ATRINSIC,
INC.
Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-175283
PROSPECTUS
SUPPLEMENT NO. 1
Dated
October 28, 2011
(To
Prospectus dated September 30, 2011)
This
Prospectus Supplement No. 1, dated October 28, 2011 (“Supplement No. 1”), filed
by Atrinsic, Inc. (the “Company”), modifies and supplements certain information
contained in the Company’s prospectus, dated September 30, 2011 (the
“Prospectus”). This Supplement No. 1 is not complete without, and may
not be delivered or used except in connection with, the
Prospectus. The Prospectus relates to the public sale, from time to
time, of up to 5,963,857 shares of the Company’s common stock by the selling
stockholders identified in the Prospectus.
The
information attached to this Supplement No. 1 modifies and supersedes, in part,
the information contained in the Prospectus. Any information that is
modified or superseded in the Prospectus shall not be deemed to constitute a
part of the Prospectus, except as so modified or superseded by this Supplement
No. 1.
This
Supplement No. 1 includes the attached Current Report on Form 8-K, as filed by
the Company with the Securities and Exchange Commission on October 27,
2011.
We may
further amend or supplement the Prospectus from time to time by filing
additional amendments or supplements as required. You should read the entire
Prospectus and any amendments or supplements carefully before you make an
investment decision.
The
Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if the Prospectus, or any
of the supplements or amendments relating thereto, is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date
of this Supplement No. 1 is October 28, 2011
TABLE
OF CONTENTS
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Page
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8-K
as filed with the Securities and Exchange Commission on October 27,
2011
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1
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Other
Information
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9
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Planned
Offering of Securities
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10
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of Earliest Event Reported): October 27, 2011
ATRINSIC,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
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001-12555
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06-1390025
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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469
7th
Avenue, 10th
Floor, New York, NY 10018
(Address
of Principal Executive Offices/Zip Code)
(212)
716-1977
(Registrant’s
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions ( see
General Instruction A.2. below):
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¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Background
On May
31, 2011, Atrinsic, Inc. (“Company,” “we,” “our,” or “us”) and certain investors
(the “Buyers”) entered into a Securities Purchase Agreement (the “Purchase
Agreement”). Pursuant to the terms of the Purchase Agreement, we sold
to the Buyers certain secured convertible notes in the aggregate original
principal amount of $5,813,500 (the “Notes”), which Notes are convertible into
shares of our common stock, as well as certain Series A Warrants, Series B
Warrants and Series C Warrants to purchase shares of our common stock
(collectively, the “Warrants”). On May 31, 2011, we also entered into
a registration rights agreement (the “Registration Rights Agreement”) with the
Buyers pursuant to which, among other things, we agreed to register the resale
of the shares of common stock underlying the Notes and Warrants.
Letter
Agreements
On
October 27, 2011, the Company and each of the Buyers entered into separate
Letter Agreements which modify certain terms of the Purchase Agreement, the
Notes, the Warrants and the Registration Rights Agreement.
Prior to
the entry into the Letter Agreements, the Notes were convertible into shares of
our common stock at the discretion of a Buyer at a conversion price of $2.90 per
share, provided that if we made certain dilutive issuances (with limited
exceptions), the conversion price of the Notes would be lowered to the per share
price paid in the applicable dilutive issuance. The Letter Agreements adjust the
conversion price to be used in connection with a Buyer initiated Note conversion
to the lower of the conversion price then in effect or 85% of the arithmetic
average of the three lowest closing bid prices of our common stock during the 20
trading day period prior to the applicable conversion date.
The
Letter Agreements also modify the list of eligible markets on which we must
maintain the listing of our shares of common stock to include the OTC Bulletin
Board, the OTCQX US Exchange and the OTCQB US Exchange. If we fail de-list our
common stock from the Nasdaq Capital Market and simultaneously list or designate
for quotation our common stock on another eligible market by November 4, 2011,
an event of default will occur under the Notes. Provided that such
action is taken, the Letter Agreements amend the Purchase Agreement to remove
our obligation to hold a stockholders meeting to obtain certain approvals which
would otherwise be required in connection with the financing transaction if we
maintained our listing on the Nasdaq Capital Market. Effective upon
delisting, the convertibility of the Notes and the ability of a Buyer to
exercise their Warrants will only be limited if, upon conversion or exercise, as
applicable, such Buyer (excluding Brilliant Digital, which prior to the
transaction held approximately 16.5% of our issued and outstanding common stock)
or any of its affiliates would beneficially own more than 4.9% of our common
stock. Prior to delisting, (i) the convertibility of the Notes and
the Warrants is limited to the extent that, upon conversion or exercise, the
Buyer or any of its affiliates would beneficially own more than 4.9% or 19.9%
(as applicable) of our common stock and (ii) the Notes may not be converted and
the Warrants are not exercisable if the total number of shares that would be
issued would exceed 19.99% of our common stock.
