UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 13D
Under
the Securities Exchange Act of 1934
(Amendment No. 1)*
TWINLAB CONSOLIDATED HOLDINGS, INC.
(Name of Issuer)
Common Stock, $0.001 Par Value
(Title of Class of Securities)
901773101
(CUSIP Number)
Capstone Financial Group, Inc.
8600 Transit Road
East Amherst, NY 14051
Telephone (866) 798-4478
and
Darin Richard Pastor
8600 Transit Road
East Amherst, NY 14051
Telephone (866) 798-4478
with a copy to:
Hayden Trubitt, Esq.
Stradling Yocca Carlson & Rauth, P.C.
4365 Executive Drive, Suite 1500
San Diego, CA 92121
(858) 926-3000
Fax (858) 408-4251
(Name,
Address and Telephone Number of Person
Authorized to Receive Notice and Communications)
May 28, 2015
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ]
* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
| CUSIP No. 901773101 | 13D/A | Page 2 of 6 Pages |
| 1. | NAMES
OF REPORTING PERSONS Capstone Financial Group, Inc. |
|||
| 2. | CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP (see instructions) (a) [ ] (b) [ ] |
|||
| 3. | SEC
USE ONLY |
|||
| 4. | SOURCE
OF FUNDS (see instructions) WC |
|||
| 5. | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] | |||
| 6. | CITIZENSHIP
OR PLACE OF ORGANIZATION Nevada |
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7. | SOLE
VOTING POWER 0 | ||
| 8. | SHARED
VOTING POWER 20,718,489(1) | |||
| 9. | SOLE
DISPOSITIVE POWER 0 | |||
| 10. | SHARED
DISPOSITIVE POWER 20,718,489(1) |
| 11. | AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 20,718,489(1) Shares of Common Stock |
|||
| 12. | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | |||
| [ ] | ||||
| 13. | PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.4%(2) |
|||
| 14. | TYPE
OF REPORTING PERSON (see instructions) CO |
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| (1) The aggregate number of shares to which the Schedule 13D relates includes options for the purchase of 1,498,500 currently-outstanding shares of common stock of the Issuer (all of which Capstone Financial Group, Inc. believes it has duly exercised, but for which the optionors are refusing to deliver the shares) and Series B Warrants to purchase 18,000,000 shares of common stock of the Issuer held by Capstone Financial Group, Inc. | ||||
(2) Based on 226,531,917 shares outstanding at June 2, 2015. | ||||
| CUSIP No. 901773101 | 13D/A | Page 3 of 6 Pages |
| 1. | NAMES
OF REPORTING PERSONS Darin Richard Pastor |
|||
| 2. | CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP (see instructions) (a) [ ] (b) [ ] |
|||
| 3. | SEC
USE ONLY |
|||
| 4. | SOURCE
OF FUNDS (see instructions) WC |
|||
| 5. | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] | |||
| 6. | CITIZENSHIP
OR PLACE OF ORGANIZATION New York |
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7. | SOLE
VOTING POWER 0 | ||
| 8. | SHARED
VOTING POWER 20,718,489(1) | |||
| 9. | SOLE
DISPOSITIVE POWER 0 | |||
| 10. | SHARED
DISPOSITIVE POWER 20,718,489(1) |
| 11. | AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
20,718,489(1) Shares of Common Stock |
|||
| 12. | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | |||
| [ ] | ||||
| 13. | PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.4%(2) |
|||
| 14. | TYPE
OF REPORTING PERSON (see instructions) IN |
|||
|
(1) The aggregate number of shares to which the Schedule 13D relates includes options for the purchase of 1,498,500 currently-outstanding shares of common stock of the Issuer (all of which Darin Richard Pastor believes a corporation controlled by Darin Richard Pastor has duly exercised, but for which the optionors are refusing to deliver the shares) and Series B Warrants to purchase 18,000,000 shares of common stock of the Issuer held by a corporation controlled by Darin Richard Pastor. | ||||
(2) Based on 226,531,917 shares outstanding at June 2, 2015. | ||||
| CUSIP No. 901773101 | 13D/A | Page 4 of 6 Pages |
Item 1. Security and Issuer
This amendment of a Schedule 13D statement relates to shares of common stock, $0.001 par value per share (the “Common Stock”), of Twinlab Consolidated Holdings, Inc. (the “Issuer”), a Nevada corporation, having its principal executive offices at 632 Broadway, New York, New York 10012.
