Attached files
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EX-22.1 - EXHIBIT 22.1 - AXION INTERNATIONAL HOLDINGS, INC. | v301633_ex22-1.htm |
EX-23.1 - EXHIBIT 23.1 - AXION INTERNATIONAL HOLDINGS, INC. | v301633_ex23-1.htm |
Colorado
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3086
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84-0846389
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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Title of Each Class of Securities to be Registered | Proposed Maximum Aggregate Offering Price(1) | Amount of Registration Fee | ||||||
Units, each consisting of one Series A preferred share, one Class A Warrant and one Class B Warrant | $ | - | $ | - | ||||
Series A convertible preferred shares | $ | - | $ | - | ||||
Common shares issuable upon conversion of Series A preferred shares(2) | $ | - | $ | - | ||||
Common shares issuable in lieu of cash payment of dividends (and certain make-whole payments) on the Series A preferred shares | $ | - | $ | - | ||||
Warrants to purchase common shares(2) | $ | - | $ | - | ||||
Common shares issuable upon exercise of warrants | $ | - | $ | - | ||||
Total | $ | 20,000,000 | $ | 2,292 |
(1)
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Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act. Pursuant to Rule 416 under the Securities Act of 1933, as amended, the shares being registered hereunder include such indeterminate number of common shares as may be issuable with respect to the shares being registered hereunder as a result of share splits, share dividends, anti-dilution provisions, or similar transactions. No additional registration fee is being paid for these shares.
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(2)
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No additional consideration is payable upon conversion of the convertible preferred shares or upon issuance of the warrants.
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10,000 Units
10,000 6% Series A Convertible Preferred Shares
(and (i) Common Shares underlying the 6% Series A Convertible Preferred Shares and (ii) Common Shares issuable in lieu of cash payment of dividends and certain make-whole payments on the 6% Series A Convertible Preferred Shares)
10,000 Class A Warrants
(and Common Shares underlying the Class A Warrants)
10,000 Class B Warrants
(and Common Shares underlying the Class B Warrants)
Price to Public
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Placement Agent
Fees (1)
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Proceeds, Before
Expenses, to
Axion International
Holdings, Inc. (2)
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||||||||||
Per Share
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$ | $ | $ | |||||||||
Total
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$ | $ | $ |
(1)
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For the purpose of estimating the Placement Agent’s fees,
we have assumed that they will receive their maximum commission on all sales made in the offering. The Placement Agent will
also be entitled to receive warrants exercisable for a number of shares of common stock equal to 2% of the aggregate number of
shares of common stock underlying the Series A preferred shares (but excluding the shares underlying the warrants) issued in this
offering and to receive reimbursement of certain expenses, as further described in “Plan of Distribution” beginning
on page 65 of this prospectus.
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(2)
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We estimate total expenses of this offering, excluding the Placement Agent’s fees and expenses, will be approximately $ . For information concerning our obligation to reimburse the Placement Agent for certain of its expenses see “Plan of Distribution” beginning on page 65 of this prospectus.
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Page
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Trademarks and Trade Names
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5
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Prospectus Summary
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6
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The Offering
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10
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Risk Factors
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13
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Cautionary Note Regarding Forward-Looking Statements
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20
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Use of Proceeds
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22
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Determination of Offering Price
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23
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Capitalization
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24
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Dilution
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25
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Dividend Policy
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26
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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27
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Business
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34
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Properties
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41
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Management
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42
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Executive Compensation
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45
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Security Ownership Of Certain Beneficial Owners And Management
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53
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Certain Relationships And Related Transactions
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55
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Legal Proceedings
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56
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Description of Securities
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57
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Market For Common Equity And Related Shareholder Matters
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61
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Plan of Distribution
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62
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Transfer Agent
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64
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Reports To Security Holders
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64
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Legal Matters
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64
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Experts
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64
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SEC Position On Indemnification For Securities Act Liabilities
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65
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Where You Can Find More Information
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67
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Financial Statements
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F-1
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Superior long-term physical attributes. Our products, unlike many of the traditional products with which we compete, are impervious to moisture and are non-corrosive, rot and insect resistant and non-chemical leaching. Early indications also show that our products are resistant to changing shape under constant stress, or “creep.”
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Documented, successful projects and results. Our products have been thoroughly tested and their various attributes have been validated through independent third parties. Our products are based on a proprietary technology that has been developed, tested and validated over a period longer than 20 years, and the lack of access to that technology by others, coupled with the long-term testing that is required to validate products like ours, creates a barrier to entry for prospective competitors.
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Documented cost savings. Our products represent cost savings over their lifecycles, as the very nature of the material prevents corrosion, rusting, moisture absorption, chemical leaching and rot, thereby increasing their durability and reducing maintenance costs. Our products are often lighter in weight and often feature quick-assembly designs that allow for projects to be built quickly, reducing downtime and inconvenience.
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Environmentally beneficial. Our products are made from recycled waste and have no natural or environmentally harmful additives that are sometimes used in connection with products of our competitors.
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Uniqueness of components. We have the ability to engineer and manufacture highly specialized components. We work closely with customers to deliver products that are engineered specifically to meet the challenges of each job or project.
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Our ECOTRAX rail tie products are targeted toward railroad customers who are expected to significantly increase capital expenditures in the next several years as a result of increased infrastructure spending globally by both governments and transportation companies.
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The potential applications for our STRUXURE building products are diverse and can provide solutions across multiple industries. Our intended client base will be various Federal agencies, including the Department of Defense, as well as other local municipalities that look to rebuild public infrastructure, and managers of recreational spaces including, parks, golf courses and marinas.
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According to the Policy & Economics Department of the Association of American Railroads (ARA), over the 24-year period from 1980-2003, Class I railroads spent more than $320 billion, a little more than $13 billion per year (approximately 44% of their operating revenue) on capital expenditures and maintenance expenses related to infrastructure and equipment.
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The ARA believes that including the cost of maintenance, railroads in recent years have been pouring roughly $20 billion a year in private investments into the nation’s rail infrastructure and will continue to do so.
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The Railway Tie Association estimates that the total number of rail ties sold will total nearly 20.4 million units in 2011, 20.9 million units in 2012, and 21.4 million units in 2013.
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According to the Government Accountability Office (GAO), the Department of Defense spends $22.5 billion annually on equipment and infrastructure as an impact of corrosion.
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The American Society of Civil Engineers has recommended that the U.S. spend $17 billion a year on bridge maintenance, significantly more than the $10.5 billion that is currently spent each year.
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Regarding docks, marinas, and piers, the GAO Report on Marine Transportation stated that 13 federal agencies spent an average of $3.9 billion annually on the construction and maintenance of federally authorized projects.
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Developing and expanding market opportunities for our STRUXURE building products;
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Concentrating on sales of our ECOTRAX rail tie products, where customers and sales opportunities are readily identifiable;
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Collaborating with the other licensee of our licensed patents for the right to sell ECOTRAX rail ties in its licensed territory;
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Working with strategic partners in specific geographic and product markets to expand our marketing and sales opportunities;
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Building brand recognition through the use of trademarks and marketing; and
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Continue to focus on market segments such as railroads, federal and municipal government agencies and departments who are rebuilding public infrastructure, and the operators and owners of recreational facilities such as golf courses and marinas.
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Our products are relatively new to the market and, to date, have limited exposure and acceptance in the marketplace. If our products do not receive market acceptance or meet our quality standards, our ability to execute our business plan most likely will be adversely affected.
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Our auditors have expressed substantial doubt as to our ability to remain as a going concern and we must raise capital to remain in business.
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We are dependent on our ability to raise capital from external funding sources. If we are unable to continue to obtain necessary capital from outside sources, we will be forced to reduce or curtail operations.
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We have substantial convertible debt and redeemable convertible preferred stock with maturity and redemption dates through April 2014.
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Our business depends on our and our contract manufacturers’ ability to purchase adequate amounts of recycled plastic and plastic composite materials at acceptable prices. If we are unable to purchase such materials reliably, or at acceptable prices, our business will be adversely affected.
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Our business is reliant on contract manufacturers. If one or more contract manufacturers that we engage do not meet our manufacturing requirements, our ability to manufacture and sell our products will be materially impaired.
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We face competition from traditional wood, concrete and steel providers of rail ties and structural building components, many of which are sold at prices that are lower than our prices.
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We derive a competitive advantage from the patents that are licensed to us. If these patents are ever invalidated or if we are ever determined to infringe the rights of third parties, our ability to compete or to produce our products could be threatened.
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Issuer
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Axion International Holdings, Inc.
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Units
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Each unit consists of (1) one Series A convertible preferred share that is convertible into common shares; (2) one Class A Warrant to purchase 0.5 of our common shares for every common share underlying the Series A preferred share included in such unit; and (3) one Class B Warrant to purchase 0.5 of our common shares for every common share underlying the Series A preferred share included in such unit.
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Unit Price
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$1,000 per unit.
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Series A Preferred Shares
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Each unit includes one Series A preferred share. Each Series A preferred share is convertible at the option of the holder into of our common shares, and has a stated value and liquidation preference of $1,000 per share. The Company also has the right to require the holders to convert the Series A preferred shares in certain circumstances described in this prospectus. Until the second anniversary of the closing, the Series A preferred shares will have a stated dividend rate of 6% per annum, payable quarterly in cash or, subject to certain Equity Conditions, in common shares or a combination of cash and common shares, at our election. After the second anniversary of the closing, the Series A preferred shares will participate in any dividends payable upon our common shares on an as-converted basis. The Series A preferred shares will not have voting rights, except as may be provided by Colorado law. The Series A preferred shares are pari passu in dividend rights and liquidation preference with the Company’s outstanding 10% convertible preferred stock. See the section entitled “Description of Securities—Series A Preferred Shares” beginning on page 58 of this prospectus.
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Dividends and Make-Whole Payment
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Until the second anniversary of the closing, each holder of the Series A preferred shares is entitled to receive dividends at the rate of 6% per annum of the stated value for each preferred share held by such holder payable quarterly on January 1, April 1, July 1 and October 1, beginning on the first such date after the original issue date, and on each conversion date. Except in limited circumstances (including a failure to meet the Equity Conditions), we can elect to pay the dividends in cash or in duly authorized, validly issued, fully paid and non-assessable common shares, or a combination thereof. If the Equity Conditions are not met, we must pay the dividends in cash. If the Equity Conditions have been met and we choose to pay the dividends in common shares, the common shares used to pay the dividends will be valued at 90% of the average volume weighted average price of our common shares for the 20 consecutive trading days ending on the trading day immediately prior to the applicable dividend payment date. From and after the second anniversary of the closing, each holder of Series A preferred shares will be entitled to receive dividends equal, on an as-if-converted to common shares basis, to and in the same form as dividends actually paid on common shares when, as, and if such dividends are paid on common shares. We have never paid dividends on our common shares and we do not intend to do so for the foreseeable future.
In the event a holder converts his, her or its Series A preferred shares, or we elect to force conversion of the Series A preferred shares as described herein, prior to the second anniversary of the closing, we must also pay to the holder in cash, or at our option, subject to satisfaction of the Equity Conditions, in common shares valued as described above, or a combination of cash and common shares, with respect to the Series A preferred shares so converted, an amount equal to $120 per $1,000 of the stated value of the Series A preferred shares, less the amount of any dividends paid in cash or in common shares on such Series A preferred shares on or before the date of conversion.
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Conversion Price of Series A Preferred Shares
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$ per share, subject to adjustment as described in this prospectus. See the section entitled “Description of Securities—Series A Preferred Shares” beginning on page 58 of this prospectus.
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Common Shares Underlying Series A Preferred Shares
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Based on the conversion price of $ per share, each Series A preferred share is convertible into of our common shares and all 10,000 Series A preferred shares offered hereby would be converted into of our common shares.
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Class A Warrant Terms
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Each unit includes a Class A Warrant to purchase 0.5 of our common shares for every common share underlying the preferred share included in such unit, which equals 50% of the common shares underlying each Series A preferred share. Class A Warrants will entitle the holder to purchase common shares for an exercise price equal to $ per share, subject to adjustment as described in this prospectus. Class A Warrants are exercisable immediately after the date of issuance and expire five years after the date of issuance. See the section entitled “Description of Securities—Warrants” beginning on page 59 of this prospectus.
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Class B Warrant Terms
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Each unit includes a Class B Warrant to purchase 0.5 of our common shares for every common share underlying the preferred share included in such unit, which equals 50% of the common shares underlying each Series A preferred share. Class B Warrants will entitle the holder to purchase common shares for an exercise price equal to $ per share, subject to adjustment as described in this prospectus. Class B Warrants are exercisable immediately after the date of issuance and expire two years after the date of issuance. See the section entitled “Description of Securities—Warrants” beginning on page 59 of this prospectus.
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Anti-Dilution Protection
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The Series A preferred shares and warrants included in the units shall have full ratchet anti-dilution protection (including “full-ratchet” price protection from future issuance of stock) subject to customary carve outs, in the event of a down round financing below the conversion price or exercise price, respectively.
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Right of Participation
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The Investors shall have the right to participate in future financings of the Company for any financing within a period of 24 months from the closing of this Offering.
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Conversion
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The holders shall have the right to convert the Series A preferred shares, in whole, or in part, at any time, into shares of the common stock of the Company.
The
Company shall have the right to require the holders to convert the Series A preferred shares if the Company’s common stock
trades at 150% of the conversion price for any 20 of 30 consecutive trading days, subject to satisfaction of the Equity Conditions.
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Limitations on Beneficial Ownership
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Notwithstanding anything herein to the contrary, the Company will not permit any holder to convert the Series A preferred shares or exercise the warrants if, after such conversion or exercise, such holder would beneficially own more than 4.99% (or 9.99%, as elected by the holder pursuant to the terms of the Series A preferred shares or warrants, as applicable) of the shares of common stock then outstanding.
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Liquidation Preference
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The Series A preferred shares would rank, with respect to rights upon liquidation, winding-up or dissolution, (1) senior to common shares, (2) senior to any series of preferred shares ranked junior to the Series A preferred shares, (3) pari passu to the 10% convertible preferred shares, and (4) junior to all existing and future indebtedness of the Company.
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Common
Shares Outstanding Before the Offering
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25,627,566
shares .
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Common Shares Outstanding After the Offering
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Approximately shares.
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Use of Proceeds
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Assuming all units are sold, we estimate that the net proceeds to us from this offering will be approximately $ million. We intend to use the net proceeds from this offering for working capital and general corporate purposes. See the section entitled “Use of Proceeds.”
