Filed pursuant to Rule
424(b)(3)
Registration No. 333-148733
This prospectus relates to the resale by the selling shareholders of up to 2,516,310 shares of our common stock currently outstanding and 31,500 shares of our Common Stock underlying Common Stock Purchase Warrants. The shares of common stock that may be offered and sold by selling shareholders pursuant to this prospectus were acquired by the selling shareholders in a private placement in December 2007.
The selling shareholders may sell common stock from time to time in the principal market on which the stock is traded at the prevailing market price or in negotiated transactions. The selling shareholders may be deemed underwriters of the shares of common stock which they are offering. We will pay the expenses of registering these shares.
Our common stock is registered under Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and is listed on the NASDAQ under the symbol “APPY.” The last reported sales price per share of our common stock as reported by the NASDAQ on January 16, 2008, was $7.37.
INVESTING IN THESE SECURITIES INVOLVES SIGNIFICANT RISKS. SEE “RISK FACTORS” BEGINNING ON PAGE 4.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is January 31, 2008
| PROSPECTUS SUMMARY | 1 | ||||
| DOCUMENTS INCORPORATED BY REFERENCE | 2 | ||||
| NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS | 3 | ||||
| RISK FACTORS | 4 | ||||
| USE OF PROCEEDS | 8 | ||||
| SELLING SECURITY HOLDERS | 8 | ||||
| PLAN OF DISTRIBUTION | 11 | ||||
| INDEMNIFICATION FOR SECURITIES ACT LIABILITIES | 13 | ||||
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The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the “risk factors” section, the financial statements and the notes to the financial statements. You should also review the additional information described under the heading “Where You Can Find More Information.” You should rely only on the information contained in this prospectus or any accompanying supplemental prospectus and the information specifically incorporated by reference. We have not authorized anyone to provide you with different information or make any additional representations. This is not an offer of these securities in any state or other jurisdiction where the offer in not permitted. You should not assume that the information contained in or incorporated by reference into this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of each such document.
The following summary is qualified in its entirety by the detailed information appearing elsewhere in this prospectus and the documents incorporated by reference herein.
We are an emerging bio-pharmaceutical company dedicated to the discovery, development, manufacture, and marketing of novel proprietary products, including those that enhance the reproductive efficiency of animals and/or that have large worldwide market potential in fields including human diagnostics. We were originally formed to produce purified proteins for diagnostic applications and have become a leading supplier of human hormones to many of the nation’s largest medical diagnostic companies and research institutions. We have successfully leveraged this foundational science and technology expertise to rapidly develop an enviable late-stage pipeline of several novel reproduction hormone analogs for wide-ranging therapeutic use initially in bovine and equine species.
Our principal office is located at 1585 South Perry Street, Castle Rock, Colorado 80104, telephone number 303-794-2000. Our website is www.aspenbiopharma.com. Our website is not included as part of this prospectus.
| Common stock to be offered by the selling stockholders, assuming exercise of the 31,500 Common Shares underlying the Common Stock Purchase Warrants. | 2,547,810 shares | |
| Common stock outstanding as of January 7, 2008 | 31,110,385 shares | |
| Use of proceeds | We will not receive any proceeds from the sale of the shares of common stock covered by this prospectus. | |
| NASDAQ Capital Market Symbol | APPY | |
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Documents Incorporated By Reference
The SEC allows us to "incorporate by reference" the information in documents we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. These documents provide a significant amount of information about us. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the termination of this offering.
| • | Our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006 (filed March 30, 2007) |
| • | Our Quarterly Report on Form 10-QSB for the quarters ended March 31, 2007 (filed May 14, 2007), June 30, 2007 (filed August 10, 2007) and September 30, 2007 (filed November 14, 2007) |
| • | Our Current Reports on Form 8-K, as amended, reporting events of (filing date in parentheses): |
| January 16, 2008 December 27, 2007 December 26, 2007 December 21, 2007 November 27, 2007 September 28, 2007 August 23, 2007 August 20, 2007 July 27, 2007 May 17, 2007 May 8, 2007 May 3, 2007 April 20, 2007 April 9, 2007 March 20, 2007 February 27, 2007 February 22, 2007 January 24, 2007 January 16, 2007 December 26, 2006 January 3, 2007 |
(January 17, 2008) (December 27, 2007) (December 26, 2007) (December 21, 2007) (November 27, 2007) (September 28, 2007) (August 23, 2007) (August 21, 2007) (July 27, 2007) (May 17, 2007) (May 8, 2007) (May 4, 2007) (April 23, 2007) (April 9, 2007) (March 26, 2007) (February 28, 2007) (February 22, 2007) (January 26, 2007) (January 16, 2007) (January 4, 2007) (January 3, 2007) |
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| • | Our Registration Statement on Form 8-A filed October 1, 2002 registering our common stock under the Securities Act of 1934, as amended by Form 8-A filed on August 27, 2007 and as amended by Form 8-A/A on August 27, 2007. |
You may request a copy of these filings or a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, at no cost, by writing us or calling us at the following address and telephone number:
AspenBio Pharma, Inc.
