On February 14, 2011, Mr. Halpern and NutraCea entered into a Note and Warrant Purchase Agreement whereby NutraCea issued to Mr. Halpern an 8.5% convertible promissory note in the original principle amount of $500,000 which was convertible into shares of Common Stock at $0.25 per share, and warrants to purchase 500,000 shares of Common Stock at $0.25 per share.
On June 29, 2011, Mr. Halpern and NutraCea entered into a Note and Warrant Purchase Agreement to restructure the February 14, 2011 convertible promissory notes and warrants, which were cancelled. Mr. Halpern and NutraCea entered into a Note and Warrant Purchase Agreement whereby NutraCea issued to Mr. Halpern (1) a convertible promissory note in the original principle amount of approximately $739,000 which was convertible into shares of Common Stock at $0.21 per share, (2) a convertible promissory note in the original amount of $270,000 which was convertible into shares of Common Stock at $0.21 per share, and (3) warrants to purchase 1,000,000 shares of Common Stock at $0.23 per share (the “First Prior Agreement”).
On August 31, 2011, Mr. Halpern and NutraCea entered into a Note and Warrant Purchase Agreements whereby NutraCea issued to Mr. Halpern (1) a convertible promissory note in the original principle amount of $730,000 which was convertible into shares of Common Stock at $0.21 per share, and (2) a warrant to purchase 730,000 shares of Common Stock at $0.23 per share (the “Second Prior Agreement”).
On October 7, 2011, Mr. Haplern and NutraCea entered into a Note and Warrant Purchase Agreement (the “October 2011 Agreement”) to restructure previously issued convertible promissory notes and warrants and to allow NutraCea to borrow additional funds. Pursuant to the October 2011 Agreement, Mr. Halpern cancelled the warrants and the convertible promissory notes issued under the First Prior Agreement and the Second Prior Agreement (collectively, the “Prior Agreements”) in exchange for the issuance of a new convertible promissory note in the original principal amount of approximately $1,773,000 to Baruch Halpern and Shoshana Halpern, as trustees of the Shoshana Shapiro Halpern Revocable Trust UA June 13, 2006 (the “Trust”). In addition, the Trust purchased and NutraCea issued a convertible promissory note in the original principal amount of $550,000. In consideration for the note purchase and the cancellation of the warrants under the Prior Agreements, NutraCea issued the Trust a warrant to purchase 2,323,186 shares of Common Stock at $0.22 per share that was to expire on June 15, 2015. Each of the October 7, 2011 convertible promissory notes was due and payable on October 16, 2014, bore interest at an annual rate equal to 10% per year, and was convertible into shares of Common Stock at $0.20 per share.
On January 18, 2012, in connection with the Note and Warrant Agreement entered into on January 17, 2012 (the “January 2012 Agreement”), Mr. Halpern cancelled the warrants and the convertible promissory notes issued under the October 2011 Agreement and paid an additional $112,523 in exchange for the issuance of a new convertible promissory note in the original principal amount of approximately $2,500,000 to the Trust. In consideration for the note purchase and the cancellation of the warrants, NutraCea issued to the Trust a warrant to purchase 25,000,000 shares of Common Stock at $0.12 per share that expires January 18, 2017. The convertible promissory note is due and payable on January 18, 2015 and bears interest at an annual rate equal to 10% per year. Each convertible note shall be convertible into shares of Common Stock at $0.10 per share. The note and warrant issued January 18, 2012 contains full ratchet antidilution provisions.
On July 31, 2012, NutraCea, the Trust and other certain investors amended the Note and Warrant Purchase Agreement dated January 17, 2012 (the “Amendment”) to, among other things, extend the maturity date to July 31, 2015 and reduce the conversion price to $0.07 on all outstanding Notes. In addition, all outstanding warrants issued under the Note and Warrant Purchase Agreement held by the parties to the Amendment were amended such that the (a) the exercise price is now equal to $0.08, (b) the number of shares of Common Stock issuable upon exercise of each warrant outstanding as of the effective date will be equal to the quotient obtained by dividing (i) the original principal amount of the Note issued to the holder of the Note, by (ii) $0.07, and (c) the exercise price of each warrant was extended to July 31, 2017. Based on the Amendment, under the January 2012 Agreement, the Trust holds (1) a convertible promissory note in the original principal amount of approximately $2,500,000, and (2) a warrant to purchase up to 35,714,286 shares of Common Stock at $0.08 per share. The note is convertible into 35,714,286 shares of Common Stock at $0.07 per share.