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Risk Factors
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You should carefully read and consider the information set forth under “Risk Factors,” together with all of the other information set forth in this prospectus, before deciding to invest in the units offered by this prospectus.
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·
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6,544,135 shares of common stock reserved for future issuance under
our 2003 and 2010 Stock Option Plans with regard to outstanding awards and awards that may be issued in the future under the plans;
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·
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762,076 shares of common stock reserved for future issuance pursuant to outstanding stock option awards based on individual arrangements;
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5,085,476 shares of common stock issuable upon exercise of warrants
outstanding as of February 9, 2012;
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·
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6,078,184 shares of common stock issuable upon conversion of 10%
convertible preferred stock outstanding as of February 9, 2012; Pursuant to terms of the sale of our 10% convertible preferred
stock, in the event our net revenue for the twelve months ending December 31, 2011 is less than $10 million, an additional 1,504,546
shares of common stock will be issuable upon the conversion of the 10% convertible preferred stock. In addition, warrants for
the purchase of up to 3,761,365 shares of common stock will be awarded if we do not reach that threshold.
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·
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466,816 shares of common stock upon exercise of 10% convertible
preferred stock placement agent warrants outstanding as of February 9, 2012 and subsequent conversion of the 10% convertible preferred
stock; and
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·
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1,000,000 shares of common stock issuable upon conversion of all
convertible debt outstanding as of February 9, 2012.
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bank and other debt financing;
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equity financing;
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strategic relationships; and/or
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other means.
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global and regional economic, political and military events and conditions;
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fluctuations in energy, fuel, oil and natural gas prices and the availability of such fuels;
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changes in residential and commercial construction demands, driven in part by fluctuating interest rates and demographic shifts;
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changes in demand for our products due to technological innovations;
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changes in laws and regulations (or the interpretation thereof) related to the production of structural plastic products or the environment;
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prices, availability and other factors relating to our products;
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continued preferences for wood, metal or concrete, rather than plastic, structural products;
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increases in costs of labor and labor strikes; and
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population growth rates.
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our ability to execute our business plan;
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actual or anticipated quarterly variations in our operating results;
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the success of our business and operating strategy; and
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the operations and stock price performance of other comparable companies.
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The ability of investors to recover from our former auditor may be limited due to the auditor’s cessation of operations and financial condition.
The auditor for our consolidated financial statements for the fiscal years ended September 30, 2010 and 2009 has ceased operations and has not reissued its report in connection with this Registration Statement. We will be unable to obtain future accountant’s reports from the firm because it has discontinued its auditing practice. This means that we will also be unable to obtain consents to incorporate any financial statements audited by the firm into registration statements that we may file or amend in the future. Accordingly, investors may not be able to bring an action against our former auditor pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 with respect to any such registration statements or with respect to this Registration Statement and, therefore, any recovery from our former auditor may be limited. The ability of investors to recover from our former auditor may also be limited as a result of its financial condition.
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·
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fluctuations in demand for structural products;
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the cyclical nature of our customers’ businesses;
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our dependence on third-party manufacturers;
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the level of spending by railroads, governments and consumers;
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federal, state and local legislative and regulatory initiatives relating to infrastructure development and the potential for related regulatory action or litigation affecting our customers’ operations;
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our ability to implement our capacity expansion plans within our current timetable and budget and our ability to secure arrangements for increased production capacity, and the actual operating costs once we have completed the capacity expansion;
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our ability to succeed in competitive markets;
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loss of, or reduction in, business from our largest customers;
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our ability to make capital expenditures to maintain, develop and increase our asset base and our ability to obtain needed capital or financing on satisfactory terms;
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substantial indebtedness;
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restrictions imposed by our indebtedness on our current and future operations;
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a shortage of skilled labor and rising labor costs for our third-party manufacturers;
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our ability to attract and retain key personnel;
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our ability, and our third-party manufacturers’ abilities, to maintain satisfactory labor relations;
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our reliance on trade secrets and contractual restrictions to protect our proprietary rights;
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plastics-related health issues and corresponding litigation;
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our ability to maintain effective quality control systems at our production facilities;
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fluctuations in our sales and results of operations due to seasonality and other factors;
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interruptions or failures in our information technology systems;
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the impact of a terrorist attack or armed conflict;
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our failure to maintain adequate internal controls;
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extensive and evolving environmental, health and safety, licensing, reclamation and other regulation (and changes in their enforcement or interpretation); and
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other factors disclosed in the section entitled “Risk Factors” and elsewhere in this prospectus.
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(Unaudited)
September 30, 2011
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||||||||
Actual
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Pro Forma
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Cash and cash equivalents
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$ | 2,663,846 | $ | |||||
Convertible debt, net
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$ | 463,928 | $ | |||||
Fair value of 10% convertible preferred stock warrants
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487,555 | |||||||
10% convertible preferred stock, no par value; authorized 880,000 shares; 759,773 issued and outstanding as of September 30, 2011, net
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6,594,341 | |||||||
Stockholders’ Equity (Deficit):
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Series A preferred stock; ____ authorized shares, ____ shares issued and outstanding as of ____
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- | |||||||
Common stock, no par value; authorized 100,000,000 shares; 24,947,261 shares issued and outstanding at September 30, 2011
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22,256,845 | 22,256,845 | ||||||
Accumulated deficit
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(25,260,476 | ) | (25,260,476 | ) | ||||
Total stockholders' equity (deficit)
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(3,003,631 | ) | ||||||
Total capitalization
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$ | 4,542,193 | $ |
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·
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6,442,089 shares of common stock reserved for future issuance under our 2003 and 2010 Stock Option Plans with regard to outstanding awards and awards that may be issued in the future under the plans;
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762,076 shares of common stock reserved for future issuance pursuant to outstanding stock option awards based on individual arrangements;
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5,352,136 shares of common stock issuable upon exercise of outstanding warrants;
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·
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6,078,184 shares of common stock issuable upon conversion of outstanding 10% convertible preferred stock. Pursuant to terms of the sale of our 10% convertible preferred stock, in the event our net revenue for the twelve months ending December 31, 2011 is less than $10 million, an additional 1,519,546 shares of common stock will be issuable upon the conversion of the 10% convertible preferred stock, and warrants for the purchase of up to 3,798,865 shares of common stock will be awarded;
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·
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466,816 shares of common stock upon exercise of outstanding 10% convertible preferred stock placement agent warrants and subsequent conversion of the 10% convertible preferred stock; and
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1,138,000 shares of common stock issuable upon conversion of all outstanding convertible debt.
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Series A preferred share conversion price
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$ | - | ||||||
Net tangible book value per share as of September 30, 2011
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$ | - | ||||||
Increase per share attributable to this offering
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$ | - | ||||||
As adjusted tangible book value per share after this offering
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$ | - | ||||||
Dilution per share to new investors in this offering
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$ | - |
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·
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6,442,089 shares of common stock reserved for future issuance under our 2003 and 2010 Stock Option Plans with regard to outstanding awards and awards that may be issued in the future under the plans;
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·
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762,076 shares of common stock reserved for future issuance pursuant to outstanding stock option awards based on individual arrangements;
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·
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5,352,136 shares of common stock issuable upon exercise of outstanding warrants;
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·
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6,078,184 shares of common stock issuable upon conversion of outstanding 10% convertible preferred stock. Pursuant to terms of the sale of our 10% convertible preferred stock, in the event our net revenue for the twelve months ending December 31, 2011 is less than $10 million, an additional 1,519,546 shares of common stock will be issuable upon the conversion of the 10% convertible preferred stock, and warrants for the purchase of up to 3,798,865 shares of common stock will be awarded;
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·
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466,816 shares of common stock upon exercise of outstanding 10% convertible preferred stock placement agent warrants and subsequent conversion of the 10% convertible preferred stock; and
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·
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1,138,000 shares of common stock issuable upon conversion of all outstanding convertible debt.
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·
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composite rail ties marketed under the brand name ECOTRAX; and
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structural composite I-beams, T-beams, pilings along with tongue-and-groove planking and various sizes of boards, all marketed under the brand name STRUXURE.
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lifecycle savings based on lower maintenance, due to greater durability and longevity;
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improved performance resulting from non-corrosive, rot and insect resistant and non-chemical leaching attributes of our products; and
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a positive environmental impact.
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divert plastic from the waste stream;
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do not use any natural products (such as wood) in our products;
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do not use any chemicals or toxins to manufacture our products; and
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develop and sell products that can be recycled again at the eventual end of their useful lives.
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Our ECOTRAX rail tie products are targeted primarily towards North American railroad customers who are expected to significantly increase capital expenditures in the next several years. Similar trends are expected to emerge outside of North America as a result of increased infrastructure spending by both foreign governments and transportation companies.
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·
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The potential applications for our STRUXURE building products are diverse and can provide solutions across multiple industries. Our intended client base will be various Federal agencies, including the Department of Defense, as well as other local municipalities that look to rebuild public infrastructure, and managers of recreational spaces including, parks, golf courses and marinas.
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·
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According to the Policy & Economics Department of the Association of American Railroads (ARA), over the 24 year period from 1980-2003, Class I railroads spent more than $320 billion, a little more than $13 billion per year (approximately 44% of their operating revenue) on capital expenditures and maintenance expenses related to infrastructure and equipment.
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·
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The ARA believes that including the cost of maintenance, railroads in recent years have been pouring roughly $20 billion a year in private investments into the nation’s rail infrastructure and will continue to do so.
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·
|
The Railway Tie Association estimates that the total number of rail ties sold will total nearly 20.4 million units in 2011, 20.9 million units in 2012, and 21.4 million units in 2013.
|
|
·
|
According to the Government Accountability Office (GAO), the Department of Defense spends $22.5 billion annually on equipment and infrastructure as an impact of corrosion.
|
|
·
|
The American Society of Civil Engineers has recommended that the U.S. spend $17 billion a year on bridge maintenance, significantly more than the $10.5 billion that is currently spent each year.
|
|
·
|
Regarding docks, marinas, and piers, the GAO Report on Marine Transportation stated that 13 federal agencies spent an average of $3.9 billion annually on the construction and maintenance of federally authorized projects.
|
Name
|
Age
|
Position
|
||
Perry
Jacobson
|
52
|
Chairman,
Board of Directors
|
||
Steven
Silverman
|
47
|
President,
Chief Executive Officer and Director
|
||
James
J. Kerstein
|
53
|
Chief
Technology Officer, Secretary and Director
|
||
Donald
Fallon
|
57
|
Chief
Financial Officer and Treasurer
|
||
Michael
Dodd
|
41
|
Director
|
||
Anthony
Hatch
|
52
|
Director
|
||
Dr.
Allen Hershkowitz
|
56
|
Director
|
||
Peter
Janoff
|
55
|
Director
|
Name and
|
Option
|
All Other
|
||||||||||||||||||||
Principal Position
|
Year
|
Salary
|
Bonus
|
Awards
|
Compensation
|
Total
|
||||||||||||||||
James Kerstein
|
2010
|
(1) | $ | 52,000 | $ | - | $ | - | $ | - | $ | 52,000 | ||||||||||
Chief Executive Officer and Secretary (2)
|
2010
|
208,000 | - | - | 10,200 | (3) | 218,200 | |||||||||||||||
2009
|
208,000 | - | - | 10,200 | (3) | 218,200 | ||||||||||||||||
Marc Green (4)
|
2010
|
(1) | - | - | - | - | - | |||||||||||||||
Former President and Treasurer
|
2010
|
73,848 | - | - | - | 73,848 | ||||||||||||||||
2009
|
120,000 | - | - | - | 120,000 | |||||||||||||||||
Steven Silverman (5)
|
2010
|
(1) | 33,654 | - | 243,996 | - | 277,650 | |||||||||||||||
President and Chief Operating Officer
|
2010
|
- | - | - | - | - |
(1)
|
Reflects information for the three-month transition period ended December 31, 2010.
|
(2)
|
On January 18, 2011, Mr. Kerstein resigned as Chief Executive Officer and was appointed Chief Technology Officer.
|
(3)
|
Includes an automobile allowance in the amount of $850.00 per month.
|
(4)
|
Mr. Green resigned as President and Treasurer in May 2010.
|
(5)
|
Mr. Silverman was appointed President and Chief Operating Officer on September 23, 2010. Mr. Silverman was appointed President and Chief Executive Officer on January 18, 2011.
|
|
·
|
Effective May 1, 2011, Mr. Silverman’s base salary was increased to $210,000;
|
|
·
|
Mr. Silverman’s base salary will be further increased to $300,000 and $375,000 upon the Company’s achievement of $15 million and $25 million in sales during any fiscal year, respectively;
|
|
·
|
Mr. Silverman was awarded an option to purchase 150,000 shares of our common stock at $1.20 per share, which is exercisable through May 10, 2018;
|
|
·
|
In addition, Mr. Silverman was awarded an option to purchase 150,000 and 100,000 shares of our common stock at $1.75 and $2.00 per share upon the Company’s achievement of $20 million and $50 million in sales during any fiscal year, respectively, and will expire on May 10, 2018; and
|
|
·
|
Upon the attainment of certain designated management objectives as established by the board of directors, Mr. Silverman will be entitled to purchase an additional 200,000 shares of our common stock until May 10, 2018, at an exercise price equal to the market price of the our common stock on the date the objectives have been met.
|
|
·
|
Effective May 1, 2011, Mr. Kerstein’s base salary was adjusted to $185,000;
|
|
·
|
Mr. Kerstein’s base salary will be increased to $220,000 and $250,000 upon the Company’s achievement of $15 million and $25 million in sales during any fiscal year, respectively;
|
|
·
|
Mr. Kerstein was awarded an option to purchase 100,000 shares of our common stock at $1.20 per share, which is exercisable for through May 10, 2018;
|
|
·
|
In addition, options to purchase 285,779 and 285,779 shares of our common stock currently held by Mr. Kerstein were revised to vest upon the Company’s achievement of $15 million and $20 million, respectively, in sales during any fiscal year; and
|
|
·
|
Mr. Kerstein agreed to enter into a lock-up agreement through May 10, 2012 with respect to 1,850,450 shares of our common stock he currently owns. When the closing price of our common stock reaches $4.00 per share, 20% of the shares will be released from the lock-up, and an additional thirty percent will be release upon the closing price reaching $10.00 per share. The lock-up shall be terminated if the closing price of our stock reaches $20.00 per share.
|
Name
|
Option Awards
($)
|
All Other
Compensation
|
Total
|
|||||||||
Bradley Love (1)
|
$ | 152,857 | $ | - | $ | 152,857 |
(1)
|
Mr. Love was a member of our board of directors from March 2010 until October 2010. Mr. Love received an option award to acquire 150,000 shares of common stock, pursuant to the 2010 Stock Plan.
|
Name
|
Option Awards (2)
($)
|
All Other
Compensation
|
Total
|
|||||||||
Perry Jacobson
|
113,660 | 43,860 | (1) | $ | 157,520 | |||||||
Michael Dodd
|
113,660 | 113,660 | ||||||||||
Peter Janoff
|
119,032 | 119,032 | ||||||||||
Anthony Hatch
|
118,464 | 118,464 |
(1)
|
Mr. Jacobson was compensated for recruiting assistance he provided to our company.
|
(2)
|
Each director that is not an officer or employee of our company received an option to acquire 150,000 shares of common stock, pursuant to the 2010 Stock Plan.