1585 S. Perry Street
Castle Rock, Colorado 80104
Telephone No.: (303) 794-2000
Facsimile No.: (303) 798-8332
Where You Can Find More Information
The documents described above are available electronically in the EDGAR database on the web site maintained by the SEC. You can find this information at http://www.sec.gov. You may also read and copy any materials we have filed with the SEC at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330.
Note of Caution Regarding Forward-Looking Statements
Certain statements contained in this report that are not historical facts constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created by that Act. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which may cause actual results, performance, or achievements to differ materially from those expressed or implied. Any forward-looking statement speaks only as of the date made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made.
Statements concerning the establishments of reserves and adjustments for dated and obsolete products, expected financial performance, on-going business strategies and possible future action which we intend to pursue to achieve strategic objectives constitute forward-looking information. The sufficiency of such charges, implementation of strategies and the achievement of financial performance are each subject to numerous conditions, uncertainties, and risk factors. Factors which could cause actual performance to differ materially from these forward-looking statements, include, without limitation, management’s analysis of our assets, liabilities, and operations, delays or difficulties in obtaining FDA approvals, the ability to cost effectively produce sufficient quantities of finished products when and if the appendicitis tests are approved by the FDA, advances in competing technologies, the failure to sell date-sensitive inventory prior to its expiration, competition, new product development by competitors, which could render particular products obsolete, the inability to develop or acquire and successfully introduce new products or improvements of existing products, problems in collecting receivables, testing or other delays or problems in introducing our bovine pregnancy test, and difficulties in obtaining financing on an as-needed basis.
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This investment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information in our Form 10-KSB for the fiscal year ended December 31, 2006 and the Form 8-K filed January 17, 2008, both of which are incorporated in this document by reference. If any of the following risks identified actually occur, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means you could lose all or a part of your investment.
RISKS RELATED TO OUR BUSINESS
If we fail to obtain FDA approval, we cannot market certain products in the United States.
Therapeutic or diagnostic products to be used by humans must be approved by the FDA prior to marketing and sale. This would apply to our ability to market, directly or indirectly our AppyScore™ and AppyScreen™ appendicitis tests. In order to obtain required FDA clearance, we must complete specific clinical trials and comply with specific standards; this process can take substantial amounts of time and resources to complete. Even if we complete the trials, FDA clearance is not guaranteed. The timing of such completion, submission and clearance could also impact our ability to realize market value from such tests. FDA clearance can be suspended or revoked, or we could be fined, based on a failure to continue to comply with those standards. Similar approval requirements and contingencies will also be encountered in a number of major international markets.
FDA approval is also required prior to marketing and sale for therapeutic products that will be used on animals, and can also require considerable time and resources to complete. New drugs for animals must receive New Animal Drug Application approval. This type of approval would be required for the use of our therapeutic equine and bovine protein products. The requirements for obtaining FDA approval are similar to those for human drugs described above and may require similar clinical testing. Approval is not assured and, once FDA approval is obtained, we would still be subject to fines and suspension or revocation of approval if we fail to comply with ongoing FDA requirements.
Advances in competing technologies or development of new technologies while we are securing FDA approval and / or advancing production and marketing of our appendicitis tests could impact the ability to sell our tests and / or reduce their market potential.
The development of new technologies or improvements in current technologies for diagnosing appendicitis, including CT imaging agents and products that would compete with our appendicitis tests could have an impact on our ability to sell the appendicitis tests or the sales price of the tests. This could impact our ability to market the tests and / or secure a marketing partner both of which could have an impact on the value of our appendicitis product and that impact could be substantial.
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If we successfully obtain FDA clearance to market the appendicitis tests, we may experience manufacturing problems that could limit the near term growth of our revenue.