The
Letter Agreements also modify the terms of the Series B Warrants so that they
expire nine months after the date our shares are delisted from the Nasdaq
Capital Market rather than nine months after the date certain stockholder
approvals are obtained. In addition, the Letter Agreements provide
that if our common stock trades at a price at least 200% above the Series B
Warrants exercise price for a period of 10 trading days at any time after we
delist our shares from the Nasdaq Capital Market, we may force the exercise of
the Series B Warrants if certain conditions are met. Prior to the
entry into the Letter Agreements, such 10 day period began only after we
obtained certain stockholder approvals which will no longer be required upon our
delisting from the Nasdaq Capital Market.
The
foregoing description of the Letter Agreements and the transactions contemplated
thereby is not complete and is subject to and qualified in its entirety by
reference to the form of Letter Agreement attached hereto as an exhibit and
incorporated herein by reference.
Item 9.01 Financial Statement
and Exhibits.
(a)
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Not
applicable
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(b)
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Not
applicable.
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(c)
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Not
applicable.
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(d)
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Exhibits.
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10.1
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Form
of Letter Agreement dated October 27,
2011.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Atrinsic,
Inc.
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Date:
October 27, 2011
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By:
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/s/ Nathan
Fong |
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Nathan
Fong |
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Chief
Financial Officer
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Exhibit
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Description
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10.1
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Form
of Letter Agreement dated October 27,
2011.
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Exhibit
10.1
Atrinsic,
Inc.
469
7th
Avenue, 10th Floor
New
York, New York 10018
October
27, 2011
[Name of
Holder]
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Re:
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Securities
Purchase Agreement, dated as of May 31, 2011 (the “Purchase Agreement”), by
and among Atrinsic, Inc. (the “Company”), ____________
(“Holder”) and the
other Buyers (as defined in the Purchase
Agreement)
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Dear
Holder:
Pursuant to the Purchase Agreement, the
Company issued that certain secured convertible note in the original principal
amount of $______________ (the “Note”) to the Holder. All
capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Purchase Agreement.
A. The
Company and the Holder hereby agree as follows:
(i) The
term Conversion Price (as defined in the Note) is hereby deleted in its entirety
and replaced with the following:
“Conversion Price” means, as of
any Conversion Date or other date of determination, the lowest of (i) $2.90
(subject to adjustment as provided herein) and (ii) the price which shall be
computed as 85% of the quotient of (I) the sum of each of the three (3) lowest
Closing Bid Prices of the Common Stock during the twenty (20) consecutive
Trading Day period immediately preceding the applicable Conversion Date or other
date of determination (as the case may be) divided by (II) three (3). All such
determinations shall be appropriately adjusted for any stock split, stock
dividend, stock combination or other similar transaction during any such
measuring period.
(ii) The
term Eligible Market (as defined in the Notes and each of the Holder’s Warrants)
is hereby deleted in its entirety and replaced with the following:
“Eligible Market” means The New
York Stock Exchange, the NYSE Amex, the Nasdaq Global Select Market, the Nasdaq
Capital Market, the OTC Bulletin Board, OTCQX US Exchange, OTCQB US Exchange or
the Principal Market.
(iii) Section
4(a)(xxi) of the Note is hereby deleted in its entirety and replaced with the
following:
“(xxi) the
Company fails to de-list the Common Stock from the Principal Market and
simultaneously list or designate for quotation (as the case may be) the Common
Stock on another Eligible Market no later than November 4, 2011 (the date on
which the Company de-lists the Common Stock from the Principal Market and
simultaneously lists or designates for quotation (as the case may be) the Common
Stock on another Eligible Market is referred to herein as the “De-Listing Date”);
or”
(iv) The
following is hereby added as Section 4(a)(xxii) to the Note:
“(xxii) any
Event of Default (as defined in the Other Notes) occurs with respect to any
Other Notes.”