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
(exercisable)
|
Number Of
Securities
Underlying
Unexercised
Options
(unexercisable)
|
Number of
Securities
Underlying
Unexercised
Options
(unearned)
|
Option
Exercise Price
|
Option Expiration
Date
|
|||||||||||||
James Kerstein (1)
|
190,518 | - | 571,558 | $ | 0.00002 |
1/1/2013
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
(exercisable)
|
Number Of
Securities
Underlying
Unexercised
Options
(unexercisable)
|
Number of
Securities
Underlying
Unexercised
Options
(unearned)
|
Option
Exercise Price
|
Option Expiration
Date
|
|||||||||||||
James Kerstein (1)
|
190,518 | - | 571,558 | $ | 0.00002 |
1/1/2013
|
||||||||||||
Steve Silverman (2)
|
250,000 | - | 750,000 | (2) |
11/4/2017
|
(1)
|
The options are exercisable for a term of five years, of which (i) 190,518 shares vest upon Axion achieving annual revenues of $10 million, (ii) 285,779 shares vest upon Axion achieving annual revenues of $15 million and (iii) 285,779 shares vest upon Axion achieving annual revenues of $25 million.
|
(2)
|
Pursuant to the terms of the option agreement, such option is exercisable for a term of seven years, of which (i) an option to purchase up to 150,000 of common stock at $1.05 per share is immediately exercisable, (ii) an option to purchase an additional 100,000 shares of common stock at $1.25 per share is exercisable on October 11, 2011, (iii) an option to purchase an additional 250,000 shares of common stock at $1.50 per share is exercisable upon the Company achieving the 1st Milestone, as defined in the agreement, (iv) an option to purchase an additional 250,000 shares of common stock at $1.75 per share upon the Company achieving the 2nd Milestone, as defined in the agreement, and (v) an option to purchase an additional 250,000 shares of common stock at $2.50 per share upon the Company achieving the 3rd Milestone, as defined in the agreement.
|
Plan Category
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
Weighted-average
exercise price of
outstanding option,
warrants and rights
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
the second column)
|
|||||||||
Equity compensation plans approved by security holders
|
2,726,685
|
$
|
1.31
|
3,469,171
|
||||||||
Equity compensation plans not approved by security holders (1)
|
762,076
|
$
|
0.00002
|
-
|
||||||||
Total
|
3,488,761
|
$
|
1.02
|
3,469,171
|
(1)
|
Includes an option pursuant to an employment agreement with our founder and Chief Technology Officer, granting the right to purchase the shares of our common stock, under the terms of a certain performance-based stock option.
|
Name and Address of Beneficial
Owner
|
Amount and
Nature of
Beneficial
Ownership
|
Percent
of Class
(1)
|
||||||
Directors
and executive officers
|
||||||||
James
Kerstein, Chief Technology Officer, Secretary and Director (2)
|
2,290,968 | 7.2 | % | |||||
Perry
Jacobson, Chairman of Board (3)
|
694,122 | 2.2 | % | |||||
Steven
Silverman, Chief Executive Officer and Director (4)
|
400,000 | 1.3 | % | |||||
Donald
Fallon, Chief Financial Officer and Treasurer (5)
|
125,000 | * | ||||||
Michael
Dodd, Director (6)
|
100,000 | * | ||||||
Anthony
Hatch, Director (6)
|
100,000 | * | ||||||
Peter
Janoff, Director (6)
|
100,000 | * | ||||||
Allen
Hershkowitz, Director (7)
|
50,000 | * | ||||||
All
directors and officers as a group (8 persons) (8)
|
3,860,090 | 11.6 | % | |||||
Other
persons
|
||||||||
Insight
Partners LLC (9)
|
1,710,206 | 5.4 | % | |||||
All
other persons (1 person)
|
1,710,206 | 5.4 | % |
(1)
|
As of February 9, 2012, we had 31,645,750 equivalent shares of common
stock outstanding, comprising 25,627,566 shares of common stock and 752,273 shares of 10% convertible preferred stock, convertible
into 6,018,184 shares of common stock. Unless otherwise indicated in these footnotes, each stockholder has sole voting and
investment power with respect to the shares beneficially owned. All share amounts reflect beneficial ownership determined pursuant
to Rule 13d-3 under the Exchange Act. All information with respect to beneficial ownership has been furnished by the respective
director or executive officer, as the case may be.
|
(2)
|
Includes options to purchase 290,518 shares of common stock and excludes options to purchase 571,558 shares of common stock, which options have not yet been earned.
|
(3)
|
Includes options and warrants to purchase 400,000 shares of common stock and excludes options to purchase 50,000 shares of common stock which have not vested. Also includes 12,500 shares of 10% convertible preferred stock, convertible into 100,000 shares of common stock.
|
(4)
|
Includes options to purchase 400,000 shares of common stock and excludes options to purchase 1,200,000 shares of common stock which have not yet been earned.
|
(5)
|
Includes options to purchase 125,000 shares of common stock and excludes options to purchase 125,000 and 250,000 shares of common stock which have not vested and have not yet been earned, respectively.
|
(6)
|
Includes options to purchase 100,000 shares of common stock and excludes options to purchase 50,000 shares of common stock which have not vested.
|
(7)
|
Includes options to purchase 50,000 shares of common stock and excludes options to purchase 100,000 shares of common stock which have not vested.
|
(8)
|
Includes options and warrants to purchase 1,565,518 shares of common stock and excludes options to purchase 425,000 and 2,021,558 shares of common stock which have not vested and have not yet been earned, respectively.
|
(9)
|
Includes options to purchase 169,293 shares of common stock. The address of the beneficial owner is 4800 Hampden Lane, 7th Floor, Bethesda, Maryland 20814.
|
High
|
Low
|
|||||||
Year
Ended December 31, 2011:
|
||||||||
First
quarter
|
$ | 2.10 | $ | 0.91 | ||||
Second
quarter
|
1.43 | 1.05 | ||||||
Third
quarter
|
1.26 | 0.75 | ||||||
Fourth quarter | 1.00 | 0.65 | ||||||
Three
Months Ended December 31, 2010
|
$ | 1.10 | $ | 0.80 | ||||
Year
Ended September 30, 2010:
|
||||||||
First
quarter
|
$ | 3.20 | $ | 2.10 | ||||
Second
quarter
|
3.10 | 1.55 | ||||||
Third
quarter
|
1.80 | 0.66 | ||||||
Fourth
quarter
|
1.29 | 0.75 | ||||||
Year
Ended September 30, 2009:
|
||||||||
First
quarter
|
$ | 1.50 | $ | 0.75 | ||||
Second
quarter
|
1.20 | 0.85 | ||||||
Third
quarter
|
1.17 | 0.80 | ||||||
Fourth
quarter
|
3.25 | 0.65 |
|
·
|
we will receive funds in the amount of the aggregate purchase price of the units being sold by us on such closing date;
|
|
·
|
we will deliver Series A preferred shares and the warrants being sold on such closing date; and
|
|
·
|
we will pay the Placement Agent a Placement Agent fee in accordance with the terms of our Placement Agency Agreement.
|
|
§
|
by operation of law or by reason of our reorganization;
|
|
§
|
to any FINRA member firm participating in the offering and the officers and partners thereof, if all securities so transferred remain subject to the lock-up restriction described above for the remainder of the time period;
|
|
§
|
if the aggregate amount of our securities held by the Placement Agent or related person does not exceed 1% of the securities being offered;
|
|
§
|
that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10% of the equity in the fund; or
|
|
§
|
the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction set forth above for the remainder of the time period.
|
Subject to compliance with FINRA Rule 5110(f)(2)(D), we have also agreed to pay the Placement Agent a non-accountable expense reimbursement equal to 1% of the gross proceeds raised in the offering and the reasonable out of pocket expenses, including, without limitation, legal counsel fees and expenses, of the Placement Agent up to $60,000. In addition, we have granted to the Placement Agent a right of first negotiation with respect to investment banking, advisory or similar services required by us during the 18 months following this offering.
Per unit Placement Agent’s fees
|
$
|
-
|
||
Maximum offering total
|
$
|
-
|
|
·
|
may not engage in any stabilization activity in connection with our securities; and
|
|
·
|
may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.
|
Page
|
||
Unaudited Interim Consolidated Financial Statements:
|
||
Condensed Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010 (audited)
|
F-2
|
|
Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 2011 and 2010
|
F-3
|
|
Condensed Consolidated Statements of Stockholders’ Deficit for the Period from January 1, 2011 to September 30, 2011
|
F-4
|
|
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010
|
F-5
|
|
Notes to Condensed Consolidated Financial Statements
|
F-6
|
|
Audited Consolidated Financial Statements:
|
||
Report of Independent Registered Public Accounting Firm
|
F-15
|
|
Consolidated Balance Sheets as of December 31, 2010, September 30, 2010 and September 30, 2009
|
F-16
|
|
Consolidated Statements of Operations for the Three Months Ended December 31, 2010 and the Years Ended September 30, 2010 and September 30, 2009
|
F-17
|
|
Consolidated Statements of Stockholders’ Equity (Deficit) for the Three Months Ended December 31, 2010 and from October 1, 2008 to September 30, 2010
|
F-18
|
|
Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2010 and the Years Ended September 30, 2010 and September 30, 2009
|
F-19
|
|
Notes to Consolidated Financial Statements for the Three Months Ended December 31, 2010
|
F-20
|
|
Report of Independent Registered Public Accounting Firm
|
F-34
|
|
Consolidated Balance Sheets as of September 30, 2010 and 2009
|
F-35
|
|
Consolidated Statements of Operations for the Years Ended September 30, 2010 and 2009
|
F-36
|
|
Consolidated Statements of Cash Flows for the Years Ended September 30, 2010 and 2009
|
F-37
|
|
Consolidated Statements of Stockholders’ Equity (Deficit) from October 1, 2008 to September 30, 2010
|
F-38
|
|
Notes to Consolidated Financial Statements for the Fiscal Year Ended September 30, 2010
|
F-39
|
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 2,663,846 | $ | 785,612 | ||||
Accounts receivable
|
537,746 | 22,529 | ||||||
Inventories
|
1,593,571 | 140,594 | ||||||
Prepaid expenses
|
264,701 | 149,902 | ||||||
Total current assets
|
5,059,864 | 1,098,637 | ||||||
Property and equipment, net
|
827,217 | 86,654 | ||||||
Other long-term and intangible assets:
|
||||||||
License, at acquisition cost,
|
68,284 | 68,284 | ||||||
Deposits
|
10,713 | 10,713 | ||||||
78,997 | 78,997 | |||||||
Total assets
|
$ | 5,966,078 | $ | 1,264,288 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 1,097,637 | $ | 1,045,312 | ||||
Accrued liabilities
|
275,608 | 186,163 | ||||||
Notes payable
|
50,640 | 12,985 | ||||||
Current portion of convertible debt, net of discount
|
463,928 | 580,140 | ||||||
Total current liabilities
|
1,887,813 | 1,824,600 | ||||||
Convertible debt, net of discount
|
- | 303,960 | ||||||
Fair value of 10% convertible preferred stock warrants
|
487,555 | - | ||||||
Total liabilities
|
2,375,368 | 2,128,560 | ||||||
Commitments and contingencies
|
- | - | ||||||
10% Convertible preferred stock, no par value; authorized 880,000 shares; 759,773 issued and outstanding at September 30, 2011, net
|
6,594,341 | - | ||||||
Stockholders' deficit:
|
||||||||
Common stock, no par value; authorized, 100,000,000 shares; 24,947,261 and 23,305,704 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively
|
22,256,845 | 17,818,336 | ||||||
Accumulated deficit
|
(25,260,476 | ) | (18,682,608 | ) | ||||
Total stockholders' deficit
|
(3,003,631 | ) | (864,272 | ) | ||||
Total liabilities and stockholders' deficit
|
$ | 5,966,078 | $ | 1,264,288 |
2011
|
2010
|
|||||||
Revenue
|
$ | 2,187,379 | $ | 1,258,092 | ||||
Costs of sales
|
2,102,515 | 1,258,055 | ||||||
Gross margin
|
84,864 | 37 | ||||||
Operating expenses:
|
||||||||
Research and development
|
296,408 | 215,990 | ||||||
Marketing and sales
|
167,076 | 253,362 | ||||||
General and administrative
|
5,090,493 | 3,158,537 | ||||||
Depreciation and amortization
|
70,030 | 203,642 | ||||||
Total operating costs and expenses
|
5,624,007 | 3,831,531 | ||||||
Loss from operations
|
(5,539,143 | ) | (3,831,494 | ) | ||||
Other expense, net:
|
||||||||
Interest expense, net
|
123,818 | 82,062 | ||||||
Amortization of debt and preferred stock discount
|
914,907 | 554,793 | ||||||
Total other expense, net
|
1,038,725 | 636,855 | ||||||