Our ability to successfully market the appendicitis tests once approved will partially depend on our ability to obtain sufficient quantities of the finished test from qualified GMP suppliers. While we have identified and are progressing with qualified suppliers, their ability to produce tests or component parts in sufficient quantities to meet possible demand may cause delays in securing products or could force us to seek alternative suppliers. The need to locate and use alternative suppliers could also cause delivery delays for a period of time.
Our success depends on our ability to develop and commercialize new products.
Our success depends on our ability to successfully develop new products. Although we are engaged in human diagnostic antigen manufacturing operations and historically substantially all of our revenues have been derived from this business, we believe our ability to substantially increase our revenues and generate net income is contingent on successfully developing one or more of our pipeline products. Our ability to develop any of the pipeline products is dependent on a number of factors, including funding availability to complete development efforts, to adequately test and refine products, and to commercialize our products, thereby generating revenues once development efforts prove successful. We have encountered in the past and may again encounter in the future problems in the testing phase for different pipeline products, sometimes resulting in substantial setbacks in the development process. There can be no assurance that we will not encounter similar setbacks with the products in our pipeline, or that funding from outside sources and our revenues will be sufficient to bring any or all of our pipeline products to the point of commercialization. There can be no assurance that the products we are developing will work effectively in the marketplace, nor that we will be able to produce them on an economical basis.
Although we continue to operate under the Distribution Agreement with Merial, the Agreement may be considered as expired.
Our Agreement with Merial Limited (“Merial”) for SurBred™15 contemplated a product launch date of October 1, 2003. The sales goals under the Agreement state that the goals will be prorated by calendar quarter since the product launch did not occur by October 1, 2003. We are actively engaged in research and development on this product and, to date, do not have a sufficiently field tested prototype. Consequently, progress payments from Merial have been delayed, and until we reach certain milestones, continued delays in developing a prototype could result in substantial modifications to the Merial Agreement, and/or possibly cancellation. Either party could consider the Agreement expired, but both parties have continued to operate as if it were still in force. The Company is continuing the development of the product and Merial is actively involved in regular discussions and preparation to potentially introduce the product. The inability to successfully develop a prototype and/or cancellation of the Agreement could have a material adverse effect on our business plan and projected growth.
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Our success will depend in part on establishing effective strategic partnerships and business relationships.
A key aspect of our business strategy is to establish strategic partnerships. We currently have license arrangements with the University of Idaho, the University of Wyoming and Washington University (St. Louis, MO). It is likely that we will seek other strategic alliances. We also intend to rely heavily on companies with greater capital resources and marketing expertise to market some of our products, such as our agreement with Merial. While we have identified certain possible candidates for other potential products, we may not reach definitive agreements with any of them. Even if we enter into these arrangements, we may not be able to maintain these collaborations or establish new collaborations in the future on acceptable terms. Furthermore, these arrangements may require us to grant certain rights to third parties, including exclusive marketing rights to one or more products, or may have other terms that are burdensome to us, and may involve the issuance of our securities. Our partners may decide to develop alternative technologies either on their own or in collaboration with others. If any of our partners terminate their relationship with us or fail to perform their obligations in a timely manner, or if we fail to perform our obligations in a timely manner, the development or commercialization of our technology in potential products may be affected, delayed or terminated.
We may experience manufacturing problems that limit the growth of our revenue.
We purify human and animal antigens and tumor markers as our historical revenue base. In 2006, our revenues from these sales were approximately $959,000. We intend to introduce new products with substantially greater revenue potential, including recombinant drugs for our animal health business. We currently have entered initial contracts with two manufacturing companies for initial batch and study work including one of these manufacturing partner’s who meets full cGMP requirements and is capable of large scale manufacturing batches of our recombinant drugs to expand the contractual relationship as part of the FDA approval process for our animal health business. Delays in finalizing and progressing under agreement with the cGMP facility may delay our FDA approval process and potentially delay sales of such drugs. In addition, we may encounter difficulties in production due to, among other things, the inability to obtain sufficient amounts of raw inventory, quality control, quality assurance and component supply. These difficulties could reduce sales of our products, increase our costs, or cause production delays, all of which could damage our reputation and hurt our financial condition. To the extent that we enter into manufacturing arrangements with third parties, we will depend on them to perform their obligations in a timely manner and in accordance with applicable government regulations.
