entertainment alternatives to casino gaming;

 

●	the growth and number of legalized gaming jurisdictions;

 

●	local conditions in key gaming markets, including seasonal and weather-related factors;

 

●	increased transportation costs;

 

●	acts of terrorism and anti-terrorism efforts;

 

●	changes or proposed changes to tax laws;

 

●	increases in gaming taxes or fees;

 

●	legal and regulatory issues affecting the development, operation and licensing of casinos;

 

●	the availability and cost of capital to construct, expand or renovate new and existing casinos;

 

●	the level of new casino construction and renovation schedules of existing casinos; and

 

●	competitive conditions in the gaming industry and in particular gaming markets, including the effect of such conditions on the pricing of our games and products.

 

 

 

 

 

 

 

 

 

 

●

increase our vulnerability to adverse economic and industry conditions, including interest rate fluctuations, because a portion of our borrowings are at variable rates of interest; require us to dedicate future cash flows to the repayment of debt. This could reduce the availability of cash to fund working capital, capital expenditures or other general corporate purposes;

 

●	limit our flexibility in planning for, or reacting to, changes in our business and industry; and

 

●	limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants contained in our debt agreements.

 

 

 

 

 

 

 

 

 

To manufacture our products, we purchase components from independent manufacturers, many of whom are located in the Far East. An extended interruption in the supply of these products or suitable substitute inventory would disrupt our operations, which could have a material adverse effect on our business, financial condition and results of operations.

 

For a number of our key inventory components, we rely on a single supplier. We are currently transitioning the manufacturing of more of our components to this supplier, increasing our dependence. We cannot estimate with any certainty the length of time that would be required to establish alternative supply relationships, or whether the quantity or quality of materials that could be so obtained would be sufficient. Furthermore, we may incur additional costs in sourcing materials from alternative producers. The disruption of our inventory supply, even in the short term, could have a material adverse effect on our business, financial condition and results of operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

Gehrig H. White, our Vice Chairman of the Board of Directors and beneficial owner of approximately 13.5% of our common stock, has disclosed in applications for the determination of suitability filed with gaming authorities that the IRS has recently completed an examination of his 2000 and 2001 federal individual income tax returns. The IRS previously issued an examination report showing a proposed income tax deficiency for Mr. White’s 2000 federal income tax return of $410,215 (plus additional interest and penalties attributable to that underpayment of tax) based on a disallowance of certain deductions for charitable contributions that Mr. White made to a foundation he established and mortgage interest that Mr. White paid to Legacy Capital, LLC, an affiliate of Merrill Scott. Merrill Scott is an investment advisor that was placed under receivership in 2002 by the SEC for violations of a variety of federal securities laws in connection with fraud and misappropriations of client funds by the firm through a scheme in which it obtained funds from its clients seeking above-market returns and other benefits. Mr. White is currently appealing the IRS’s proposed income tax deficiency. The IRS examination of Mr. White’s 2001 federal tax return resulted in the issuance of a notice of deficiency for additional income tax in the amount of $75,445 (plus additional interest and penalties attributable to that underpayment of tax). In his original 2001 federal tax return, Mr. White claimed deductions relating to a partnership investment he made after receiving advice from a law firm. The law firm subsequently informed Mr. White that the IRS had challenged the tax treatment of the investment structure and that he should file an amended return. Mr. White then filed an amended federal income tax return for 2001 eliminating the deductions relating to the partnership investment. He also paid the federal income taxes resulting from the elimination of such deductions. The IRS notice of deficiency assessed additional income taxes as the result of disallowing deductions for tax advice in connection with the partnership investment transaction and an accuracy penalty in connection with the losses claimed with respect to that investment. These amounts have been paid, which completes the audit process for Mr. White’s 2001 return. Due to the broad discretionary powers of gaming authorities, it is unknown what effect the IRS examinations of Mr. White’s federal income tax returns may have on Mr. White’s applications for a determination of suitability.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In connection with entering into the Purchase Agreement, we authorized the sale to LPC of up to 2,247,843 shares of our common stock. The number of shares ultimately offered for sale by LPC under this prospectus is dependent upon the number of shares purchased by LPC under the agreement. The purchase price for the common stock to be sold to LPC pursuant to the purchase agreement will fluctuate based on the price of our common stock. All 2,247,843 shares registered in this offering are expected to be freely tradable. It is anticipated that shares registered in this offering will be sold over a period of up to 30 months from the date of this prospectus. Depending upon market liquidity at the time, a sale of shares under this offering at any given time could cause the trading price of our common stock to decline. We can elect to direct purchases in our sole discretion, but no sales may occur if the price of our common stock is below $0.25, and, therefore, LPC may ultimately purchase all, some or none of the 1,730,343 additional shares of common stock not yet issued but registered in this offering. After it has acquired such shares, LPC may sell all, some or none of such shares. Therefore, sales to LPC by us under the agreement may result in substantial dilution to the interests of other holders of our common stock. The sale of a substantial number of shares of our common stock under this offering, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. However, we have the right to control the timing and amount of any sales of our shares to LPC, and the agreement may be terminated by us at any time at our discretion without any cost to us.