Loss before provision for income taxes
|
(6,577,868 | ) | (4,468,349 | ) | ||||
Provision for income taxes
|
- | - | ||||||
Net loss
|
(6,577,868 | ) | (4,468,349 | ) | ||||
Accretion of preferred stock dividends and beneficial conversion feature
|
(414,653 | ) | - | |||||
Net loss attributable to common shareholders
|
$ | (6,992,521 | ) | $ | (4,468,349 | ) | ||
Weighted average common shares - basic and diluted
|
24,091,129 | 21,157,035 | ||||||
Basic and diluted net loss per share
|
$ | (0.29 | ) | $ | (0.21 | ) |
Common
Shares
|
Additional
Paid-in
Capital and
Common
Stock
|
Accumulated
Deficit
|
Total
|
|||||||||||||
Balance, January 1, 2011
|
23,305,704 | $ | 17,818,336 | $ | (18,682,608 | ) | $ | (864,272 | ) | |||||||
Shares issued pursuant to conversion of debt
|
503,408 | 462,067 | 462,067 | |||||||||||||
Shares issued pursuant to exercise of warrants
|
294,115 | 200 | 200 | |||||||||||||
Shares issued for services and license agreements
|
484,940 | 654,308 | 654,308 | |||||||||||||
Shares issued for interest payments
|
33,426 | 36,183 | 36,183 | |||||||||||||
Shares issued for dividend payments
|
325,668 | 352,032 | 352,032 | |||||||||||||
Share-based compensation
|
2,372,646 | 2,372,646 | ||||||||||||||
Recognition of beneficial conversion features pursuant to modification of debt
|
600,000 | 600,000 | ||||||||||||||
Recognition of beneficial conversion features pursuant to 10% Convertible Preferred Stock
|
375,726 | 375,726 | ||||||||||||||
Accretion of dividend on 10% Convertible Preferred Stock
|
(352,032 | ) | (352,032 | ) | ||||||||||||
Accretion of beneficial conversion feature of 10% Convertible Preferred Stock
|
(62,621 | ) | (62,621 | ) | ||||||||||||
Net loss
|
(6,577,868 | ) | (6,577,868 | ) | ||||||||||||
Balance, September 30, 2011
|
24,947,261 | $ | 22,256,845 | $ | (25,260,476 | ) | $ | (3,003,631 | ) |
2011
|
2010
|
|||||||
Cash flow from operating activities:
|
||||||||
Net loss
|
$ | (6,577,868 | ) | $ | (4,468,349 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation, and amortization
|
92,619 | 203,641 | ||||||
Accretion of convertible debt discount
|
589,830 | 554,792 | ||||||
Accretion of preferred stock discount
|
138,057 | - | ||||||
Fair value of warrants to purchase redeemable preferred stock
|
487,555 | - | ||||||
Share-based compensation
|
3,026,954 | 1,395,889 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(515,217 | ) | (106,471 | ) | ||||
Inventories
|
(1,452,977 | ) | 174,475 | |||||
Prepaid expenses and other
|
(114,799 | ) | (57,227 | ) | ||||
Accounts payable
|
140,573 | 609,881 | ||||||
Accrued liabilities
|
89,445 | (96,398 | ) | |||||
Net cash used in operating activities
|
(4,095,828 | ) | (1,789,767 | ) | ||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
(833,182 | ) | (76,600 | ) | ||||
Net cash used in investing activities
|
(833,182 | ) | (76,600 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of 10% convertible preferred stock, net
|
6,769,389 | - | ||||||
Proceeds from short term notes
|
100,758 | 63,126 | ||||||
Proceeds from convertible debt
|
- | 710,000 | ||||||
Issuance of common stock, net of expenses
|
200 | 1,966,376 | ||||||
Repayments of convertible debt
|
- | (300,000 | ) | |||||
Repayment of short term notes
|
(63,103 | ) | (24,431 | ) | ||||
Net cash provided by financing activities
|
6,807,244 | 2,415,071 | ||||||
Net increase in cash
|
1,878,234 | 548,704 | ||||||
Cash and cash equivalents at beginning of period
|
785,612 | 338,192 | ||||||
Cash and cash equivalents at end of period
|
$ | 2,663,846 | $ | 886,896 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for interest
|
$ | 67,480 | $ | 71,401 | ||||
Conversion of notes
|
462,067 | 278,236 | ||||||
Accretion of dividends on 10% convertible preferred stock
|
352,032 | - |
September 30,
2011
|
December 31,
2010
|
|||||||
Property, equipment, and leasehold improvements, at cost:
|
||||||||
Equipment
|
$ | 13,754 | $ | 13,754 | ||||
Machinery and equipment
|
1,353,694 | 520,512 | ||||||
Purchased software
|
56,404 | 56,404 | ||||||
Furniture and fixtures
|
13,090 | 13,090 | ||||||
Leasehold improvements
|
950 | 950 | ||||||
1,437,892 | 604,710 | |||||||
Less accumulated depreciation
|
(610,675 | ) | (518,056 | ) | ||||
Net property and leasehold improvements
|
$ | 827,217 | $ | 86,654 |
September 30,
2011
|
December 31,
2010
|
|||||||
Finished products
|
$ | 1,127,780 | $ | 104,754 | ||||
Parts
|
12,747 | - | ||||||
Production materials
|
453,044 | 35,840 | ||||||
Total inventories
|
$ | 1,593,571 | $ | 140,594 |
September 30,
2011
|
December 31,
2010
|
|||||||
Payable to insurer pursuant to policy terms
|
$ | 100,000 | $ | 100,000 | ||||
Royalties
|
71,406 | - | ||||||
Payroll
|
22,654 | 23,642 | ||||||
Interest
|
22,500 | 54,852 | ||||||
Miscellaneous
|
59,048 | 7,669 | ||||||
Total accrued liabilities
|
$ | 275,608 | $ | 186,163 |
Due
|
September 30,
2011
|
December 31,
2010
|
||||||||
10% convertible note
|
February 2011
|
$ | - | $ | 60,000 | |||||
8.75% convertible debenture
|
January 2012
|
172,500 | 172,500 | |||||||
7% convertible note
|
May 2012
|
- | 350,000 | |||||||
10% convertible debentures
|
June 2012
|
600,000 | 600,000 | |||||||
Subtotal - principal
|
772,500 | 1,182,500 | ||||||||
Debt discount
|
(308,572 | ) | (298,400 | ) | ||||||
463,928 | 884,100 | |||||||||
Less: current portion
|
(463,928 | ) | (580,140 | ) | ||||||
Total long term debt
|
$ | - | $ | 303,960 |
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Redeemable preferred stock – face value
|
$ | 7,597,730 | $ | - | ||||
Unamortized discount
|
(1,003,389 | ) | - | |||||
Redeemable preferred stock, net of discount
|
$ | 6,594,341 | $ | - |
Three Months Ended
|
||||||||
September 30, 2011
|
||||||||
Weighted-
|
||||||||
Average
|
||||||||
Number
|
Exercise
|
|||||||
of Shares
|
Price
|
|||||||
Outstanding at beginning of period
|
5,218,381 | $ | 1.20 | |||||
Granted during the period
|
133,755 | 0.77 | ||||||
Exercised during the period
|
||||||||
Cancelled during the period
|
- | |||||||
Outstanding at end of the period
|
5,352,136 | $ | 1.19 | |||||
Exercisable at end of period
|
5,102,803 | $ | 1.20 |
Three Months Ended
|
||||||||
September 30, 2011
|
||||||||
Weighted-
|
||||||||
Average
|
||||||||
Number
|
Exercise
|
|||||||
of Shares
|
Price
|
|||||||
Outstanding at beginning of period
|
5,803,761 | $ | 1.13 | |||||
Granted during the period
|
157,500 | 1.05 | ||||||
Exercised during the period
|
- | - | ||||||
Cancelled during the period
|
(200,000 | ) | 1.40 | |||||
Outstanding at end of the period
|
5,761,261 | $ | 1.12 | |||||
Exercisable at end of period
|
2,924,703 | $ | 1.04 |
Weighted
|
Weighted
|
|||||||||||||
Average
|
Average
|
Aggregate
|
||||||||||||
Number of
|
Exercise
|
Remaining
|
Intrinsic
|
|||||||||||
Shares
|
Price
|
Life
|
Value
|
|||||||||||
Options outstanding
|
5,761,261 | $ | 1.12 |
4.1 years
|
$ | 846,200 | ||||||||
Options vested and exercisable
|
2,924,703 | 1.04 |
3.5 years
|
280,369 | ||||||||||
Unvested options expected to vest
|
2,836,558 | 1.20 |
4.6 years
|
565,831 |
/s/ RBSM LLP
|
December 31,
|
September 30,
|
September 30,
|
||||||||||
2010
|
2010
|
2009
|
||||||||||
ASSETS
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
$ | 785,612 | $ | 886,896 | $ | 1,257,516 | ||||||
Accounts receivable
|
22,529 | 409,292 | 314,027 | |||||||||
Inventories
|
140,594 | 130,453 | 76,533 | |||||||||
Prepaid expenses
|
149,902 | 64,727 | 1,915 | |||||||||
Total current assets
|
1,098,637 | 1,491,368 | 1,649,991 | |||||||||
Property and equipment, net
|
86,654 | 160,372 | 306,347 | |||||||||
Other long-term and intangible assets:
|
||||||||||||
License, at acquisition cost,
|
68,284 | 68,284 | 68,284 | |||||||||
Deposits
|
10,713 | 10,713 | 10,713 | |||||||||
78,997 | 78,997 | 78,997 | ||||||||||
Total assets
|
$ | 1,264,288 | $ | 1,730,737 | $ | 2,035,335 | ||||||
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
|
||||||||||||
Current liabilities
|
||||||||||||
Accounts payable
|
$ | 1,045,312 | $ | 1,102,882 | $ | 546,920 | ||||||
Accrued liabilities
|
186,163 | 277,935 | 357,172 | |||||||||
Notes payable
|
12,985 | 38,695 | 14,000 | |||||||||
Current portion of convertible debentures, net of discount
|
580,140 | 657,420 | 253,795 | |||||||||
Total current liabilities
|
1,824,600 | 2,076,932 | 1,171,887 | |||||||||
Convertible debentures, net of discount
|
303,960 | 92,894 | 157,347 | |||||||||
Total liabilities
|
2,128,560 | 2,169,826 | 1,329,234 | |||||||||
Commitments and contingencies
|
- | - | - | |||||||||
Stockholders' (deficit) equity:
|
||||||||||||
Additional paid-in capital and common stock, no par value; authorized, 100,000,000 shares; 23,305,704, 22,854,037 and 19,243,669 shares issued and outstanding at December 31, 2010,and September 30, 2010 and 2009, respectively
|
17,818,336 | 15,968,740 | 10,009,677 | |||||||||
Accumulated deficit
|
(18,682,608 | ) | (16,407,829 | ) | (9,303,576 | ) | ||||||
Total stockholders' (deficit) equity
|
(864,272 | ) | (439,089 | ) | 706,101 | |||||||
Total liabilities and stockholders' (deficit) equity
|
$ | 1,264,288 | $ | 1,730,737 | $ | 2,035,335 |
Three Months
Ended
December 31,
|
Year ended
September 30,
|
Year Ended
September 30,
|
||||||||||
2010
|
2010
|
2009
|
||||||||||
Revenue
|
$ | - | $ | 1,560,633 | $ | 1,374,961 | ||||||
Cost of goods sold
|
- | 1,504,095 | 995,218 | |||||||||
Gross profit
|
- | 56,538 | 379,743 | |||||||||
Operating expenses:
|
||||||||||||
Research and development costs
|
43,066 | 242,605 | 467,133 | |||||||||
Marketing and sales
|
71,086 | 358,402 | 497,961 | |||||||||
General and administrative expenses
|
1,925,595 | 5,620,137 | 3,398,509 | |||||||||
Depreciation and amortization
|
74,194 | 268,006 | 179,547 | |||||||||
Total operating costs and expenses
|
2,113,941 | 6,489,150 | 4,543,150 | |||||||||
Loss from operations
|
(2,113,941 | ) | (6,432,612 | ) | (4,163,407 | ) | ||||||
Total other expense:
|
||||||||||||
Interest expense, net
|
27,052 | 107,276 | 113,438 | |||||||||
Amortization of debt discount
|
133,786 | 564,365 | 475,744 | |||||||||
Debt conversion expense
|
- | - | 1,006,826 | |||||||||
Total other expense
|
160,838 | 671,641 | 1,596,008 | |||||||||
Loss before income taxes
|
(2,274,779 | ) | (7,104,253 | ) | (5,759,415 | ) | ||||||
Provision for income taxes
|
- | - | - | |||||||||
Net loss
|
$ | (2,274,779 | ) | $ | (7,104,253 | ) | $ | (5,759,415 | ) | |||
Weighted average common shares - basic and diluted
|
23,042,108 | 20,752,217 | 15,873,361 | |||||||||
Basic and diluted net loss per share
|
$ | (0.10 | ) | $ | (0.34 | ) | $ | (0.36 | ) |
Common
Shares
|
Additional
Paid-in
Capital and
Common
Stock
|
Accumulated
Deficit
|
Total
|
|||||||||||||
Balance, October 1, 2008
|
13,978,136
|
$
|
3,029,334
|
$
|
(3,544,161
|
)
|
$
|
(514,827
|
)
|
|||||||
Private placements of common stock
|
3,115,055
|
3,205,343
|
-
|
3,205,343
|
||||||||||||
Shares issued pursuant to conversion of debenture and interest accrued thereon
|
1,330,621
|
1,355,327
|
-
|
1,355,327
|
||||||||||||
Shares issued pursuant to exercise of options
|
297,857
|
-
|
-
|
-
|
||||||||||||
Stock-based compensation
|
522,000
|
1,453,404
|
-
|
1,453,404
|
||||||||||||
Warrants issued in connection with debt instruments
|
820,238
|
-
|
820,238
|
|||||||||||||
Recognition of beneficial conversion features
|
146,031
|
-
|
146,031
|
|||||||||||||
Net loss
|
(5,759,415
|
)
|
(5,759,415
|
)
|
||||||||||||
Balance, September 30, 2009
|
19,243,669
|
10,009,677
|
(9,303,576
|
)
|
706,101
|
|||||||||||
Private placement of common stock
|
1,761,340
|
2,664,260
|
-
|
2,664,260
|
||||||||||||
Shares issued pursuant to conversions of debentures and accrued interest
|
1,005,330
|
647,716
|
-
|
647,716
|
||||||||||||
Shares issued pursuant to exercise of warrants
|
18,972
|
-
|
-
|
-
|
||||||||||||
Stock-based compensation
|
824,726
|
2,285,184
|
-
|
2,285,184
|
||||||||||||
Warrants issued in connection with debt instruments
|
152,463
|
-
|
152,463
|
|||||||||||||
Recognition of beneficial conversion feature
|
209,440
|
-
|
209,440
|
|||||||||||||
Net loss
|
-
|
(7,104,253
|
)
|
(7,104,253
|
)
|
|||||||||||
Balance, September 30, 2010
|
22,854,037
|
15,968,740
|
(16,407,829
|
)
|
(439,089
|
)
|
||||||||||
Private placement of common stock
|
416,667
|
500,000
|
500,000
|
|||||||||||||
Stock issued for services
|
35,000
|
36,750
|
36,750
|
|||||||||||||
Stock-based compensation
|
1,312,846