Our success depends upon our ability to protect our intellectual property rights.
Our success will partially depend on our ability to obtain and enforce patents relating to our technology and to protect our trade secrets. Third parties may challenge, narrow, invalidate or circumvent our patents. The patent position of biotechnology companies is generally highly uncertain, involves complex legal and factual questions and has recently been the subject of much litigation. Neither the U.S. Patent Office nor the courts have a consistent policy regarding breadth of claims allowed or the degree of protection afforded under many biotechnology patents.
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In an effort to protect our un-patented proprietary technology, processes and know-how, we require our employees and consultants to execute confidentiality agreements. However, these agreements may not provide us with adequate protection against improper use or disclosure of confidential information. These agreements may be breached, and we may not have adequate remedies for any such breach. In addition, in some situations, these agreements may conflict, or be subject to, the rights of third parties with whom our employees or consultants have previous employment or consulting relationships. Also, others may independently develop substantial proprietary information and techniques or otherwise gain access to our trade secrets. We intend to market our products in many different countries some of which we will not have patents in or applied for. Different countries have different patent rules and we may sell in countries that do not honor patents and in which the risk that our products could be copied and we would not be protected would be greater.
We may be unable to retain key employees or recruit additional qualified personnel.
Because of the specialized scientific nature of our business, we are highly dependent upon qualified scientific, technical, and managerial personnel. There is intense competition for qualified personnel in our business. A loss of the services of our qualified personnel, as well as the failure to recruit additional key scientific, technical and managerial personnel in a timely manner would harm our development programs and our business.
Our competitors may have greater resources or research and development capabilities than we have, and we may not have the resources necessary to successfully compete with them.
Our business strategy has been to create a niche in the protein purification area, which is from where all of our current revenues are generated. We are aware of only one competitor commercially selling products in this area, Dr. Albert Parlow, a UCLA professor. The biotechnology business is highly competitive, and we may face increasing competition. We expect that many of our competitors will have greater financial and human resources, more experience in research and development, and more established sales, marketing and distribution capabilities than we have. In addition, the healthcare industry is characterized by rapid technological change. New product introductions or other technological advancements could make some or all of our products obsolete.
Our product liability insurance coverage may not be sufficient to cover claims.
Our insurance policies currently cover claims and liability arising out of defective products for losses up to $2 million. As a result, if a claim were to be successfully brought against us, we may not have sufficient insurance that would apply and would have to pay any costs directly, which we may not have the resources to do.
If we fail to obtain regulatory approval in foreign jurisdictions, then we cannot market our products in those jurisdictions.
We plan to market some of our products in foreign jurisdictions. Specifically, we expect that SurBred, the open cow test will be aggressively marketed in foreign jurisdictions. We may market our therapeutic products in foreign jurisdictions, as well. We may need to obtain regulatory approval from the European Union or other jurisdictions to do so and obtaining approval in one jurisdiction does not necessarily guarantee approval in another. We may be required to conduct additional testing or provide additional information, resulting in additional expenses, to obtain necessary approvals.
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RISKS RELATED TO OUR SECURITIES
We will require additional capital in the future and we cannot assure you that capital will be available on reasonable terms, if at all, or on terms that would not cause substantial dilution to your stock holdings.
We have historically needed to raise capital to fund our operating losses. We expect to continue to incur operating losses into the 2007 calendar year and possibly longer. If capital requirements vary materially from those currently planned, we may require additional capital sooner than expected. There can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to us, if at all. Any sale of a substantial number of additional shares may cause dilution to your investment and could also cause the market price of our common stock to decline.
We do not anticipate paying any dividends in the foreseeable future.
The Company does not intend to declare any dividends in the foreseeable future. Investors who require income from dividends should not purchase our securities.
This prospectus relates to shares of our common stock that may be offered and sold from time to time by the Selling Shareholders. We will not receive any proceeds from the sale of Shares in this offering. However, if the warrants are exercised we will receive the exercise price paid upon exercise of outstanding warrants. If we receive any proceeds upon the exercise of the outstanding warrants we intend to use the proceeds for working capital and other corporate purposes. All proceeds received from the sale of the Shares offered by the Selling Shareholders will accrue to the benefit of the Selling Shareholders and not to the Company.
