UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
FORM 10-Q/A
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended : June 30, 2012 |
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to |
Commission File Number: 000-49901
NATURALNANO, INC.
(Exact name of registrant as specified in its charter)
Nevada | 87-0646435 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
11 Schoen Place, Pittsford NY | 14534 | |
(Address of principal executive offices) | (Zip Code) |
585-267-4848
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by checkmark if the registrant has submitted electronically and posted on its Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
54,633,539 as of August 17, 2012
EXPLANATORY NOTE
This Amendment No. 1 to the Quarterly Report on Form 10-Q is being filed solely to furnish the Interactive Data files as Exhibit 101, in accordance with Rule 405 of Regulation S-T. No other changes have been made to the Form 10-Q, as originally filed on August 20, 2012.
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Item 6. Exhibits.
Exhibit No. |
Description | Location | ||
101 | Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Stockholders Deficiency (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements. | ** | ||
101.INS XBRL Instance Document | ||||
101.SCH XBRL Taxonomy Extension Schema Document | ||||
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document | ||||
101.DEF XBRL Taxonomy Extension Definition Linkbase Document | ||||
101.LAB XBRL Taxonomy Extension Label Linkbase Document | ||||
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document | ||||
** | Filed herewith | |||
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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 thereunto duly authorized.
NaturalNano, Inc. | |||||
Date: | September 10, 2012 | /s/ James Wemett | |||
James Wemett | |||||
President and Director | |||||
(Principal Executive, Financial and Accounting Officer) |
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CONTINGENCIES (Details Textual) (Deferred Compensation, Severance and Vacation Benefits [Member], USD $)
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3 Months Ended | |
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Sep. 30, 2010
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May 24, 2009
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Deferred Compensation, Severance and Vacation Benefits [Member]
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Loss Contingency, Estimate of Possible Loss | $ 331,265 | |
Stock Issued During Period Shares For Deferred Compensation | $ 54,691 |
DEBT AGREEMENTS
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6 Months Ended |
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Jun. 30, 2012
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Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | 2. DEBT AGREEMENTS
As of June 30, 2012, the Company had $3,580,972 in principal that was outstanding and past due under the terms of the Senior Secured Convertible Notes and Promissory Notes with Platinum Partners Long Term Growth IV (“Platinum”), Platinum Advisors and Longview Special Financing, Inc. (“Longview”). The Company entered into various Senior Secured Convertible Notes and Promissory Note obligations during the period from 2007 through 2012 with Platinum, Platinum Advisors and Longview, the holders of the Company’s primary debt obligations since 2007. The outstanding principal and all accrued and unpaid interest on these obligations was due and payable in full on various dates beginning March 6, 2009. Platinum and Platinum Advisors have granted waivers of default, extended the due dates of all the outstanding principal balances to September 30, 2012, and waived the application of the 16% default interest rate. In consideration for their forbearance effective April 16, 2012, Platinum Advisors will be paid $125,000 which was added to the principle balance of the note. This forbearance was considered and accounted for as a modification of debt and a loss of $125,000 for the three months ending June 30, 2012 and reported in the statement of operations. By way of two separate forbearance agreements dated January 1, 2012 and April 16, 2012, Longview has granted waivers of default, extended the due dates of all the outstanding principal balances to July 1, 2012, and waived the application of the 16% default interest rate. Additionally, Longview waived the automatic adjustment of the conversion rate for past and future S-8 stock issuances made for compensation and payments of services. In consideration for their forbearance, Longview will be paid $50,000 each for the forbearance which was added to the principle balance of the note. These forbearance amounts were considered and accounted for as a modification of debt and a loss of $50,000 for the three months ending March 31, 2012 and June 30, 2012 respectively and reported in the statement of operations. By way of a third forbearance agreement dated June 15, 2012, Longview has granted waivers of default, extended the due dates of all the outstanding principal balances to September 30, 2012, and waived the application of the 16% default interest rate. In consideration for their forbearance, Longview will be paid $30,000 for the forbearance which was added to the principle balance of the note. This forbearance amount was considered and accounted for as a modification of debt and recorded as a loss of $30,000 for the three months ending June 30, 2012 in the statement of operations.
The Convertible Notes discussed above mature and all outstanding principal is due and payable on September 30, 2012, as amended.
On February 10, 2012, the Company borrowed $25,000 from Platinum. This promissory note is pursuant to the terms of the Senior Secured Promissory Note. The note bears interest at the rate of 8% per annum and is due and payable on September 30, 2012 with the forbearance agreement extension.
On March 5, 2012, the Company borrowed $12,000 from Platinum. This promissory note is pursuant to the terms of the Senior Secured Promissory Note. The note bears interest at the rate of 8% per annum and is due and payable on September 30, 2012 with the forbearance agreement extension.
On April 16, 2012, the Company borrowed $15,000 from Platinum. This promissory note is pursuant to the terms of the Senior Secured Promissory Note. The note bears interest at the rate of 8% per annum and is due and payable on September 1, 2012.
On May 11, 2012, the Company borrowed $20,000 from Platinum. This promissory note is pursuant to the terms of the Senior Secured Promissory Note. The note bears interest at the rate of 8% per annum and is due and payable on September 1, 2012.