|
1,312,846
|
||||||||||||||
Net loss
|
(2,274,779
|
)
|
(2,274,779
|
)
|
||||||||||||
Balance, December 31, 2010
|
23,305,704
|
$
|
17,818,336
|
$
|
(18,682,608
|
)
|
$
|
(864,272
|
)
|
Three Months
Ended
December 31,
|
Year Ended
September 30,
|
Year Ended
September 30,
|
||||||||||
2010
|
2010
|
2009
|
||||||||||
Cash flow from operating activities:
|
||||||||||||
Net loss
|
$
|
(2,274,779
|
)
|
$
|
(7,104,253
|
)
|
$
|
(5,759,415
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Depreciation, and amortization
|
74,195
|
268,005
|
179,547
|
|||||||||
Accretion of interest expense on convertible debentures
|
133,786
|
564,364
|
475,745
|
|||||||||
Debt conversion expense
|
-
|
-
|
1,006,826
|
|||||||||
Issuance of common stock and warrants for financial obligations
|
1,349,596
|
2,952,443
|
1,526,905
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
386,763
|
(95,265
|
)
|
(314,027
|
)
|
|||||||
Inventories
|
(10,141
|
)
|
(53,920
|
)
|
33,882
|
|||||||
Prepaid expenses and other
|
(85,175
|
)
|
(62,812
|
)
|
(19,675
|
)
|
||||||
Accounts payable & accrued liabilities
|
(149,342
|
)
|
476,725
|
314,849
|
||||||||
Net cash used in operating activities
|
(575,097
|
)
|
(3,054,713
|
)
|
(2,555,363
|
)
|
||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of equipment and leasehold improvements
|
(477
|
)
|
(122,030
|
)
|
(145,289
|
)
|
||||||
Net cash used in investing activities
|
(477
|
)
|
(122,030
|
)
|
(145,289
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from short term notes
|
63,126
|
1,124,000
|
||||||||||
Issuance of common stock, net of expenses
|
500,000
|
2,371,428
|
3,205,343
|
|||||||||
Issuance of convertible debenture
|
710,000
|
500,000
|
||||||||||
Repayment of notes and convertible debentures
|
(25,710
|
)
|
(338,431
|
)
|
(1,010,000
|
)
|
||||||
Net cash provided by financing activities
|
474,290
|
2,806,123
|
3,819,343
|
|||||||||
Net (decrease) increase in cash
|
(101,284
|
)
|
(370,620
|
)
|
1,118,691
|
|||||||
Cash and cash equivalents at beginning of period
|
886,896
|
1,257,516
|
138,825
|
|||||||||
Cash and cash equivalents at end of period
|
$
|
785,612
|
$
|
886,896
|
$
|
1,257,516
|
||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Cash paid for interest
|
$
|
3,773
|
$
|
69,469
|
$
|
8,821
|
||||||
Common stock issued for consulting services
|
36,750
|
1,758,024
|
562,810
|
|||||||||
Conversion of notes
|
-
|
278,236
|
275,000
|
|||||||||
Warrants issued in connection with debt
|
-
|
147,515
|
820,238
|
(1)
|
Summary of Significant Accounting Policies
|
(a)
|
Business and Basis of Financial Statement Presentation
|
(b)
|
Statement of Cash Flows
|
(c)
|
Property and Equipment
|
December 31,
2010
|
September 30,
2010
|
September 30,
2009
|
||||||||||
Property, equipment, and leasehold improvements, at cost:
|
||||||||||||
Equipment
|
$
|
13,754
|
$
|
13,754
|
$
|
9,838
|
||||||
Machinery and equipment
|
520,512
|
520,035
|
406,639
|
|||||||||
Purchased software
|
56,404
|
56,404
|
56,404
|
|||||||||
Furniture and fixtures
|
13,090
|
13,090
|
9,322
|
|||||||||
Leasehold improvements
|
950
|
950
|
29,300
|
|||||||||
604,710
|
604,233
|
511,503
|
||||||||||
Less accumulated depreciation
|
(518,056
|
)
|
(443,861
|
)
|
(205,156
|
)
|
||||||
Net property and leasehold improvements
|
$
|
86,654
|
$
|
160,372
|
$
|
306,347
|
(d)
|
Allowance for Doubtful Accounts
|
(e)
|
Inventories
|
December 31,
2010
|
September 30,
2010
|
September 30,
2009
|
||||||||||
Finished goods
|
$
|
104,754
|
$
|
108,001
|
$
|
46,731
|
||||||
Production materials
|
35,840
|
22,452
|
29,802
|
|||||||||
Total inventories
|
$
|
140,594
|
$
|
130,453
|
$
|
76,533
|
(f)
|
Revenue and Cost Recognition
|
(g)
|
Income Taxes
|
(h)
|
Impairment of Long-Lived Assets Other Than Goodwill
|
(i)
|
Stock-Based Compensation
|
(j)
|
Earnings (Loss) Per Share
|
(k)
|
Fair value of Financial Instruments
|
(m)
|
Operating Cycle
|
(n)
|
Use of Estimates
|
(2)
|
Recent Accounting Pronouncements
|
(3)
|
Going Concern
|
(4)
|
Intangibles and Exclusive Agreement
|
(5)
|
Accrued liabilities
|
December 31,
2010
|
September 30,
2010
|
September 30,
2009
|
||||||||||
Payable to insurer for legal settlement
|
$
|
100,000
|
$
|
100,000
|
$
|
100,000
|
||||||
Refundable oil and gas receipts
|
-
|
67,146
|
129,334
|
|||||||||
Accrued interest
|
54,852
|
39,896
|
76,644
|
|||||||||
Accrued payroll
|
23,642
|
70,312
|
-
|
|||||||||
Other
|
7,669
|
581
|
51,194
|
|||||||||
Total accrued liabilities
|
$
|
186,163
|
$
|
277,935
|
$
|
357,172
|
(6)
|
Debt
|
December 31,
|
September 30,
|
September 30,
|
|||||||||||
Due
|
2010
|
2010
|
2009
|
||||||||||
8.75% convertible debenture
|
December 2010
|
$
|
172,500
|
$
|
172,500
|
$
|
172,500
|
||||||
9% convertible debentures
|
-
|
278,236
|
|||||||||||
10% convertible debentures
|
February 2011
|
500,000
|
500,000
|
500,000
|
|||||||||
10% convertible debenture
|
March 2011
|
100,000
|
100,000
|
100,000
|
|||||||||
7% convertible note
|
May 2012
|
350,000
|
350,000
|
||||||||||
10% convertible note
|
February 2011
|
60,000
|
60,000
|
-
|
|||||||||
Subtotal – principal
|
1,182,500
|
1,182,500
|
1,050,736
|
||||||||||
Debt discount
|
(298,400
|
)
|
(432,186
|
)
|
(639,594
|
)
|
|||||||
884,100
|
750,314
|
411,142
|
|||||||||||
Less, current portion
|
580,140
|
657,420
|
253,795
|
||||||||||
$
|
303,960
|
$
|
92,894
|
$
|
157,347
|
(7)
|
Stockholder’s Equity
|
Three Months Ended
|
Fiscal Year Ended
|
Fiscal Year Ended
|
||||||||||||||||||||||
December 31, 2010
|
September 30, 2010
|
September 30, 2009
|
||||||||||||||||||||||
Weighted-
|
Weighted-
|
Weighted-
|
||||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||||
Number
|
Exercise
|
Number
|
Exercise
|
Number
|
Exercise
|
|||||||||||||||||||
of Shares
|
Price
|
of Shares
|
Price
|
of Shares
|
Price
|
|||||||||||||||||||
Outstanding at beginning of period
|
5,374,563
|
$
|
1.44
|
3,122,446
|
$
|
1.51
|
426,446
|
$
|
4.89
|
|||||||||||||||
Granted during the period
|
381,666
|
1.42
|
2,277,117
|
1.33
|
2,696,000
|
0.98
|
||||||||||||||||||
Exercised during the period
|
-
|
(25,000
|
)
|
0.87
|
0.01
|
|||||||||||||||||||
Cancelled during the period
|
(426,446
|
)
|
4.89
|
-
|
||||||||||||||||||||
Outstanding at end of the period
|
5,329,783
|
$
|
1.16
|
5,374,563
|
$
|
1.44
|
3,122,446
|
$
|
1.51
|
|||||||||||||||
Exercisable at end of period
|
5,329,783
|
$
|
1.16
|
5,086,563
|
$
|
1.47
|
3,092,446
|
$
|
1.52
|
(8)
|
Stock–based compensation
|
Three Months Ended
|
Fiscal Year Ended
|
Fiscal Year Ended
|
||||||||||||||||||||||
December 31, 2010
|
September 30, 2010
|
September 30, 2009
|
||||||||||||||||||||||
Weighted-
|
Weighted-
|
Weighted-
|
||||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||||
Number
|
Exercise
|
Number
|
Exercise
|
Number
|
Exercise
|
|||||||||||||||||||
of Shares
|
Price
|
of Shares
|
Price
|
of Shares
|
Price
|
|||||||||||||||||||
Outstanding at beginning of period
|
1,938,761
|
$ |
0.61
|
2,219,799
|
$ |
0.47
|
1,218,114
|
$ |
-
|
|||||||||||||||
Granted during the period
|
1,600,000
|
1.53
|
150,000
|
1.22
|
1,301,685
|
0.81
|
||||||||||||||||||
Exercised during the period
|
-
|
-
|
(300,000
|
)
|
0.01
|
|||||||||||||||||||
Cancelled during the period
|
(50,000
|
)
|
1.13
|
(431,038
|
)
|
0.13
|
-
|
|||||||||||||||||
Outstanding at end of the period
|
3,488,761
|
$ |
1.02
|
1,938,761
|
$ |
0.61
|
2,219,799
|
$ |
0.47
|
|||||||||||||||
Exercisable at end of period
|
1,326,685
|
$ |
1.01
|
892,724
|
$ |
0.97
|
646,057
|
$ |
0.91
|
Weighted
|
Weighted
|
||||||||||||
Average
|
Average
|
Aggregate
|
|||||||||||
Number of
|
Exercise
|
Remaining
|
Intrinsic
|
||||||||||
Shares
|
Price
|
Life
|
Value
|
||||||||||
Options outstanding
|
3,488,761
|
$
|
1.02
|
4.0 years
|
$
|
819,900
|
|||||||
Options vested and exercisable
|
1,326,685
|
1.01
|
3.3 years
|
80,702
|
|||||||||
Unvested options expected to vest
|
2,162,076
|
1.03
|
4.5 years
|
739,198
|
(9)
|
Income Taxes
|
December 31,
|
September 30,
|
September 30,
|
||||||||||
2010
|
2010
|
2009
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
State
|
-
|
-
|
||||||||||
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Increase in valuation allowance
|
(1,400,000
|
)
|
(1,500,000
|
)
|
(1,000,000
|
)
|
||||||
Benefit of operating loss carry forward
|
1,400,000
|
1,500,000
|
1,00,000
|
|||||||||
Provision (benefit) for income taxes, net
|
$
|
-
|
$
|
-
|
$
|
-
|
|
December 31,
|
September 30,
|
September 30,
|
||||||||||
2010
|
2010
|
2009
|
||||||||||
Statutory federal income tax rate
|
40.0
|
%
|
40.0
|
%
|
40.0
|
%
|
||||||
Increase in valuation allowance
|
(40.0
|
)%
|
(40.0
|
)%
|
(40.0
|
)%
|
||||||
Effective tax rate
|
-
|
%
|
-
|
%
|
-
|
%
|
December 31,
|
September 30,
|
September 30,
|
||||||||||
2010
|
2010
|
2009
|
||||||||||
Deferred tax assets
|
||||||||||||
Current
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Non-current
|
3,900,000
|
2,500,000
|
1,000,000
|
|||||||||
3,900,000
|
2,500,000
|
1,000,000
|
||||||||||
Less valuation allowance
|
(3,900,000
|
)
|
(2,500,000
|
)
|
(1,100,000
|
)
|
||||||
Net deferred income tax asset
|
$
|
-
|
$
|
-
|
$
|
-
|
(10)
|
Commitments and Contingencies
|
Year ending December 31, 2011
|
$
|
66,000
|
||
Year ending December 31, 2012
|
$
|
37,000
|
(11)
|
Related Party Transactions
|
(12)
|
Transition Period Comparative Data (Unaudited)
|
Three Months Ended
|
Three Months Ended
|
|||||||
December 31,
2010
|
December 31,
2009
|
|||||||
Revenue
|
$
|
-
|
$
|
302,541
|
||||
Cost of goods sold
|
-
|
246,040
|
||||||
Gross profit
|
-
|
56,501
|
||||||
Operating expenses:
|
||||||||
Research and development costs
|
43,066
|
26,615
|
||||||
Marketing and sales
|
71,086
|
105,040
|
||||||
General and administrative expenses
|
1,925,595
|
2,461,600
|
||||||
Depreciation and amortization
|
74,194
|
64,364
|
||||||
Total operating costs and expenses
|
2,113,941
|
2,657,619
|
||||||
Loss from operations
|
(2,113,941
|
)
|
(2,601,118
|
)
|
||||
Total other expense :
|
||||||||
Interest expense, net
|
27,052
|
25,214
|
||||||
Amortization of debt discount
|
133,786
|
9,572
|
||||||
Total other expense
|
160,838
|
34,786
|
||||||
Loss before income taxes
|
(2,274,779
|
)
|
(2,635,904
|
)
|
||||
Provision for income taxes
|
-
|
-
|
||||||
Net loss
|
$
|
(2,274,779
|
)
|
$
|
(2,635,904
|
)
|
||
Weighted average common shares - basic and diluted
|
23,042,108
|
19,550,964
|
||||||
Basic and diluted net loss per share
|
$
|
(0.10
|
)
|
$
|
(0.13
|
)
|
For the Three
Months Ended
December 31,
|
For the Three
Months Ended
December 31,
|
|||||||
2010
|
2009
|
|||||||
Cash flow from operating activities:
|
||||||||
Net loss
|
$
|
(2,274,779
|
)
|
$
|
(2,635,904
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation, and amortization
|
74,195
|
64,364
|
||||||
Accretion of interest expense on convertible debentures
|
133,786
|
9,572
|
||||||
Issuance of common stock and warrants for financial obligations
|
1,349,596
|
1,475,089
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
386,763
|
11,206
|
||||||
Inventories
|
(10,141
|
)
|
(228,395
|
)
|
||||
Prepaid expenses and other
|
(85,175
|
)
|
(5,585
|
)
|
||||
Accounts payable & accrued liabilities
|
(149,342
|
)
|
39,759
|
|||||
Net cash used in operating activities
|
(575,097
|
)
|
(1,269,894
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of equipment and leasehold improvements
|
(477
|
)
|
(45,430
|
)
|
||||
Net cash used in investing activities
|
(477
|
)
|
(45,430
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Issuance of common stock, net of expenses
|
500,000
|
410,000
|
||||||
Repayment of notes and convertible debentures
|
(25,710
|
)
|
(14,000
|
)
|
||||
Net cash provided by financing activities
|
474,290
|
396,000
|
||||||
Net (decrease) increase in cash
|
(101,284
|
)
|
(919,324
|
)
|
||||
Cash at beginning of period
|
886,896
|
1,257,516
|
||||||
Cash at end of period
|
$
|
785,612
|
$
|
338,192
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
3,773
|
$
|
-
|
||||
Common stock issued for consulting services
|
36,750
|
-
|
(13)
|
Subsequent Events
|
(a)
|
Subsequent to December 31, 2010, we sold $7,597,730 of our 10% Convertible Preferred Stock to accredited investors. Pursuant to this transaction, we issued 759,773 shares of 10% Convertible Preferred Stock In addition, we paid $735,478 and we’re obligated to issue warrants to purchase 57,560 shares of 10% Convertible Preferred Stock, to certain broker-dealers.