(v) The
second sentence of Section 4(f) of the Purchase Agreement is hereby deleted in
its entirety and replaced with the following:
“The
Company shall maintain the Common Stock’s listing or designation for quotation
(as the case may be) on an Eligible Market (as defined in the
Notes).”
(vi) Simultaneously
with the delisting of the Common Stock from the Principal Market and the listing
or designation for quotation (as the case may be) of the Common Stock on another
Eligible Market, Section 4(s) of the Purchase Agreement shall be deleted in its
entirety, with such deletion effective as of June 15, 2011.
(vii) The
reference to the “120th
calendar day” in Effectiveness Deadline (as defined in the Registration Rights
Agreement) is hereby deleted and replaced with “125th
calendar day,” with such deletion and replacement effective as of September 15,
2011.
(viii) The
references in the Holder’s Series B Warrants and Series C Warrants to “date on
which Shareholder Approval (as defined in the Securities Purchase Agreement) is
obtained” and “date on which Shareholder Approval is obtained” are
hereby deleted and replaced with “De-Listing Date (as defined in the
Notes).”
(vi) Upon
the earlier to occur of (i) the De-Listing Date and (ii) November 5, 2011,
Section 3(d)(ii) of the Note and Sections 1(f)(ii) of each of the Holder’s
Warrants are hereby deleted in their entirety.
B. The
Company and the Holder further agree that no adjustment to any Exercise Price
(as defined in each of the Holder’s Warrants) shall occur solely as a result of
the amendment to the definition of the Conversion Price contemplated
above.
C. Except
as expressly set forth herein, (i) each of the Transaction Documents and each of
the obligations of the Company thereunder, and each of the rights of and
benefits to the Holder thereunder, is, and shall continue to be, in full force
and effect and each is hereby ratified and confirmed in all respects, except
that from and after the date hereof, without implication that the contrary would
otherwise be true, (A) all references in the Note to “this Note,” “hereto,”
“hereof,” “hereunder” or words of like import referring to the Note shall mean
the Note as amended by this letter agreement, (B) all references in each of the
Holder’s Warrants to “this Warrant,” “hereto,” “hereof,” “hereunder” or words of
like import referring to each such Warrant shall mean each such Warrant as
amended by this letter agreement, (C) all references in the Purchase Agreement
to “this Agreement,” “hereto,” “hereof,” “hereunder” or words of like import
referring to the Purchase Agreement shall mean the Purchase Agreement as amended
by this letter agreement, (D) all references in the Registration Rights
Agreement to “this Agreement,” “hereto,” “hereof,” “hereunder” or words of like
import referring to the Registration Rights Agreement shall mean the
Registration Rights Agreement as amended by this letter agreement and (E) all
references in the Transaction Documents to “the Transaction Documents,”
“thereto,” “thereof,” “thereunder” or words of like import referring to the
Transaction Documents shall mean the Transaction Documents as amended by this
letter agreement and (ii) the execution, delivery and effectiveness of this
letter agreement shall not operate as an amendment or waiver of any right, power
or remedy of the Holder under any of the other Transaction Documents, nor
constitute an amendment or waiver of any provision of any of the Transaction
Documents and each of the Transaction Documents shall continue in full force and
effect, as amended or modified by this letter agreement. The parties hereto
agree that this letter agreement constitutes a Transaction
Document.
D. The
Company shall, on or before 8:30 a.m., New York time, on October 28, 2011, file
(i) a Current Report on Form 8-K and (ii) a prospectus supplement to the
prospectus contained in the Registration Statement (as defined in the
Registration Rights Agreement), in each case, describing all the material terms
of the transactions contemplated by this letter agreement in the form required
by the 1934 Act.
E. To
the extent that the consent of the Holder is required for any identical
amendments of any of the Other Notes (as defined in the Note) or the amendment
to the Purchase Agreement and Registration Rights Agreement contemplated above,
the Holder hereby provides its consent to such amendments. This letter agreement
shall only be effective upon receipt by the Company of fully-executed identical
letter agreements from all of the holders of Other Notes. If such fully-executed
identical letter agreements are not received by the Company from all of the
holders of Other Notes by 9:00 p.m. (New York City time) on October 27, 2011,
then this letter agreement shall be null and void ab initio.