This amendment is being filed by Capstone Financial Group, Inc., a Nevada corporation (“CAPP”) and Darin Richard Pastor (“Mr. Pastor”) (collectively, the “Reporting Persons”) to amend and supplement Items 3, 5, 6 and 7 of the Schedule 13D statement, which was filed on December 17, 2014.
Item 3. Source and Amount of Funds or Other Consideration
Item 3 of the Schedule 13D statement is amended and supplemented to reflect the following:
On May 28, 2015, CAPP and the Issuer entered into a Compromise Agreement and Release and an Amendment No. 1 to Series B Warrant. Pursuant to these two agreements:
| - | The Common Stock Put Agreement, dated as of September 30, 2014, was terminated. |
| - | CAPP surrendered to the Issuer the entire Series A Warrant, dated as of September 30, 2014. |
| - | CAPP surrendered to the Issuer 4,368,421 of the warrants under the Series B Warrant, dated as of September 30, 2014. |
| - | The remaining 18,000,000 warrants under the Series B Warrant were deemed divided into four tranches, each with an associated date beyond which it would no longer be exercisable: one tranche for 2,000,000 warrant shares (no longer exercisable after November 30, 2015); one for 4,000,000 warrant shares (no longer exercisable after March 31, 2016); one for 6,000,000 warrant shares (no longer exercisable after July 31, 2016); and another for 6,000,000 warrant shares (no longer exercisable after November 30, 2016). |
| - | CAPP granted the Issuer three contingent call options, at $0.01 per share, to acquire shares of common stock of the Issuer from CAPP to the extent that upon effective expiration of the second, third and fourth tranches CAPP had not exercised the warrants within such tranches. The three contingent call options would be for a number of shares of common stock of the Issuer equal to 25% of such unexercised warrants (i.e., a maximum of 1,000,000 shares if CAPP exercised no warrants from the second tranche, a maximum of 1,500,000 shares if CAPP exercised no warrants from the third tranche and a maximum of 1,500,000 shares if CAPP exercised no warrants from the fourth tranche). In addition, the Issuer cannot exercise a contingent call option unless it has satisfied such option’s “Liquidity Condition,” namely that for each of the three or fourth months before the tranche’s effective expiration date the Issuer must have a financial position sufficient to show a 1.15x fixed charge coverage ratio for a certain trailing period, all as defined by the Issuer’s Credit and Security Agreement dated January 22, 2015. |
The source of the funds for any future exercises of the Series B Warrant is anticipated to be CAPP’s working capital.
Item 5. Interest in Securities of Issuer
Items 5(a) and (c) of the Schedule 13D statement are amended to reflect the following:
| (a) | As of the filing date of the this amendment, CAPP may be deemed to beneficially own (within the meaning of Rule 13d-3 under the Securities Exchange Act) 20,718,489 shares of common stock of the Issuer, or 8.4% of the class (using the principles of Rule 13d-3 under the Securities Exchange Act to determine such percentage). Of such shares, 1,498,500 shares are issuable pursuant to the Stock Option, and 18,000,000 shares are issuable pursuant to the Series B Warrant. |
Mr. Pastor beneficially owns 74.5% of CAPP and therefore controls CAPP, and therefore also beneficially owns 8.4% of the Issuer.
| CUSIP No. 901773101 | 13D/A | Page 5 of 6 Pages |
| (c) | Except as set forth or incorporated herein, the Reporting Persons have not effected any transaction in the common stock of the Issuer during the past 60 days. In addition to the matters described in Item 3 of this amendment, during the past 60 days CAPP sold the following numbers of shares of common stock of the Issuer on the following dates (all in private transactions to accredited investors and all at $0.76 per share): |
| May 1, 2015 | 184,209 shares | ||
| May 5, 2015 | 20,000 shares | ||
| May 18, 2015 | 263,157 shares | ||
| May 19, 2015 | 263,157 shares | ||
| May 21, 2015 | 855,263 shares | ||
| May 28, 2015 | 246,049 shares | ||
| June 10, 2015 | 13,157,895 shares | ||
| June 11, 2015 | 32,894 shares | ||
| June 12, 2015 | 65,789 shares |
Each of the six May 2015 sale transactions also included CAPP issuing to the respective buyers a three-year call option to purchase from CAPP, at $1.00 per share, the same number of shares of common stock of the Issuer as the number of outstanding shares of the Issuer (as listed above) sold in the transaction, for a total of 1,831,835 shares of common stock of the Issuer underlying such call options sold in such particular transactions.