|
|
|
(b)
|
Subsequent to December 31, 2010, we amended our 8.75% convertible debenture, originally due on December 31, 2010 in the principal amount of $172,500, to extend the maturity date to January 31, 2012. In addition, we agreed:
|
|
·
|
to eliminate our ability to pay interest in shares of our common stock in lieu of cash;
|
|
·
|
to eliminate our ability to optionally redeem the debenture;
|
|
·
|
to amend the terms of our right to force conversion of the debenture when the volume weighted average price for any 30-day trading period exceeds $2.50 from originally $0.80; and
|
|
·
|
that we would be allowed to pay dividends on any financing transaction entered into between the effective date of the amendment and April 30, 2011.
|
Subsequent to December 31, 2010, we amended our 10% convertible debentures, originally due in February and March 2011 in the aggregate principal amount of $600,000, to extend the maturity dates to June 30, 2012. In addition, we agreed :
|
|
·
|
that effective March 1, 2011, the interest rate would increase to 15% if paid in cash and to 18% if paid with shares of common stock, at the rate of one share of common stock for each $0.60 of interest from $0.90 of interest;
|
|
·
|
to decrease the Conversion Price to $0.60 from $0.90;
|
|
·
|
to amend the terms of our right to force conversion of the debenture when the volume weighted average price for any 30-day trading period exceeds $2.50 from originally $2.00;
|
|
·
|
that we would be allowed to pay dividends or distributions on any of our equity securities; and
|
|
·
|
that effective for each month after March 2011, we would issue a three-year warrant to purchase shares of our common stock for $0.90 per share, equal to 5% of the outstanding principal on the final day of that month.
|
(d)
|
Subsequent to December 31, 2010, the holder of our 10% convertible note, due February 10, 2011, converted principal plus accrued interest into 60,000 shares of our Common Stock.
|
/s/ Jewett, Schwartz, Wolfe and Associates
|
|
Hollywood, Florida
|
|
January 11, 2011
|
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
886,896
|
$
|
1,257,516
|
||||
Accounts receivable
|
409,292
|
314,027
|
||||||
Inventories
|
130,453
|
76,533
|
||||||
Prepaid expenses
|
64,727
|
1,915
|
||||||
Total current assets
|
1,491,368
|
1,649,991
|
||||||
Property, equipment, and leasehold improvements, at cost:
|
||||||||
Equipment
|
13,754
|
9,838
|
||||||
Machinery and equipment
|
520,035
|
406,639
|
||||||
Purchased software
|
56,404
|
56,404
|
||||||
Furniture and fixtures
|
13,090
|
9,322
|
||||||
Leasehold improvements
|
950
|
29,300
|
||||||
604,233
|
511,503
|
|||||||
Less accumulated depreciation
|
(443,861
|
)
|
(205,156
|
)
|
||||
Net property and leasehold improvements
|
160,372
|
306,347
|
||||||
Long-term and intangible assets
|
||||||||
License, at acquisition cost,
|
68,284
|
68,284
|
||||||
Deposits
|
10,713
|
10,713
|
||||||
78,997
|
78,997
|
|||||||
Total assets
|
$
|
1,730,737
|
$
|
2,035,335
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$
|
1,102,882
|
$
|
546,920
|
||||
Accrued liabilities
|
277,935
|
357,172
|
||||||
Notes payable
|
38,695
|
14,000
|
||||||
Current portion of convertible debentures, net of discount
|
657,420
|
253,795
|
||||||
Total current liabilities
|
2,076,932
|
1,171,887
|
||||||
Convertible debentures, net of discount
|
92,894
|
157,347
|
||||||
Total liabilities
|
2,169,826
|
1,329,234
|
||||||
Commitments and contingencies
|
-
|
-
|
||||||
Stockholders' equity (deficit):
|
||||||||
Additional paid-in capital and common stock, no par value; authorized, 100,000,000 shares; 22,854,037 and 19,243,669 shares issued and outstanding at September 30, 2010 and 2009, respectively
|
15,968,740
|
10,009,677
|
||||||
Accumulated deficit
|
(16,407,829
|
)
|
(9,303,576
|
)
|
||||
Total stockholders' equity (deficit)
|
(439,089
|
)
|
706,101
|
|||||
Total liabilities and stockholders' equity (deficit)
|
$
|
1,730,737
|
$
|
2,035,335
|
Year ended
September 30,
|
Year Ended
September 30,
|
|||||||
2010
|
2009
|
|||||||
Revenue
|
$
|
1,560,633
|
$
|
1,374,961
|
||||
Cost of goods sold
|
1,504,095
|
995,218
|
||||||
Gross profit
|
56,538
|
379,743
|
||||||
Operating expenses:
|
||||||||
Research and development costs
|
242,605
|
467,133
|
||||||
Marketing and sales
|
358,402
|
497,961
|
||||||
General and administrative expenses
|
5,620,137
|
3,398,509
|
||||||
Depreciation and amortization
|
268,006
|
179,547
|
||||||
Total operating costs and expenses
|
6,489,150
|
4,543,150
|
||||||
Loss from operations
|
(6,432,612
|
)
|
(4,163,407
|
)
|
||||
Total other expense :
|
||||||||
Interest expense, net
|
107,276
|
113,438
|
||||||
Amortization of debt discount
|
564,365
|
475,744
|
||||||
Debt conversion expense
|
-
|
1,006,826
|
||||||
Total other expense
|
671,641
|
1,596,008
|
||||||
Loss before income taxes
|
(7,104,253
|
)
|
(5,759,415
|
)
|
||||
Provision for income taxes
|
-
|
-
|
||||||
Net loss
|
$
|
(7,104,253
|
)
|
$
|
(5,759,415
|
)
|
||
Weighted average common shares - basic and diluted
|
20,752,217
|
15,873,361
|
||||||
Basic and diluted net loss per share
|
$
|
(0.34
|
)
|
$
|
(0.36
|
)
|
Year Ended
September 30,
|
Year Ended
September 30,
|
|||||||
2010
|
2009
|
|||||||
Cash flow from operating activities:
|
||||||||
Net loss
|
$
|
(7,104,253
|
)
|
$
|
(5,759,415
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation, and amortization
|
268,005
|
179,547
|
||||||
Accretion of interest expense on convertible debentures
|
564,364
|
475,745
|
||||||
Debt conversion expense
|
-
|
1,006,826
|
||||||
Issuance of common stock and warrants for financial obligations
|
2,952,443
|
1,526,905
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(95,265
|
)
|
(314,027
|
)
|
||||
Inventories
|
(53,920
|
)
|
33,882
|
|||||
Prepaid expenses and other
|
(62,812
|
)
|
(19,675
|
)
|
||||
Accounts payable & accrued liabilities
|
476,725
|
314,849
|
||||||
Net cash used in operating activities
|
(3,054,713
|
)
|
(2,555,363
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of equipment and leasehold improvements
|
(122,030
|
)
|
(145,289
|
)
|
||||
Net cash used in investing activities
|
(122,030
|
)
|
(145,289
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from short term notes
|
63,126
|
1,124,000
|
||||||
Issuance of common stock, net of expenses
|
2,371,428
|
3,205,343
|
||||||
Issuance of convertible debenture
|
710,000
|
500,000
|
||||||
Repayment of notes and convertible debentures
|
(338,431
|
)
|
(1,010,000
|
)
|
||||
Net cash provided by financing activities
|
2,806,123
|
3,819,343
|
||||||
Net (decrease) increase in cash
|
(370,620
|
)
|
1,118,691
|
|||||
Cash at beginning of period
|
1,257,516
|
138,825
|
||||||
Cash at end of period
|
$
|
886,896
|
$
|
1,257,516
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
69,469
|
$
|
8,821
|
||||
Common stock issued for consulting services
|
1,758,024
|
562,810
|
||||||
Conversion of notes
|
278,236
|
275,000
|
||||||
Warrants issued in connection with debt
|
147,515
|
820,238
|
Common
Shares
|
Additional
Paid-in
Capital and
Common
Stock
|
Accumulated
Deficit
|
Total
|
|||||||||||||
Balance, October 1, 2008
|
13,978,136
|
$
|
3,029,334
|
$
|
(3,544,161
|
)
|
$
|
(514,827
|
)
|
|||||||
Private placements of common stock
|
3,115,055
|
3,205,343
|
-
|
3,205,343
|
||||||||||||
Shares issued pursuant to conversion of debenture and interest accrued thereon
|
1,330,621
|
1,355,327
|
-
|
1,355,327
|
||||||||||||
Shares issued pursuant to exercise of options
|
297,857
|
-
|
-
|
-
|
||||||||||||
Stock-based compensation
|
522,000
|
1,453,404
|
-
|
1,453,404
|
||||||||||||
Warrants issued in connection with debt instruments
|
820,238
|
-
|
820,238
|
|||||||||||||
Recognition of beneficial conversion features
|
146,031
|
-
|
146,031
|
|||||||||||||
Net loss
|
(5,759,415
|
)
|
(5,759,415
|
)
|
||||||||||||
Balance September 30, 2009
|
19,243,669
|
$
|
10,009,677
|
$
|
(9,303,576
|
)
|
$
|
706,101
|
||||||||
Private placement of common stock
|
1,761,340
|
2,664,260
|
-
|
2,664,260
|
||||||||||||
Shares issued pursuant to conversions of debentures and accrued interest
|
1,005,330
|
647,716
|
-
|
647,716
|
||||||||||||
Shares issued pursuant to exercise of warrants
|
18,972
|
-
|
-
|
-
|
||||||||||||
Stock-based compensation
|
824,726
|
2,285,184
|
-
|
2,285,184
|
||||||||||||
Warrants issued in connection with debt instruments
|
152,463
|
-
|
152,463
|
|||||||||||||
Recognition of beneficial conversion feature
|
209,440
|
-
|
209,440
|
|||||||||||||
Net loss
|
-
|
(7,104,253
|
)
|
(7,104,253
|
)
|
|||||||||||
Balance September 30, 2010
|
22,854,037
|
$
|
15,968,740
|
$
|
(16,407,829
|
)
|
$
|
(439,089
|
)
|
(1)
|
Summary of Significant Accounting Policies
|
(a)
|
Business and Basis of Financial Statement Presentation
|
(b)
|
Statement of Cash Flows
|
(c)
|
Equipment and Leasehold Improvements
|
Depreciation expense for years ended
|
September 30, 2010
|
September 30, 2009
|
||||||
Machinery & equipment
|
$
|
235,671
|
$
|
137,351
|
||||
Furniture, fixtures & equipment
|
28,434
|
27,546
|
||||||
Leasehold improvements
|
3,901
|
14,650
|
||||||
Total depreciation
|
$
|
268,006
|
$
|
179,547
|
(d)
|
Allowance for Doubtful Accounts
|
(e)
|
Inventories
|
Inventories as of September 30,
|
2010
|
2009
|
||||||
Finished goods
|
$
|
108,001
|
$
|
46,731
|
||||
Production materials
|
22,452
|
29,802
|
||||||
Total inventories
|
$
|
130,453
|
$
|
76,533
|
(f)
|
Revenue and Cost Recognition
|
(g)
|
Income Taxes
|
(g)
|
Income Taxes (continued)
|
(h)
|
Impairment of Long-Lived Assets Other Than Goodwill
|
(i)
|
Stock-Based Compensation
|
(j)
|
Earnings (Loss) Per Share
|
Income
(Numerator)
|
Shares
(Denominator)
|
Per-share
Amount
|
||||||||||
Loss from continuing operations
|
$
|
(7,104,253
|
)
|
|||||||||
Less preferred stock dividends
|
-
|
|||||||||||
Loss available to common stockholders - basic earnings per share
|
)
|
$
|
(0.34
|
)
|
||||||||
Effect of dilutive securities - no dilutive securities
|
||||||||||||
Loss available to common stockholders - diluted earnings per share
|
$
|
)
|
$
|
(0.34
|
)
|
(k)
|
Financial Instruments
|
|
¨
|
Level 1. Inputs are unadjusted, quoted prices in active markets for identical instruments at the measurement date (e.g. U.S. Government securities and active exchange traded equity securities.
|
|
¨
|
Level 2. Inputs (other than quoted prices included within Level 1) that are observable for the instrument either directly or indirectly (e.g. certain corporate and municipal bonds and certain preferred stocks). This includes (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are observable for the instruments, and (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
(k)
|
Financial Instruments (continued)
|
|
¨
|
Level 3. Inputs that are unobservable. Unobservable inputs reflect the reporting entity’s subjective evaluation about the assumptions market participants would use in pricing the financial instruments (e.g. certain structured securities and privately held investments).