[signature page
follows]
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Sincerely,
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Stuart
Goldfarb,
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CEO
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Agreed
to and accepted:
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[______________________]
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By: |
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Its: |
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By: |
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Name: |
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Title: |
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Other
Information
Potential Profits to Note
Holders Pursuant to Transaction: Repayment by Conversion at Note
Holders’ Election
The
following is information relating to the potential profit selling stockholders
could receive in the event the selling stockholders elect to convert their Notes
into shares of the Company’s common stock.
Subject
to the limitations described above relating to a selling stockholder’s ability
to convert their Note prior to delisting, at any time after the issuance of the
Notes, the selling stockholders may convert their Notes into shares of the
Company’s common stock by delivery of a notice of conversion to the
Company. Following the entry into the Letter Agreements described
above, the Notes are convertible into shares of common stock at a conversion
price equal to the lower of the conversion price then in effect (which is
initially $2.90) or 85% of the arithmetic average of the three lowest closing
bid prices of the Company’s common stock during the 20 trading day period prior
to the applicable conversion date. In the event that the Company
makes certain dilutive issuances (with limited exceptions), the initial
conversion price of the Notes ($2.90) will be lowered to the per share price
paid in the applicable dilutive issuance. The following table sets
out the potential profit to the Note holders at different market prices at the
time of the Note holder’s conversion (assuming that (a) that the market price
and the applicable average of the closing bid prices are the same and (b) the
Note holders are able to sell all of those shares at that market
price):
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Market
Price
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$2.50
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$2.70
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$2.90
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$3.10
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$3.30
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$3.41
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$3.70
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Conversion
Price
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$2.13
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$2.30
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$2.47
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$2.64
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$2.81
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$2.90
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$2.90
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%
Profit
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29.4%
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29.4%
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29.4%
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29.4%
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29.4%
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29.4%
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40.34%
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Total
shares underlying converted notes
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2,735,765
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2,533,116
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2,358,418
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2,206,262
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2,072,550
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2,005,693
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2,004,655
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Total
Market Price of Shares Underlying Convertible Notes
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$6,839,413
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$6,839,413
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$6,839,412
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$6,839,412
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$6,839,415
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$6,839,413
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$7,417,224
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Total
Conversion Price of Shares Underlying Convertible Notes
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$5,813,500
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$5,813,500
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$5,813,500
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$5,813,500
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$5,813,500
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$5,813,500
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$5,813,500
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Total
Profit on Sale of Shares or Total Discount to Market Price
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$1,025,912
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$1,025,913
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$1,025,912
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$1,025,912
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$1,025,915
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$1,025,913
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$1,603,724
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Original
Issue Discount on Notes Profit
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$528,500
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$528,500
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$528,500
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$528,500
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$528,500
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$528,500
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$528,500
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Total
Profit
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$1,554,412
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$1,554,412
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$1,554,412
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$1,554,412
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$1,554,412
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$1,554,412
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$2,132,224
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Following
the Company’s entry into the Letter Agreements, the profits a Note holder will
receive on the conversion of their Note into common stock, whether at the
Company’s election or at such Note holder’s election, is identical (assuming the
applicable average of the closing bid prices for a Note conversion at the
Company’s election and for a Note conversion at a Note holder’s election is
identical).
Planned Offering of
Securities
The
Company intends to make an offering of securities not registered under the
Securities Act of 1933, as amended (the “Securities Act”). The
securities to be offered will not be registered under the Securities Act and may
not be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements. At this time, the
title, amount and basic terms of the securities to be offered and the amount and
timing of the offering are not known, but the Company anticipates that the terms
of the offering may be substantially similar to the financing transaction the
Company completed on May 31, 2011, as reported in the Company’s Current Reports
on Form 8-K filed with the Securities and Exchange Commission on June 1, 2011
and October 27, 2011. The proceeds of the offering will be used for
general working capital purposes, including to fund Atrinsic’s Kazaa digital
music subscription business. The Company intends for this notice to
comply with Rule 135(c) of the general rules and regulations promulgated under
the Securities Act, and accordingly, this notice is not intended to and does not
constitute an offer to sell nor a solicitation for an offer to purchase any
securities of the Company.