Settlement of the June 10, 2015 sale transaction has not yet occurred, but for purposes of this amendment it is deemed to have occurred.
| Item 6. | Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer |
Item 6 of the Schedule 13D statement is amended and supplemented to reflect the following:
The information set forth under Item 3 (as amended and supplemented by this amendment) is incorporated herein by reference.
Other than the Agreements described in Item 3 of the Schedule 13D statement (as amended and supplemented by this amendment), there are no contracts, arrangements, understandings or relationships (legal or otherwise) between CAPP, Mr. Pastor, and any other person with respect to any securities of the Issuer.
| Item 7. | Materials to Be Filed as Exhibits |
| Exhibit 1* | Joint Filing Agreement |
| Exhibit 7 | Form of Option Agreement |
| Exhibit 8** | Compromise Agreement and Release, dated as of May 28, 2015, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. |
| Exhibit 9** | Amendment No. 1 to Series B Warrant, dated as of May 28, 2015, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. |
| * | Incorporated by reference to the Reporting Persons’ Schedule 13D statement, as filed with the SEC on December 17, 2014. |
| ** | Incorporated by reference to CAPP’s Current Report on Form 8-K, as filed with the SEC on May 29, 2015 |
| CUSIP No. 901773101 | 13D/A | Page 6 of 6 Pages |
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| Date: June 17, 2015 | ||
| Capstone Financial Group, Inc. | ||
| By: | /s/ Darin Pastor | |
| Darin Pastor, Chief Executive Officer |
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| Date: June 17, 2015 | ||
| /s/ Darin Richard Pastor | ||
| DARIN RICHARD PASTOR, an individual |
THE SECURITIES REPRESENTED BY AND UNDERLYING THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (A) SUCH TRANSFER IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (B) SUCH TRANSFER IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT, THE RULES AND REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE STATE SECURITIES LAWS.
OPTION AGREEMENT TO PURCHASE THIRD-PARTY COMMON STOCK
Issue Date_______ __, 2015
THIS OPTION AGREEMENT CERTIFIES THAT, for value received, __________ (“Holder”) is entitled to purchase from Capstone Financial Group, Inc., a Nevada corporation (the “Seller”), up to _____ validly-issued, fully-paid and nonassessable shares of the common stock (the “Restricted Shares”) of Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “Company”), at an exercise price of $1.00 per Restricted Share (the "Option Price"), all as may be adjusted from time to time pursuant to Section 3 of this Option, subject to the provisions and upon the terms and conditions set forth of this Option.
1. TERM. This Option is exercisable, in whole or in part at any time commencing on the Issue Date and ending on the third anniversary of the Issue Date, and the Option shall terminate upon such third anniversary of the Issue Date; provided, that if before such third anniversary the Company or its business is acquired for or at a value of less than $1.00 per share of Company common stock, the Option shall terminate immediately upon such acquisition.
| 2. | EXERCISE. |
2.1 Method of Exercise. Holder may exercise this Option by delivering this original Option and a duly executed Notice of Exercise in substantially the form of Appendix 1, attached hereto and incorporated herein by this reference, to the principal office of the Seller. Holder shall also deliver to the Seller payment by wire transfer of immediately available United States funds to an account designated by the Seller or by check for the aggregate Option Price for the Restricted Shares being purchased. Exercise shall not be deemed effective unless and until each of the original Option, the duly executed Notice of Exercise and the Option Price payment have been received by the Seller.
2.2 Delivery of Certificate and New Option. Promptly after Holder exercises this Option, the Seller shall deliver to Holder certificates for the Restricted Shares acquired and, if this Option has not been fully exercised and has not expired, a new Option of like tenor representing the Restricted Shares not so acquired.
2.3 Replacement of Options. On receipt of evidence reasonably satisfactory to the Seller of the loss, theft, destruction or mutilation of this Option and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Seller or, in the case of mutilation, on surrender and cancellation of this Option, the Seller at its expense shall execute and deliver, in lieu of this Option, a new Option of like tenor.
| 3. | ADJUSTMENT TO THE RESTRICTED SHARES. |
3.1 Stock Dividends, Splits, Reverse Splits. If the Company subdivides or combines its outstanding common stock into a greater or lesser amount of common stock, or pays a dividend of common stock on common stock, then upon exercise of this Option, for each Restricted Share acquired, Holder shall receive, without extra cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Restricted Shares of record as of the date the subdivision, combination (reverse split) or stock dividend occurred. The Option Price shall be adjusted accordingly.