|
(l)
|
Concentration of Credit Risk
|
(m)
|
Operating Cycle
|
(n)
|
Use of Estimates
|
(2)
|
Recent Accounting Pronouncements
|
(2)
|
Recent Accounting Pronouncements (continued)
|
(3)
|
Going Concern
|
(4)
|
Intangibles and Exclusive Agreement
|
(5)
|
Accrued liabilities
|
September 30, 2010
|
September 30, 2009
|
|||||||
Payable to insurer for legal settlement
|
$
|
100,000
|
$
|
100,000
|
||||
Refundable oil and gas receipts
|
67,146
|
129,334
|
||||||
Accrued interest
|
39,896
|
76,644
|
||||||
Accrued payroll
|
70,312
|
-
|
||||||
Other
|
581
|
51,194
|
||||||
Total accrued liabilities
|
$
|
277,935
|
$
|
357,172
|
(6)
|
Debt
|
September 30,
|
|||||||||
Due
|
2010
|
2009
|
|||||||
9% convertible debentures
|
$
|
-
|
$
|
278,236
|
|||||
8.75% convertible debenture
|
December 2010
|
172,500
|
172,500
|
||||||
10% convertible debentures
|
February 2011
|
500,000
|
500,000
|
||||||
10% convertible debenture
|
March 2011
|
100,000
|
100,000
|
||||||
7% convertible note
|
May 2012
|
350,000
|
|||||||
10% convertible note
|
February 2011
|
60,000
|
-
|
||||||
Subtotal - principal
|
$
|
1,182,500
|
$
|
1,050,736
|
|||||
Debt discount
|
(432,186
|
)
|
(639,594
|
)
|
|||||
$
|
750,314
|
$
|
411,142
|
||||||
Less, current portion
|
657,420
|
253,795
|
|||||||
$
|
92,894
|
$
|
157,347
|
Year ended September
30, 2010
|
Year ended September
30, 2009
|
|||||||
Beginning Balance
|
$
|
1,050,736
|
$
|
725,736
|
||||
Repayments
|
(300,000
|
)
|
||||||
Issuances
|
710,000
|
600,000
|
||||||
Conversion
|
(278,236
|
)
|
(275,000
|
)
|
||||
Ending Balance
|
$
|
1,182,500
|
$
|
1,050,736
|
|
Expiration
|
Conversion/
Exercise Price
|
Common
Shares
Issuable
|
||||||
Class A Warrants
|
2011
|
$
|
5.36
|
95,473
|
|||||
Class B Warrants
|
2011
|
5.96
|
95,473
|
||||||
Class E Warrants
|
2011
|
4.74
|
188,018
|
||||||
Advisor Warrants
|
2011
|
2.36
|
47,482
|
||||||
Warrants issued in short-term borrowings
|
2012
|
1.00
|
100,000
|
||||||
Warrants issued in short-term borrowings
|
2013
|
0.88
|
200,000
|
||||||
Warrants issued in short-term borrowings
|
2014
|
0.88
|
671,000
|
||||||
Warrants attached to 10% convertible notes
|
2014
|
0.90
|
1,600,000
|
||||||
September 2009 investor warrants
|
2012
|
3.13
|
50,000
|
||||||
September 2009 finder warrants
|
2012
|
3.13
|
50,000
|
||||||
November 2009 finder warrants
|
2012
|
2.91
|
20,000
|
||||||
November 2009 finder warrants
|
2012
|
2.91
|
20,000
|
||||||
November 2009 consultant warrants
|
2014
|
0.90
|
360,000
|
||||||
December 2009 consultant warrants
|
2012
|
0.88
|
104,554
|
||||||
February 2010 consultant warrants
|
2015
|
2.50
|
100,000
|
||||||
February 2010 investor warrants
|
2015
|
2.50
|
12,200
|
||||||
February 2010 consultant warrants
|
2015
|
2.05
|
20,000
|
||||||
LPC warrants
|
2015
|
2.91
|
50,000
|
||||||
Warrants attached to 7% convertible note
|
2015
|
1.40
|
166,667
|
||||||
May 2010 finder warrants
|
2015
|
1.40
|
14,286
|
||||||
May 2010 employment warrants
|
2015
|
1.65
|
340,000
|
||||||
July 2010 consultant warrants
|
2015
|
1.50
|
100,000
|
||||||
Warrants attached to August 2010 short-term convertible note
|
2015
|
1.35
|
28,571
|
||||||
Warrants issued as convertible debt compensation
|
2012
|
0.40
|
287,500
|
||||||
May to September 2010 investor & finders warrants
|
2015
|
1.40
|
653,339
|
||||||
Weighted average exercise price and total shares issuable
|
$
|
1.44
|
5,374,563
|
|
Principal
Amount
|
Conversion/
Exercise Price
|
Common
Shares
Issuable
|
|||||||||
8.75% convertible debenture due in 2010
|
$
|
172,500
|
1.00
|
172,500
|
||||||||
10% convertible debentures due in 2011
|
600,000
|
0.90
|
666,667
|
|||||||||
7% convertible note, due in 2012
|
350,000
|
1.20
|
291,667
|
|||||||||
10% convertible note, due 2011
|
60,000
|
1.05
|
57,142
|
|||||||||
Total
|
$
|
1,182,500
|
1.03
|
1,187,976
|
|
Number of Shares
|
Weighted Average
Exercise Price
|
||||||
Outstanding at beginning of period
|
2,219,799
|
$
|
0.47
|
|||||
Granted
|
150,000
|
1.22
|
||||||
Exercised
|
-
|
-
|
||||||
Cancelled
|
(431,038
|
)
|
$
|
0.13
|
||||
Outstanding at end of period
|
1,938,761
|
$
|
0.61
|
Fiscal Year Ended
|
Fiscal Year Ended
|
|||||||||||||||
September 30, 2010
|
September 30, 2009
|
|||||||||||||||
Weighted-
|
Weighted-
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Number
|
Exercise
|
Number
|
Exercise
|
|||||||||||||
of Shares
|
Price
|
of Shares
|
Price
|
|||||||||||||
Outstanding at beginning of the fiscal year
|
2,219,799
|
$
|
0.47
|
1,218,114
|
$
|
-
|
||||||||||
Granted during the fiscal year
|
150,000
|
$
|
1.22
|
1,301,685
|
$
|
0.81
|
||||||||||
Exercised during the fiscal year
|
-
|
(300,000
|
)
|
$
|
0.01
|
|||||||||||
Cancelled during the fiscal year
|
(431,038
|
)
|
$
|
0.13
|
-
|
|||||||||||
Outstanding at end of the fiscal year
|
1,938,761
|
$
|
0.61
|
2,219,799
|
$
|
0.47
|
||||||||||
Exercisable at end of fiscal year
|
892,724
|
$
|
0.97
|
646,057
|
$
|
0.91
|
||||||||||
Weighted average fair value of options granted during the fiscal year
|
$
|
0.87
|
$
|
0.79
|
Weighted-
|
Weighted-
|
||||||||||||
Average
|
Average
|
Aggregate
|
|||||||||||
Number
|
Exercise
|
Remaining
|
Intrinsic
|
||||||||||
of Shares
|
Price
|
Term
|
Value
|
||||||||||
Options outstanding at end of fiscal year
|
1,938,761
|
$
|
0.61
|
2.6 years
|
$
|
962,114
|
|||||||
Options vested at end of fiscal year
|
892,724
|
$
|
0.97
|
2.6 years
|
$
|
122,995
|
|||||||
Unvested options expected to vest
|
1,046,037
|
$
|
0.30
|
2.5 years
|
$
|
823,494
|
(9)
|
Income Taxes
|
September 30,
|
September 30,
|
|||||||
2010
|
2009
|
|||||||
Current:
|
||||||||
Federal
|
$
|
-
|
$
|
-
|
||||
State
|
-
|
-
|
||||||
$
|
-
|
$
|
-
|
|||||
Increase in valuation allowance
|
(2,800,000
|
)
|
(901,000
|
)
|
||||
Benefit of operating loss carryforward
|
2,800,000
|
901,000
|
||||||
Provision (benefit) for income taxes, net
|
$
|
-
|
$
|
-
|
September 30,
|
September 30,
|
|||||||
2010
|
2009
|
|||||||
Statutory federal income tax rate
|
40.0
|
%
|
40.0
|
%
|
||||
Increase in valuation allowance
|
(40.0
|
)%
|
(40.0
|
)%
|
||||
Effective tax rate
|
-
|
%
|
-
|
%
|
September 30,
|
September 30,
|
|||||||
2010
|
2009
|
|||||||
Net operating loss carry-forward expiring after the year 2030
|
$
|
6,500,000
|
$
|
3,700,000
|
||||
Deferred income tax asset
|
$
|
6,500,000
|
$
|
3,700,000
|
September 30,
|
September 30,
|
|||||||
2010
|
2009
|
|||||||
Deferred tax assets
|
||||||||
Current
|
$
|
-
|
$
|
-
|
||||
Non-current
|
4,400,000
|
1,661,000
|
||||||
4,400,000
|
1,661,000
|
|||||||
Less valuation allowance
|
(4,400,000
|
)
|
(1,661,000
|
)
|
||||
Net deferred income tax asset
|
$
|
-
|
$
|
-
|
(10)
|
Leases
|
Fiscal year ending September 30, 2011
|
$
|
42,223
|
||
Fiscal year ending September 30, 2012
|
$
|
44,343
|
||
Fiscal year ending September 30, 2013
|
$
|
3,710
|
(11)
|
Litigation and Other Contingencies
|
(12)
|
Fair Value of Financial Instruments
|
September 30,
2009
|
Additions
|
Amortization
|
September 30,
2010
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||||||
Convertible debt discount
|
$
|
639,594
|
$
|
356,957
|
$
|
(564,365
|
)
|
$
|
432,186
|
(13)
|
Related Party Transactions
|
(14)
|
Subsequent Events
|
|
(a)
|
Subsequent to September 30, 2010, we sold $500,000 of Units to accredited investors, with the investor receiving one share of Common Stock and a warrant to purchase one-half of a share of Common Stock for $1.40 per full share. The warrants expire five years from issuance. Pursuant to this transaction, the Company issued 416,667 shares of Common Stock and warrants to purchase 208,333 shares of Common Stock at a purchase price of $1.40 per share. In addition, the Company paid $40,000 and issued warrants to purchase 33,333 shares of Common Stock to certain broker-dealers.
|
|
(b)
|
Subsequent to September 30, 2010, we amended our 8.75% convertible debenture, originally due on December 31, 2010 in the principal amount of $172,500, to extend the maturity date to April 1, 2011. In addition, the Company agreed to reduce the conversion rate of the debenture from $1.25 to $1.00 and adjust the exercise price of certain warrants held by the debenture holder, to $1.25 per share.
|
10,000 Units
10,000 6% Series A Convertible Preferred Shares
(and (i) Common Shares underlying the 6% Series A Convertible Preferred Shares and (ii) Common Shares issuable in lieu of cash payment of dividends and certain make-whole payments on the 6% Series A Convertible Preferred Shares)
10,000 Class A Warrants
(and Common Shares underlying the Class A Warrants)
10,000 Class B Warrants
(and Common Shares underlying the Class B Warrants)
Securities and Exchange Commission Registration Fee
|
$
|
|||
Printing and Engraving Expenses
|
*
|
|||
Accounting Fees and Expenses
|
*
|
|||
Legal Fees and Expenses
|
*
|
|||
Transfer Agent and Registrar Fees and Expenses
|
*
|
|||
Blue Sky Fees and Expenses (including Legal Fees)
|
*
|
|||
Miscellaneous
|
*
|
|||
Total
|
$
|
*
|
*
|
To be filed by amendment.