We are registering for resale an aggregate of 2,516,310 shares of our common stock that we issued and sold for an aggregate purchase price of approximately $18.2 million to the selling stockholders identified below pursuant to separate purchase agreements, each dated as of December 21, 2007, by and between us and each of the selling stockholders. We are also registering 31,500 shares of common stock underlying warrants to purchase common stock issued to the Placement Agent in the December 2007 private placement. We are registering these shares of our common stock to permit each of the selling stockholders and their donees, pledgees, transferees or other successors-in-interest that receive their shares after the date of this prospectus to resell or otherwise dispose of the shares, or interests therein, as well as any stock that we may issue or may be issuable by reason of any stock split, stock dividend or similar transaction involving these shares, in the manner contemplated under “Plan of Distribution.”
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The table below, including the footnotes, presents information regarding the selling stockholders and the shares of our common stock that were sold to the selling stockholders under the purchase agreements and that the selling stockholders may offer and sell from time to time under this prospectus. Except as set forth below, none of the selling stockholders nor any of their respective affiliates, officers, directors or principal equity holders has held any position or office or had any other material relationship with us or our affiliates within the past three years.
This table and the accompanying footnotes are prepared based in part on information supplied to us beginning on January 11, 2008 by the selling stockholders. The number of shares in the column “Number of Shares Being Offered” represents all of the shares that a selling stockholder and its affiliates may offer under this prospectus. The table and footnotes assume that the selling stockholders will sell all of such shares. However, because the selling stockholders may sell all or some of their shares under this prospectus from time to time, or in another permitted manner, we cannot assure you as to the actual number of shares that will be sold by the selling stockholders or that will be held by the selling stockholders after completion of any sales. We do not know how long the selling stockholders will hold the shares before selling them. Information concerning the selling stockholders may change from time to time and changed information will be presented in a supplement to this prospectus if and when necessary and required. Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act. We will not receive any proceeds from the resale of the common stock by the selling shareholders.
| Shares Beneficially Owned Prior to Offering (1) |
Number of Shares Being |
Shares Beneficially Owned After Offering (1) |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selling Stockholders |
Number |
Percent |
Offered |
Number |
Percent |
||||||||||||
| Funds affiliated with HealthCor Management, L.P. (2) | 1,100,000 | 3.5 | % | 1,100,000 | — | — | |||||||||||
| Funds affiliated with Ardsley Funds (3) | 407,500 | 1.3 | % | 407,500 | — | — | |||||||||||
| Corriente Master Fund, L. P. (4) | 2,809,422 | 9.0 | % | 303,448 | 2,505,974 | 8.1 | % | ||||||||||
| Funds affiliated with 1837 Partners (5) | 1,863,321 | 6.0 | % | 300,000 | 1,563,321 | 5.0 | % | ||||||||||
| Iroquois Master Fund LTD (6) | 275,862 | * | 275,862 | — | — | ||||||||||||
| Joshua Tree Capital Partners, LP (7) | 1,531,378 | 4.9 | % | 125,000 | 1,406,378 | 4.5 | % | ||||||||||
| Marion Lynton (8) | 4,500 | * | 4,500 | — | — | ||||||||||||
| Oppenheimer & Co., Inc (9) | 32,500 | * | 31,500 | 1,000 | * | ||||||||||||
| Totals | 8,024,483 | 2,547,810 | 5,476,673 | ||||||||||||||
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* Less than 1%.