3.2 Reclassification, Exchange or Substitution. Upon any reclassification exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise of this Option, or any reorganization, consolidation, or merger of the Company or any sale, conveyance or other disposition of all or substantially all of the property or business of the Company, Holder shall be entitled to receive, upon exercise of this Option, the number and kind of securities and property that Holder would have received for the Restricted Shares if this Option had been exercised immediately before such reclassification, exchange, substitution, or such reorganization, consolidation or merger, or such sale, conveyance or other disposition. The Seller shall promptly issue to Holder, in exchange for this Option Agreement, a new replacement Option for such new securities or other property. The new Option shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 3 including, without limitation, adjustments to the Option Price and to the number of securities or property issuable upon exercise of the new Option. The provisions of this Section 3.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or to successive reorganizations, consolidations or mergers, or successive sales, conveyances or other dispositions of all or substantially all of the property or business.
3.3 Fractional Shares. No fractional Restricted Shares shall be issuable upon exercise or conversion of the Option and the number of Restricted Shares to be issued shall be rounded down to the nearest whole Restricted Share. If fractional share interest arises upon any exercise or conversion of the Option, the Seller shall eliminate such fractional share interest by paying Holder an amount computed by multiplying the fractional interest by the fair market value of a full Restricted Share.
3.4 Certificate as to Adjustments. Upon each adjustment of the Option Price or the number of Restricted Shares issuable upon the exercise of the Option, the Seller at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Seller shall, upon written request, furnish Holder a certificate setting forth the new number of Restricted Shares issuable under the Option, and if necessary, the Option Price in effect upon the date thereof and the series of adjustments leading to such change in the number of Restricted Shares issuable under the Option and/or in the Option Price.
| 4. | MISCELLANEOUS |
4.1 Third-Party Investment Units Purchase Agreement. This Option is issued pursuant to, and is subject to the terms and conditions of, and the Restricted Shares issuable upon the exercise of this Option shall be subject to the terms and conditions of, a Third-Party Investment Units Purchase Agreement entered into on or shortly before the Issue Date between the Seller and Holder.
4.2 The Company Is Not a Party. Holder, by acceptance of this Option, acknowledges that the Company is not a party to this Option and has no contractual obligations with respect to this Option.
4.3 Securities-Law Status. Holder, by acceptance of this Option, acknowledges that the Restricted Shares have not been registered under the Securities Act of 1933, are “restricted securities” under the Securities Act of 1933 and shall bear a customary securities-law restrictive legend, and cannot be transferred by Holder except upon registration thereof under the Securities Act of 1933 or an exemption from such registration.
4.4 Transfer of Option. Until actual delivery to the Seller’s principal office of this original Option accompanied by a duly endorsed instrument of transfer in a form reasonably acceptable to the Seller, the Seller may treat Holder as the sole record and beneficial holder of the Option for all purposes whatsoever, regardless of any notice given or received to the contrary.
4.5 No Rights as Shareholder Until Exercise. This Option does not entitle Holder to any voting rights or other rights as a stockholder of the Company before the exercise hereof.
4.6 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed email if sent during normal business hours of the recipient, if not, then on the next business day; (c) three business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Seller at its principal place of business or to Holder at Holder’s address as shown in the Seller’s records, or to such other address as such party may designate by ten days’ advance written notice to the other.
4.7 Amendment and Waiver. Any term of this Option may be amended or waived only with the written consent of the Seller and the holder of the Option. Any amendment or waiver effected in accordance with this Section shall be binding upon the Seller, such holder and each and every transferee of the Option or Restricted Shares.
4.8 Governing Law. This Option shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to its principles regarding conflicts of law.
IN WITNESS WHEREOF, the Seller has executed this Option as of the date first above written.
CAPSTONE FINANCIAL GROUP, INC.
By: __________________________
Darin Pastor
Chief Executive Officer
Address: ______________________
______________________
Email: dpastor@capstonefg.com
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase from Capstone Financial Group, Inc. _____ shares of Common Stock of Twinlab Consolidated Holdings, Inc. pursuant to the terms of the attached Option, and tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:
_______________________
(Name)
________________________
(Address l)
________________________
(Address 2)
3. Said shares are “restricted securities” under the Securities Act of 1933 and shall bear a customary securities-law restrictive legend. The undersigned represents the undersigned is acquiring the shares solely for the undersigned’s own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.
____________________________
(Signature)
____________________________
(Date)