|
|
·
|
Pursuant to plans approved by our shareholders, through February
9, 2012 we have granted options to purchase 5,517,960 shares of common stock and may grant options for up to an additional 1,169,950
shares of common stock. We also may issue up to an additional 762,076 shares of common stock pursuant to options that were awarded
pursuant to an individual performance-based arrangement. (2)
|
|
·
|
From December 2008 to September 2009, we sold a total of 2,615,055 shares of common stock for aggregate gross proceeds of $2,301,248.(1)
|
·
|
In April 2009, $61,537 of principal and accrued interest of our 13% convertible debentures, was converted at a price of $0.30 per share into 207,687 shares of common stock.(1)
|
|
·
|
During the six months ended June 30, 2009, we issued warrants to purchase 150,000 shares of our common stock at a weighted average exercise price of $0.88 per share, for consulting services provided.(2)
|
|
·
|
In July 2009, $35,533 of principal and accrued interest of our 13% convertible debentures was converted at a price of $0.40 per share into 88,834 shares of common stock.(1)
|
|
·
|
In September 2009, an additional $181,440 of principal and accrued interest of our 13% convertible debentures was converted at a price of $0.20 per share into 907,200 shares of common stock.(1)
|
|
·
|
In September 2009, pursuant to Securities Purchase Agreements, we received $600,000 and issued to three accredited investors an aggregate of 600,000 units which totaled (i) $600,000 of principal amount of our 10% convertible debenture and (ii) 1.6 million 3-year common stock purchase warrants, exercisable at $0.90 per share. The warrants had a fair value of $453,968 at issuance based on the Black-Scholes pricing model.(1)
|
|
·
|
In September 2009, we sold 500,000 shares of common stock, together with warrants to purchase 50,000 shares of common stock at an exercise price of $3.13, to an investor for gross proceeds of $975,000. (1)
|
|
·
|
During the nine months ended September 30, 2009, we received proceeds from several short-term debt securities for which we issued warrants in the aggregate to purchase 646,000 shares of common stock at a weighted average exercise price of $0.89.(1)
|
|
·
|
During the three years ended February 9, 2012, we issued a total
of 215,702 shares of common stock to settle interest due on various notes payable. (1)
|
·
|
During the three years ended February 9, 2012, we issued an aggregate
of 1,526,793 shares of common stock to consultants and advisors and recorded aggregate compensation expense of $2,375,392, representing
the fair value of the common stock, in connection with the issuances. (2)
|
|
·
|
In November 2009, the Company sold 200,000 shares of common stock and 20,000 three-year warrants, exercisable at $2.91 per share, for aggregate proceeds of $410,000. As a placement fee, the Company paid $8,200 and issued 20,000 three-year warrants, also at the exercise price of $2.91 per share.(1)
|
|
·
|
In November 2009, the Company issued 360,000 five-year warrants exercisable at $0.90 per share to a consultant for strategic planning, business development and investor relations services to be performed. The warrants had a fair value of $506,136 at issuance based on the Black-Scholes pricing model.(2)
|
|
·
|
In December 2009, the Company issued 104,554 five-year warrants exercisable at $0.88 per share to a consultant for services performed in the Company’s financing efforts. The warrants had a fair value of $283,788 at the date of grant based on the Black-Scholes pricing model.(2)
|
|
·
|
In February 2010, we issued a 10% short-term note in the amount of $300,000, convertible at the rate of $2.00 per share, together with a five-year warrant to purchase 100,000 shares of common stock at an exercise price of $2.50. The warrants had a fair value of $200,044 at the date of grant based on the Black-Scholes pricing model.(1)
|
|
·
|
In February 2010, we sold 122,000 shares of common stock and 12,200 five-year warrants, exercisable at $2.50 per share, for aggregate proceeds of $250,100.(1)
|
|
·
|
In February 2010, the Company issued 10,000 three-year warrants exercisable at $2.05 per share to a consultant for services performed. The warrants had a fair value of $19,442 at issuance based on the Black-Scholes pricing model.(2)
|
|
·
|
In February 2010, we executed a purchase agreement and a registration rights agreement with Lincoln Park Capital, LLC (“LPC”), pursuant to which LPC agreed to purchase 100,000 shares of our common stock at $2.05 per share together with warrants to purchase 50,000 shares at an exercise price of $2.91 per share for total consideration of $205,000. Upon entering into the purchase agreement, we issued to LPC 85,000 shares of our common stock as consideration for entering into the agreement. Pursuant to the registration rights agreement, we filed a registration statement with the Securities and Exchange Commission covering the shares issued to LPC under the purchase agreement. The registration statement became effective and the initial purchase of 100,000 shares and 50,000 warrants was completed in May 2010. After the effective date, in May 2010, we sold an additional 20,000 shares under the agreement and received proceeds of $30,067. In July 2010, we and LPC mutually terminated the purchase agreement and related agreements.(1)
|
|
·
|
During March 2010, the remaining 9% convertible debentures of $278,236 were converted, prior to their maturity dates and in accordance with their terms, into an aggregate of 927,453 shares of common stock. (1)
|
|
·
|
During May 2010, we sold 41,667 shares of common stock for proceeds of $50,000.(1)
|
|
·
|
In May 2010, we issued a 7% two-year note in the amount of $350,000, convertible at the rate of $1.20 per share, together with a five-year warrant to purchase 166,667 shares of common stock at an exercise price of $1.40 per share. The warrants had a fair value of $243,468 at issuance based on the Black-Scholes pricing model, with $152,463 being allocated to the warrant based on its relative fair value of the note and warrant.(1)
|
|
·
|
In May 2010, we issued 340,000 three-year warrants exercisable at $1.65 per share to an officer upon hire. The warrants had a fair value of $401,239 at issuance based on the Black-Scholes pricing model.(2)
|
|
·
|
During the period May through September 2010, we received $1,431,209, and issued units consisting of an aggregate of 1,192,673 shares of common stock and five-year warrants to purchase 596,339 shares of common stock at an exercise price of $1.40 per share. Certain of these warrants had a fair value of $94,890 at issuance based on the Black-Scholes pricing model. As a placement fee, we issued 57,000 five-year warrants, also at the exercise price of $1.40 per share.(1)
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|
·
|
During the three months ended June 30, 2010, a former holder of a convertible note claimed that additional compensation was payable by the Company in the form of warrants related to a note conversion in 2008. The Company determined that issuance of additional warrants based on the claim was justified and charged $292,962, representing the fair value of the two-year warrant for the purchase of 287,500 shares of common stock based on the Black-Scholes pricing model, to general and administrative expenses during the fiscal year ended September 30, 2010.(1)
|
|
·
|
During the three months ended September 30, 2010, we issued to two consultants for services rendered, five-year warrants to purchase 114,286 shares of common stock at a weighted average exercise price of $1.49. The warrants had a fair value of $107,675 at issuance based on the Black-Scholes pricing model. (2)
|
|
·
|
In August 2010, we issued a 10% short-term note in the amount of $60,000, convertible at the rate of $1.05 per share and a five-year warrant to purchase 28,571 shares of common stock at an exercise price of $1.35 per share. The warrants had a fair value of $27,214 at issuance based on the Black-Scholes pricing model.(1)
|
|
·
|
During the three years ended February 9, 2012, we issued 514,809
shares of common stock upon cashless exercise of certain options and warrants. In addition, during the same period we issued 95,000
shares of common stock and received $950 upon exercise of certain options and warrants. (1)
|
|
·
|
Pursuant to the terms of a letter agreement executed in October 2010, we issued 35,000 shares of common stock to a consultant to assist us in raising capital. The shares had a fair value of $36,750 at issuance based on the quoted market price of the Company’s stock on the OTC Bulletin Board.(2)
|
|
·
|
During October 2010, we issued a five-year warrant to purchase 50,000 shares of common stock at $1.20 per share to one of our directors for providing recruiting assistance.(2)
|
|
·
|
In November 2010, we issued 80,000 three-year warrants exercisable at $1.65 per share to an director for services previously performed. The warrants had a fair value of $58,908 at issuance based on the Black-Scholes pricing model.(2)
|
|
·
|
During the three months ended December 31, 2010, we received $500,000, and issued units consisting of an aggregate of 416,667 shares of common stock and five-year warrants to purchase 208,333 shares of common stock at an exercise price of $1.40 per share. A warrant to purchase 33,333 shares of common stock was issued as a finder’s fee in regards to these transactions and had a fair value of $28,321 at issuance based on the Black-Scholes pricing model.(1)
|
|
·
|
During March 2011, we issued 262,500 shares of common stock, valued at $367,500 at date of issue pursuant to a sub-license agreement.(1)
|
|
·
|
At maturity in February 2011, we issued 60,000 shares of common stock upon conversion of our 10% Convertible Note, comprised of $60,000 of principal and $3,000 of accrued interest.(1)
|
|
·
|
On March 22, 2011, we sold 156,498 shares of our 10% Convertible Preferred Stock at a price per share of $10, for gross proceeds of $1,564,980. Each share of 10% Convertible Preferred Stock is convertible into eight (8) shares of common stock.(1)
|
|
·
|
During the three months ended March 31, 2011, we issued warrants to purchase 71,926 shares of our common stock at a weighted average exercise price of $0.89 per share to various consultants for services performed on our behalf. The warrants had a fair value of $288,850 at the date of grant based on the Black-Scholes pricing model.(2)
|
|
·
|
In June 2011, we issued 443,408 shares of common stock upon conversion of our 7% Convertible Note, in the principal amount of $350,000 and $49,067 of accrued interest.(1)
|
|
·
|
On April 1, 2011, we sold 188,125 shares of our 10% Convertible Preferred Stock at a price per share of $10, for gross proceeds of $1,881,250. Each share of 10% Convertible Preferred Stock is convertible into 8 shares of common stock.(1)
|
|
·
|
On April 13, 2011, we sold 227,500 shares of our 10% Convertible Preferred Stock at a price per share of $10, for gross proceeds of $2,275,000. Each share of 10% Convertible Preferred Stock is convertible into eight (8) shares of common stock.(1)
|
|
·
|
On April 21, 2011, we sold 187,650 shares of our 10% Convertible Preferred Stock at a price per share of $10, for gross proceeds of $1,876,500. Each share of 10% Convertible Preferred Stock is convertible into eight (8) shares of common stock.(1)
|
|
·
|
During the three months ended June 30, 2011, we issued warrants to purchase 130,000 shares of our common stock at a weighted average exercise price of $1.44 per share, to various consultants for services performed, or to be performed on our behalf. The warrants had a fair value of $125,497 at the date of grant based on the Black-Scholes pricing model.(2)
|
|
·
|
During the six months ended September 30, 2011, we issued warrants to purchase 283,347 shares of our common stock at a weighted average exercise price of $0.60 per share, to debenture holders pursuant to the amended terms of our 10% convertible debentures due in June 2012. The warrants had a fair value of $187,020 at the date of grant based on the Black-Scholes pricing model.(1)
|
|
·
|
For the dividend payable on June 30, 2011 and September 30, 2011, we chose to pay the dividend with shares of our common stock, in lieu of cash. We issued 325,668 shares of common stock with a fair value on date of payment of $352,032.(1)
|
|
·
|
During July 2011, we issued 42,373 shares of common stock to Rutgers, in settlement of our $50,000 royalty obligation.(1)
|
|
·
|
During August 2011, for consulting services previously provided, we issued a warrant to purchase 3,750 shares of common stock at an exercise price of $1.40 per share. At the date of issuance, the warrants had a fair value of $3,536, based on the Black-Scholes pricing model. (2)
|
|
·
|
Pursuant to a consulting and advisory agreement entered into during December 2010, through September 2011 we issued three-year warrants to purchase 100,000 shares of common stock at an exercise price of $1.25 per share. The warrants had a cumulative fair value of $75,293 at the dates of grant based on the Black-Scholes pricing model.(2)
|
|
·
|
During October 2011, we issued 250,000 shares of our common stock with a fair value on the date of issuance of $212,500 to the lender as a commitment fee in regards to our revolving credit facility.(1)
|
·
|
During the three months ended December 31, 2011, we issued 60,000 shares of our common upon
conversion of 7,500 shares of our 10% convertible preferred stock(1)
|
·
|
For the dividend payable on December 31, 2011, with respect to our
10% convertible preferred stock, we elected to pay the dividend with shares of our common stock in lieu of cash. We issued 245,305
shares of common stock with a fair value on the date of payment of $176,620.
|
( 1)
|
We relied on the exemption provided by Sections 3(a)(9), 4(2) and/or
4(6) of the Securities Act and Regulation D under the Securities Act. The purchasers of securities are accredited investors
and acquired securities for their own account for investment purposes only and not for resale unless registered under the Securities
Act or pursuant an exemption from such registration.
|
(2)
|
We relied on the exemption from registration under the Securities Act, pursuant to Rule 701 thereof, on the basis that the transactions were pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701, and/or Section 4(2) as transactions by an issuer not involving a public offering.
|
· | For the dividend payable on December 31, 2011, with respect to our 10% convertible preferred stock, we elected to pay the dividend with shares of our common stock in lieu of cash. We issued 245,305 shares of common stock with a fair value on the date of payment of $176,620 |
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
ii. | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
iii. | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(5) Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
i. | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
ii. | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
iii. | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
iv. | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(7) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(8) For the purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(9) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
AXION INTERNATIONAL HOLDINGS, INC.
|
|||
By:
|
/s/ Steven Silverman | ||
Steven Silverman
|
|||
President and Chief Executive Officer
|
SIGNATURE
|
TITLE
|
DATE
|
||
/s/ Steven Silverman | President,
Chief Executive Officer and Director
|
February 10, 2012
|
||
Steven
Silverman
|
(principal
executive officer)
|
|||
/s/
Donald Fallon
|
Chief
Financial Officer
|
February 10, 2012
|
||
Donald
Fallon
|
(principal
financial and accounting officer)
|
|||
/s/
James Kerstein
|
Chief
Technology Officer, Secretary, and Director
|
February 10, 2012
|
||
James
Kerstein
|
||||
/s/
Michael Dodd
|
Director
|
February 10, 2012
|
||
Michael
Dodd
|
||||
/s/
Anthony Hatch
|
Director
|
February 10, 2012
|
||
Anthony
Hatch
|
||||
/s/
Allen Hershkowitz
|
Director
|
February 10, 2012
|
||
Allen
Hershkowitz
|
||||
/s/
Perry Jacobson
|
Director
|
February 10, 2012
|
||
Perry
Jacobson
|
||||
/s/
Peter Janoff
|
Director
|
February 10, 2012
|
||
Peter
Janoff
|
Exhibit
No.
|
|
Description of Document
|
1.1
|
+
|
Form of Placement Agency Agreement
|
2.1
|
Agreement and Plan of Merger by and among Analytical Surveys, Inc., Axion Acquisition Corp, and Axion International, Inc. dated as of November 20, 2007 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated November 21, 2007)
|
|
2.2
|
Certificate of Merger of the Merger Sub and Axion, dated March 20, 2008 (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on March 26, 2008)
|
|
3.1
|
Articles of Incorporation, as amended (incorporated by reference to the Company’s Registration Statement on Form S-18 (Registration No. 2-93108-D))
|
|
3.2
|
By-Laws (incorporated by reference to the Company’s Registration Statement on Form S-18 (Registration No. 2-93108-D))
|
|
3.3
|
Amendment to By-laws (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended September 30, 1998)
|
|
3.4
|
Articles of Amendment, filed July 21, 2008 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 6, 2008)
|
|
3.5
|
Certificate of Designation of 10% Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on March 25, 2011)
|
|
3.6
|
Certification of Correction of Preferred Stock Designation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 21, 2011)
|
|
4.1
|
Form of Company’s 10% Secured Convertible Debenture due March 11, 2011, with form of Warrant as an exhibit (incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K filed on October 1, 2009)
|
|
4.2
|
+
|
Form of Class A Warrant
|
4.3
|
+
|
Form of Class B Warrant
|
4.4
|
+
|
Form of Certificate of Designation of Preferences, Rights, and Limitations of Series A Preferred Shares
|
5.1
|
+
|
Opinion of Counsel
|
10.1
|
Analytical Surveys, Inc. Year 2003 Stock Option Plan and Form of Agreement (incorporated by reference to the Company’s Proxy Statement dated July 21, 2003) (1)
|
|
10.2
|
Employment Agreement, dated as of January 1, 2008, between James Kerstein and Axion International, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 26, 2008) (1)
|
|
Assignment and Amendment Agreement, dated March 20, 2008, among the Assignors named therein, ADH Ventures, LLC and the Company (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed March 26, 2008)
|
||
10.4
|
License Agreement, dated February 1, 2007, by and between Rutgers, the State University of New Jersey, and Axion International, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB filed May 15, 2008) (2)
|
10.5
|
Employment Agreement, dated September 23, 2010, between Steven Silverman and Axion International Holdings, Inc. (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K, filed on January 12, 2011) (1)
|
|
10.6
|
Form of Subscription Agreement for private placement of 10% Convertible Preferred Stock (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on March 25, 2011)
|
|
10.7
|
Amended Employment Letter with Steven Silverman, dated May 10, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on May 16, 2011) (1)
|
|
10.8
|
Amended Employment Letter with James Kerstein, dated May 10, 2011 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on May 16, 2011) (1)
|
|
10.9
|
Employment Agreement, dated June 7, 2011, between the Company and Donald Fallon (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 13, 2011) (1)
|
|
10.10
|
Revolving Credit Agreement, dated November 9, 2011, between the Company and Samuel G. Rose (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on November 14, 2011)
|
|
10.11
|
Security Agreement, dated November 9, 2011, between the Company and Samuel G. Rose (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed on November 14, 2011)
|
|
10.12
|
Revolving Credit Note, dated November 9, 2011, issued by the Company (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed on November 14, 2011)
|
|
10.13
|
+
|
Form of Securities Purchase Agreement
|
22.1
|
Subsidiaries of the Company*
|
|
23.1
|
Consent of RBSM LLP*
|
|
23.2
|
Consent of Greenberg Traurig, LLP (included in Exhibit 5.1 to this Registration Statement)
|