 

 

 

 

 

 

 

 

 

 

As of October 15, 2010, our executive officers, directors, and affiliates owned shares representing approximately 53.67% of our outstanding common stock. Our current executive officers, directors, and affiliates therefore have and will continue to have substantial influence over the outcome of corporate actions requiring shareholder approval, including the election of directors, a merger, consolidation, or sale of all or substantially all of our assets, or any other significant corporate transactions, as well as over our management and affairs. Accordingly, your ability to influence corporate matters will be limited. In addition, this concentration of ownership may delay or prevent a change of control of us at a premium price if these shareholders oppose it, even if it would benefit our other shareholders.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE LINCOLN PARK CAPITAL TRANSACTION

 

 

On June 24, 2010, we executed the Purchase Agreement and the Registration Rights Agreement with LPC pursuant to which LPC has purchased and we have issued 100,000 shares of our common stock together with warrants to purchase an equivalent number of shares at an exercise price of $1.10 per share, for total consideration of $100,000. The warrants have a term of five years. Under the Purchase Agreement, we also have the right to sell to LPC up to an additional $4,900,000 of our common stock at our option as described below.

 

 

 

 

 

 

●	the lowest sale price of our common stock on the purchase date; or

 

●	the average of the three lowest closing sale prices of our common stock during the 12 consecutive business days prior to the date of a purchase by LPC.

 

 

 

 

 

Under the Purchase Agreement, we have set a minimum purchase price (“floor price”) of $0.25. However, LPC shall not have the right or the obligation to purchase any shares of our common stock in the event that the purchase price would be less than the floor price. Specifically, LPC shall not have the right or the obligation to purchase shares of our common stock on any business day that the market price of our common stock is below $0.25.

 

 

 

The Purchase Agreement contains the following events of default:

 

 

●

while any registration statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness of the registration statement of which this prospectus is a part of lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable to LPC for sale of our common stock offered hereby and such lapse or unavailability continues for a period of 10 consecutive business days or for more than an aggregate of 30 business days in any 365-day period;

 

●	suspension by our principal market of our common stock from trading for a period of three consecutive business days;

 

●	the de-listing of our common stock from our principal market provided our common stock is not immediately thereafter trading on the NASDAQ Global Market, the NASDAQ Global Select Market, the OTC Bulletin Board, the New York Stock Exchange or the NYSE AMEX;

 

●	the transfer agent’s failure  to issue to LPC within five business days shares of our common stock that LPC is entitled to under the purchase agreement;

 

●	any material breach of the representations or warranties or covenants contained in the purchase agreement or any related agreements which has or which could have a material adverse effect on us subject to a cure period of five business days;

 

●	any participation or threatened participation in insolvency or bankruptcy proceedings by or against us; or

 

●	the issuance of more than 19.99% of our outstanding shares of common stock as of October 15, 2010 to LPC if we fail to obtain shareholder approval.

