Who can explain this in simple terms...It looks as if the number of shares is limited to 6 million at the current stock price thats only about 50,000 dollars if they converted to shares.....is this correct?
To obtain additional cash flow for its on-going operations, the Company entered into Subscription Agreements with
five accredited investors on March 19, 2007. The Company received gross proceeds of $2,250,000 by the issuance
of Convertible Notes (the “Notes”) at an original discount of 16% to the selling shareholders listed herein. The
Notes, due March 18, 2009 may be converted, at the option of the Noteholders, into shares of common stock of the
Company at the conversion price of eighty-five (85%) of the preceding ten (10) days VWAP. Each investor also
received warrants (the “Warrants”) equal to that investor’s pro rata portion of the Note Principal divided by the
VWAP on the closing date of the Subscription Agreement. The Warrants are exercisable until March 18, 2010.
None of the Shares being registered pursuant to this registration statement will be available for issuance pursuant to
the exercise of the Warrants.
This Prospectus relates to the resale of the common stock underlying the Notes. The selling stockholders have
contractually agreed to restrict their ability to convert or exercise their Notes and Warrants and receive shares of our
common stock such that the number of shares of common stock held by them and their affiliates after such
conversion or exercise does not exceed, 4.99% of the then issued and outstanding shares of common stock.
We have set out below, in tabular format, certain information related to: the payments which we may be required to
make to parties in conjunction with the sale of the Notes and Warrants; the total possible profit to those parties as a
result of the conversion discount related to the Notes; the total possible shares underlying the Notes; the total
possible profit to those parties as a result of any conversion discount related to the Warrants; the total possible shares
underlying the Warrants; the gross proceeds payable to the Company with respect to the Notes; and other relevant
financial information related to the sale of the Notes and Warrants by the Company.
5
Payments on Closing March 19, 2007 Cash Non Cash Explanation
JPC Capital Partners Inc. placement fees $ 180,000 Fee of 8% of gross proceeds $2,250,000
JPC Capital Partners Inc. broker shares $220,500 283,147 shares valued at $0.7791 per share
JPC Capital Partners Inc. broker warrants $137,177 240,662 warrants valued at weighted average
exercise price $0.57
Cantara SA (affiliate of Cresent International Ltd) $20,000 Due Diligence fees
Grushko Mittman $25,000 Legal fees for documentation
Total $225,000 $357,677
Less Gross Proceeds $2,250,000
Net proceeds to Grower’s Direct $
2,025,000
Other Payments on closing to selling shareholders
Original discount of 16% paid on Convertible Note
principal amount
$428,571
Possible profit to selling shareholders from share
conversion discount
$274,248
Possible profit to selling shareholders from warrant
conversion discount
$233,099
Total $935,918
Convertible Note
Principal Amount
Purchase price
paid
Original discount of 16% paid on
principal amount on closing
Crescent International Ltd $1,190,476 $1,000,000 $190,476
Pierce Diversified Strategy
Master Fund LLC
$ 59,524 $50,000 $ 9,524
Enable Growth Partners L.P $1,011,905 $850,000 $161,905
Enable Opportunity Partners
LP
$ 119,048 $100,000 $ 19,048
Bristol Investment Fund Ltd $ 297,619 $250,000 $ 47,619
JPC Capital Partner Inc. 0 0 0
$2,678,572 $2,250,000 $428,571
There are no provisions that could result in a change in the price per share
We have set out below, in tabular format, disclosures comparing: the number of shares outstanding prior to the sale
of the Notes and Warrants (which are held by persons other than the Noteholders, Warrantholders, Company
affiliates or affiliates of the Noteholders and Warrantholders); the number of shares registered, in prior registration
statements, by the Noteholders and Warrantholders; the number of shares previously registered that are still held by
the Noteholders, Warrantholders and/or affiliates thereof; the number of shares previously sold by the Noteholders,
Warrantholders and/or affiliates thereof; and the number of shares being registered, on behalf of the Noteholders,
Warrantholders and/or affiliates thereof, pursuant to this registration statement.
We have set out below, in tabular format, disclosures which are intended to set forth the potential costs, to the
Company, in the form of liquidated damages, interest payments and other penalty amounts (collectively the “Penalty
Amounts”), which may be incurred by the Company under certain listed circumstances. Prospective Investors
should carefully review the following documents with respect to the Penalty Amounts: the Subscription Agreement
(filed herewith as Exhibit 4.1); the Convertible Note (filed herewith as Exhibit 4.2); and the Warrant (filed herewith
as Exhibit 4.3). Prospective Investors should also note that notes set forth below each set of disclosure tables below
contain information regarding the hypothetical nature of many of the Penalty Amounts calculations contained within
the following tables.
Payments on Notes
6
Total
Warrants
Issued
Maximum
Shares
Issued on
Warrant exercise
Value at closing
market price $0.73
3/19/07
Exercise Price
fixed at $0.6622
Possible profit
for discount from
closing market
price
Crescent International
Ltd
1,528,015 1,528,015 $1,115,451 $ 1,011,851 $ 103,599
Pierce Diversified
Strategy Master Fund
LLC
76,401 76,401 $ 55,773 $ 50,593 $ 5,180
Enable Growth Partners
L.P
1,298,812 1,298,812 $948,133 $860,074 $88,059
Enable Opportunity
Partners LP
152,801 152,801 $111,545 $101,185 $10,360
Bristol Investment Fund
Ltd
382,004 382,004 $278,863 $252,963 $25,900
JPC Capital Partner Inc. 240,662 240,662 $175,683 $159,366
TOTAL 3,678,695 3,678,695 $2,685,447 $2,436,032 $ 233,099
# of shares
outstanding prior to
this Offering as of
September 30, 2007
# of shares
registered, in prior
registration
statements, by the
Noteholders and
Warrantholders
# of shares
previously registered
that are still held by
the Noteholders,
Warrantholders
and/or affiliates
thereof
# of shares
previously sold by
the Noteholders,
Warrantholders
and/or affiliates
thereof
# of shares being
registered, on behalf
of the Noteholders,
Warrantholders
and/or affiliates
thereof, pursuant to
this registration
statement
30,559,328 None None None 6,350,584
Date of Calculation Interest Due on Notes* Total Principal and Interest Due on Notes*
10/31/07 0 $2,678,572
11/30/
AI