In connection with the Amendment, Mr. Halpern invested an additional $100,000 in exchange for the issuance of a new convertible promissory note in the original principal amount of approximately $100,000. In consideration for the note purchase, NutraCea issued to Mr. Halpern a warrant to purchase 1,428,571 shares of Common Stock at $0.07 per share that expires July 31, 2017. The convertible promissory note is due and payable on July 31, 2015 and bears interest at an annual rate equal to 10% per year. The convertible note shall be convertible into shares of Common Stock at $0.07 per share. The note and warrant issued July 31, 2012 contains full ratchet antidilution provisions.
Mr. Halpern, as managing director of Halpern Capital, also received two warrants to purchase up to 1,017,857 and 321,429 (after adjustments based on full ratchet antidilution provisions) shares of Common Stock as consideration for Halpern Capital acting as NutraCea’s placement agent for two financings that took place in January 2012. In addition, Mr. Halpern received a warrant to purchase up to 416,570 shares of Common Stock as consideration for Halpern Capital acting as NutraCea’s placement agent for the subsequent closings under the January 2012 Agreement as amended. The warrants have an exercise price of $0.07 per share and expire July 31, 2017.
The convertible promissory notes and the warrants described herin provides that no holder of the notes or warrants shall be entitled to convert or exercise, as the case may be, the notes and warrants to the extent that such conversion or exercise would cause the aggregate number of shares of Common Stock beneficially owned by such holder to exceed 4.99% of the outstanding shares of Common Stock following such conversion or exercise (which provision may be waived by such holder by written notice from such holder to NutraCea, which notice shall be effective 61 days after the date of such notice).
Assuming a conversion price of $0.07, if the notes were converted and the warrants were exercised as of the date hereof, Mr. Halpern would beneficially own 84,541,427 shares of Common Stock which would represent approximately 29.2% of the total shares of Common Stock outstanding, based on 204,833,937 shares of Common Stock outstanding as informed by NutraCea on July 31, 2012. However, as noted above, Mr. Halpern is prevented from converting the notes or exercising the warrants to the extent such conversion would result in Mr. Halpern, beneficially owning (as determined in accordance with section 13(d) of the Securities Exchange Act of 1934, as amended and the rules promulgated thereunder) in excess of 4.99% of the then and outstanding shares of Common Stock.
On January 18, 2012 in connection with the appointment of Mr. Halpern as director of NutraCea, NutraCea granted Mr. Halpern an option to purchase up to 229,167 shares of Common Stock at an exercise price equal to $0.20 per share. The option vests in eleven equal monthly installments commencing on February 29, 2012.
On March 27, 2012, NutraCea granted Mr. Halpern an option to purchase up to 169,938 shares of Common Stock at an exercise price equal to $0.14 per share. The option vests in nine equal monthly installments commencing on April 30, 2012.
In addition to the above transactions, Mr. Halpern beneficially owns 790,000 shares of Common Stock and warrants to purchase up to 7,380,743 of Common Stock at an exercise price of $0.07 per share which expire on July 31, 2017.
(a) Mr. Halpern is or may be deemed to be the beneficial owner of an aggregate of 10,700,000 shares (the “Underlying Shares”) of Common Stock, or approximately 4.99% of the number of (i) outstanding shares of Common Stock outstanding as of July 31, 2012, plus (ii) shares of Common Stock into which the NutraCea securities may be converted. Mr. Halpern is the beneficial owner of 790,000 shares of Common Stock. The remainder represents shares which may be converted into Common Stock pursuant to outstanding notes and warrants.
(b) Mr. Halpern has sole voting and dispositive power over the Common Stock underlying the options to purchase up to 399,105 shares of Common Stock and warrants to purchase up to 1,696,428 shares of Common Stock. Mr. Halpern has sole voting and dispositive power jointly with Shoshana Halpern with respect to any of the Underlying Shares that he may be deemed to beneficially own. Please see Rows 7 through 10 of the cover page to this Schedule 13D.
(c) Other than as described above in Item 3, Mr. Halpern has not engaged in any transaction in NutraCea Common Stock during the 60-day period immediately preceding the date hereof except as described herein.
(d) Mr. Halpern and Shoshana Halpern are each trustees under the Trust and each have voting and dispositive powers over securities owned by the Trust.
(e) On January 18, 2012, Mr. Halpern ceased to be the beneficial owner of more than five percent of the Common Stock due to the conversion blockers described in Item 3 above.
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Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
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Mr. Halpern is a financial advisor who works with NutraCea through Halpern Capital, Inc. Halpern Capital, Inc. has an agreement with NutraCea under which Halpern Capital may receive between 2.5% and 5%, depending on the type of security offering, of cash consideration for security offerings Halpern Capital arranges for NutraCea.
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Material to Be Filed as Exhibits
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