Noted, in the most recent quarterly filings, ending June 2006.
#1 has a cash impact, as disclosed.
#2 has no cash impact.
I have lightened my position.
The revised re-pricing down of the recent stock deal costs about an extra 6 mill shares being issued. Now this...at a time when they need all they cash they can raise. am I being too negative? Fox.
1. Liquidated Damages
On November 28, 2005, we sold 40,500,000 shares of the Company's common stock to the Subscribers for $20,250,000 to thirteen accredited institutional investors. We also issued five-year warrants for the purchase of an additional 15,187,500 shares of common stock at an exercise price of $0.80 per share. The issued securities are restricted and have been issued pursuant to an exemption to the registration requirements of Section 5 of the Securities Act of 1933 for "transactions of the issuer not involving any public offering" provided in
Section 4(2) of the Act and pursuant to a Regulation D offering. The securities carry registration rights that obligate the Company to file a registration statement within 45 days and have the registration statement declared effective 120 days from closing. We are in default of our obligation to register the securities sold in this transaction and have incurred liquidated damages of $2,128,275 for the six months ended June 30, 2006, pursuant to the terms of the stock purchase agreements for this transaction as a result of that default.
2. Legal Settlement - the costs thereof:
In June 2005, we issued Marvel Enterprises a warrant to purchase 1,000,000 shares of our common stock in connection with the grant of a trademark license by Marvel to the Company. The warrant contained an expiration date of June 16, 2006. In connection with the issuance of the warrant, we executed a registration rights agreement with Marvel that required us to use our reasonable best efforts to cause the effectiveness of a registration statement, under the Securities Act of 1933, for the resale by Marvel of the shares purchasable under the warrant. In December 2005, the Company filed a registration statement under From SB-2 that included the common stock underlying the Marvel warrant. As of March 31, 2006, however, the Registration Statement had not been declared effective. In the second quarter of 2006, Marvel filed a complaint against the Company, alleging that Marvel had been damaged by our failure to cause a registration statement to become effective. On June 7, 2006, we settled the lawsuit, without the necessity of filing an answer to the complaint, by delivering to Marvel an amendment to the Warrant extending its term through June 16, 2007, and Marvel dismissed its complaint. |