During the first six months of 2012, until the Reverse Stock Split (see Note 9), the Company issued 1,729,412 and 11,053,941 split adjusted shares of common stock to Platinum in payment of $147,000 of interest expense obligations and $939,585 of principal obligations, respectively, on the Senior Secured Convertible Notes. In accordance with the debt agreement, these shares were issued to Platinum using a split adjusted conversion price of $0.085 per common share. Subsequent to the Reverse Stock Split, the Company issued 3,967,626 shares of common stock to Platinum in payment of $25,393 of interest expense obligations on the Senior Secured Convertible Notes. These shares were issued to Platinum using a conversion price of $0.0064 per common share. The issuance of shares in excess of the conversion rate in place at the time of $0.085 were considered an inducement to convert and resulted in an expense of $24,221 based on the market value at the time the excess shares were issued. This expense is included in interest expense for the three months ended June 30, 2012.
The anti-dilution provisions of the above instruments would be triggered as a result of this inducement, as well as the preferred share inducement disclosed in Note 6. The holders of these notes have agreed to waive their rights to adjustment of the conversion rate of the debt and exercise price of their warrants as a result of these transactions.
As of March 1, 2011 the Company had $225,000 in principal that was outstanding and due under the terms of the 10% Subordinated Secured Convertible Promissory Agreement (the “Convertible Note”) with Cape One Financial LP (“Cape One”). On March 15, 2011 the Company and Cape One entered into a forbearance agreement which altered the due date of the Convertible Note from March 1, 2011 to June 30, 2011. As consideration for this forbearance, Cape One will be paid $30,000 which was added to the principal balance of the note. In addition, the interest rate on the outstanding amount during the forbearance period will be adjusted from 10% to 18%. The forbearance agreement was considered and accounted for as a modification of debt and resulted in a loss of $30,000 for the three months ended March 31, 2011 reported in the statement of operations. Effective June 30, 2011, the Company and Cape One entered into a forbearance agreement which altered the due date of the Convertible Note from June 30, 2011 to October 1, 2011. Effective September 30, 2011, the Company and Cape One entered into another forbearance agreement which altered the due date of the Convertible note from October 1, 2011 to November 22, 2011. As consideration for this forbearance, Cape One will be paid $30,000 which will be added to the principal balance of the note. This forbearance agreement was considered and accounted for as a modification of debt and resulted in a loss of $30,000 for the three months ended September 30, 2011 reported in the statement of operations. Effective January 17, 2012, the Company entered into a forbearance agreement which extends the due date of all the outstanding principal and interest balances to April 16, 2012. As consideration for this forbearance, Cape One will be paid $25,000 which will be added to the principal balance of the note. The forbearance agreement was considered and accounted for as modification of debt and a loss of $25,000 for the three months ending March 31, 2012 and reported in the statement of operations. Effective April 16, 2012, the Company entered into a forbearance agreement which extends the due date of all the outstanding principal and interest balances to July 01, 2012. Effective June 30, 2012, the Company entered into a forbearance agreement which extends the due date of all the outstanding principal and interest balances to September 30, 2012. As consideration for this forbearance, Cape One will be paid $30,000 which will be added to the principle balance of the note. The forbearance agreement was considered and accounted for as modification of debt and a loss of $30,000 for the three months ending June 30, 2012 and reported in the statement of operations.
During the first six months of 2012, the Company issued 524,118 and 352,941 shares of common stock to Cape One in payment of $30,000 of principal obligations and $44,550 of interest expense obligations, respectively, on the 10% Convertible Note. In accordance with the debt agreement, these shares were issued to Cape One using a split adjusted conversion price of $0.085 per common share.
Registration Rights Agreement On March 7, 2007, the Company entered into a Registration Rights Agreement with the Agent and the other investors, pursuant to which the Company agreed to prepare and file within 60 days of the March 7, 2007 agreement, a registration statement for resale under the Securities Act of 1933, the common stock issuable upon the exercise of the Warrants, in payment of interest on, or upon conversion of, the Notes. The Company further agreed to use its best efforts to cause the Registration Statement to be declared effective 120 days following the March 7, 2007 agreement date, or within 150 days if the Company receives a comment letter from the SEC, and to maintain such Registration Statement for the two year period following this date. This agreement allows for liquidated damages based on a daily amount of 0.0333% of the principal amount of the notes relating to the common stock issuable upon conversion of the Notes included in the Registration Statement.
As of June 30, 2012, the registration statement had not been updated with the requisite SEC filings and as such, the Company was in default of this provision of the Registration Rights Agreement. The lenders have provided the Company with a forbearance agreement related to this default through September 30, 2012. The Company recorded a total of $146,028 in such liquidated damages as of December 17, 2007, the date the registration statement was declared effective. As of December 31, 2007, $63,539 of this obligation was paid in cash and $82,489 was recorded as an accrued liability. The lender has the option to settle the liquidated damages in common stock valued at the average price for the five days prior to the end of a payment period. At June 30, 2012 and December 31, 2011 the outstanding balance for this obligation was $82,489. |