 

 

 

 

 

 

All 2,247,843 shares registered in this offering are expected to be freely tradable. It is anticipated that shares registered in this offering will be sold over a period of up to 30 months from the date of this prospectus. The sale by LPC of a significant amount of shares registered in this offering at any given time could cause the market price of our common stock to decline and to be highly volatile. LPC may ultimately purchase all, some or none of the 1,730,343 additional shares of common stock not yet issued but registered in this offering. After it has acquired such shares, it may sell all, some or none of such shares. Therefore, sales to LPC by us under the agreement may result in substantial dilution to the interests of other holders of our common stock. However, we have the right to control the timing and amount of any sales of our shares to LPC and the agreement may be terminated by us at any time at our discretion without any cost to us.

 

 

Assumed Average Purchase Price				Number of Registered Purchase Shares Available for Purchase		Registered Pro Rata Commitment Shares Earned			Total Number of Additional Registered Shares to be Issued if Full Purchase		Proceeds from the Future Sales of Shares to LPC Under the Purchase Agreement				Percentage of Outstanding Shares After Giving Effect to Future  Issuance to LPC (1)
$	0.25	(2)		1,730,343		15,573			1,745,916		$	432,586			10.38%
$	0.54	(3)		1,730,343		33,638			1,763,981		$	934,385			10.48%
$	1.00			1,730,343		62,292			1,792,635		$	1,730,343			10.63%
$	1.50			1,730,343		93,439			1,823,782		$	2,595,515			10.80%
$	2.00			1,730,343		124,585			1,854,928		$	3,460,686			10.96%
$	3.00			1,633,333		176,400			1,809,733		$	4,900,000			10.72%

____________

 

(1)	The denominator is based on 15,068,080 shares outstanding as of October 15, 2010 plus the Total Number of Registered Shares to be Issued if Full Purchase of the additional $4,900,000. The numerator is the Total Number of Registered Shares to be Issued if Full Purchase of the additional $4,900,000.

 

(2)	Under the agreement the company may not sell and LPC cannot purchase any shares in the event the price of our stock below $0.25

 

(3)	Closing sale price of our shares on October 15, 2010.

 

 

The following table presents information regarding the selling shareholder. LPC may sell all, some or none of the shares that are beneficially owned. Neither the selling shareholder nor any of its affiliates has held a position or office, or had any other material relationship, with us.

Selling Shareholder	Shares Beneficially Owned Before Offering	Percentage of Outstanding Shares Beneficially Owned Before Offering	Shares to be Sold in the Offering Assuming The Company Issues The Maximum Number of Shares Under the Purchase Agreement	Percentage of Outstanding Shares Beneficially Owned After Offering
Lincoln Park Capital Fund, LLC (1)	237,500(2)	1.6%(2)	2,247,843	0%

 

 

(1)	Josh Scheinfeld and Jonathan Cope, the principals of LPC, are deemed to be beneficial owners of all of the shares of common stock owned by LPC. Messrs. Scheinfeld and Cope have shared voting and disposition power over the shares being offered under this prospectus.

 

(2)

Includes 137,500 shares of our common stock previously issued to LPC as a commitment fee and 100,000 shares of common stock sold to LPC under the Purchase Agreement. LPC may acquire an additional 100,000 shares upon the exercise of a warrant, and we may at our discretion elect to issue to LPC up to 1,730,343 additional shares of our common stock and LPC may earn up to 180,000 additional commitment shares under the Purchase Agreement, but LPC does not beneficially own any such shares that may be issued by us at our sole discretion, and such shares are not included in determining the percentage of shares beneficially owned before the offering.