| (1) | Percentages are based on 31,110,385 shares of our common stock that were outstanding on January 7, 2008. |
| (2) | These shares are held in funds managed by HealthCor Management, L.P. as set forth below: |
| Shares Beneficially Owned Prior to Offering (1) |
Number of Shares Being |
Shares Beneficially Owned After Offering (1) |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selling Stockholders |
Number |
Percent |
Offered |
Number |
Percent |
||||||||||||
| HealthCor, L. P. | 209,547 | * | 209,547 | — | — | ||||||||||||
| HealthCor Hybrid Offshore, LTD. | 174,378 | * | 174,378 | — | — | ||||||||||||
| HealthCor Offshore, LTD | 716,075 | 2.3 | % | 716,075 | — | — | |||||||||||
| HealthCor, L.P., HealthCor Offshore, Ltd. and HealthCor Hybrid Offshore, Ltd. are the three owners of the shares set forth above. The investment manager of each of these funds is HealthCor Management, L.P. The inclusion of information herein with respect to HealthCor Management, L.P., HealthCor, L.P., HealthCor Offshore, Ltd., and HealthCor Hybrid Offshore, Ltd., shall not be considered an admission that any of such persons, for the purpose of Section 16(b) of the Exchange Act, are the beneficial owners of any shares in which such persons do not have a pecuniary interest. |
| (3) | These shares are held by Ardsley affiliates as set forth below: |
| Shares Beneficially Owned Prior to Offering (1) |
Number of Shares Being |
Shares Beneficially Owned After Offering (1) |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selling Stockholders |
Number |
Percent |
Offered |
Number |
Percent |
||||||||||||
| Ardsley Partners Fund II, L. P. | 176,500 | * | 176,500 | — | — | ||||||||||||
| Ardsley Offshore Fund, LTD. | 120,000 | * | 120,000 | — | — | ||||||||||||
| Ardsley Partners Institutional Fund, L. P. | 111,000 | * | 111,000 | — | — | ||||||||||||
| Steven Nagel is the agent, advisor or partner of the above selling shareholders. Steven Nagel disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest therein, if any. |
| (4) | Corriente Master Fund, L. P. is managed by Corriente Capital Management, L. P. its managing general partner and Corriente Advisors, LLC is its general partner. |
| (5) | These shares are held by 1837 Partners affiliates as set forth below: |
| Shares Beneficially Owned Prior to Offering (1) |
Number of Shares Being |
Shares Beneficially Owned After Offering (1) |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selling Stockholders |
Number |
Percent |
Offered |
Number |
Percent |
||||||||||||
| 1837 Partners, L. P. | 1,144,284 | 3.7 | % | 184,170 | 960,114 | 3.1 | % | ||||||||||
| 1837 Partner & QP, L. P. | 346,560 | 1.1 | % | 55,880 | 290,680 | * | |||||||||||
| 1837 Partners, Ltd. | 372,477 | 1.2 | % | 59,950 | 312,527 | 1.0 | % | ||||||||||
| B. R. Haarlow is the general partner of the above selling shareholders. B. R. Haarlow disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest therein, if any. |
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| (6) | Joshua Silverman has voting and interest control over these shares. Mr. Silverman disclaims beneficial ownership of these shares. |
| (7) | Vikas Tandon has investment discretion for the entire fund. |
| (8) | Marion Lynton has represented that the Selling Shareholder is not affiliated with a Broker / Dealer. |
| (9) | Shares owned are represented by 1,000 Common Shares and 31,500 shares underlying Common Stock Purchase Warrants, exercisable at $9.15 per share and issued in connection with the private placement in December 2007. Voting and investment control of shares is by Albert G. Lowenthal and Dennis McMamara. The Selling Shareholder is a Broker / Dealer. |
Each selling stockholder of our common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the trading market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling shares:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| • | in the over-the-counter market; |
| • | in transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
| • | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| • | an exchange distribution in accordance with the rules of the applicable exchange; |
| • | privately negotiated transactions; |
| • | settlement of short sales entered into after the date of this prospectus; |
| • | broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share; |
| • | a combination of any such methods of sale; |
| • | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or |
| • | any other method permitted pursuant to applicable law. |
The selling shareholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under the prospectus.
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Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Each selling stockholder does not expect these commissions and discounts relating to its sales of shares to exceed what is customary in the types of transactions involved.
The selling shareholders and any broker-dealers or agents that are involved in selling our common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed us that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the common stock.
The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state or provincial securities laws. In addition, in certain states or provinces, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to our common stock for a period of two business days prior to the commencement of the distribution. In addition, the selling shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our common stock by the selling shareholders or any other person.
In connection with sales of the shares of Common Stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of Common Stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of Common Stock short and deliver shares of Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of Common Stock to broker-dealers that in turn may sell such shares.
The selling stockholders may pledge or grant a security interest in some or all of the shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of Common Stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
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There can be no assurance that any selling stockholder will sell any or all of the shares of Common Stock registered pursuant to the registration statement, of which this prospectus forms a part.
Once sold under the registration statement, of which this prospectus forms a part, the shares of Common Stock will be freely tradable in the hands of persons other than our affiliates.
We will not receive any of the proceeds from the sale by the selling stockholders of the shares of Common Stock. We will pay all expenses of the registration of the shares of Common Stock pursuant to the registration rights agreement, estimated to be $15,000 in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreements, or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the related registration rights agreement, or we may be entitled to contribution.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the Company’s governing documents, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
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