As filed with the Securities and
Exchange Commission on April 22, 2008 Registration No. 333-145344
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO FORM S-3 ON FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
TALON INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 5130 95-4654481
(State or jurisdiction (Primary Standard (I.R.S Employer
of incorporation Industrial Classification Identification
or organization) Code Number) Number)
21900 BURBANK BLVD. SUITE 270
WOODLAND HILLS, CALIFORNIA 91367
(818) 444-4100
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
LONNIE D. SCHNELL, CHIEF EXECUTIVE OFFICER
TALON INTERNATIONAL, INC.
21900 BURBANK BLVD., SUITE 270
WOODLAND HILLS, CALIFORNIA 91367
(818) 444-4100
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copy to:
JOHN MCILVERY, ESQ.
STUBBS ALDERTON & MARKILES, LLP
15260 VENTURA BOULEVARD, 20TH FLOOR
SHERMAN OAKS, CALIFORNIA 91403
(818) 444-4500
(Name, Address and Telephone Number of Agent for Service)
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If any securities being registered on this Form are to be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check
the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
============================================= ================= ================= ==================== =============
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED (1) PER UNIT (2) OFFERING PRICE (2) FEE (3)
--------------------------------------------- ----------------- ----------------- -------------------- -------------
Common Stock, par value $.001 per share.... 1,750,000 $0.34 $595,000 $24.00
--------------------------------------------- ----------------- ----------------- -------------------- -------------
(1) In the event of a stock split, stock dividend, or other similar
transaction involving the Registrant's common stock, in order to
prevent dilution, the number of shares registered shall automatically
be increased to cover the additional shares in accordance with Rule
416(a) under the Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, using the
average of the high and low price as reported on the OTC Bulletin Board
on April 16, 2008.
(3) A registration fee of $101.13 was previously paid by the Registrant
with respect to 3,600,000 shares of common stock included with the
prior filing of the Registration Statement filed August 10, 2007.
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
Subject to Completion, Dated April 22, 2008
TALON INTERNATIONAL, INC.
1,750,000 SHARES
COMMON STOCK
This prospectus relates to the offer and sale from time to time of up
to 1,750,000 shares of our common stock that are held by the shareholder named
in the "Selling Shareholder" section of this prospectus. The prices at which the
selling shareholder may sell the shares in this offering will be determined by
the prevailing market price for the shares or in negotiated transactions. We
will not receive any of the proceeds from the sale of the shares. We will bear
all expenses of registration incurred in connection with this offering. The
selling shareholder will bear all selling and other expenses.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"TALN." On April 17, 2008, the last reported sales price of the common stock on
the OTC Bulletin Board was $0.37 per share.
FOR A DISCUSSION OF IMPORTANT FACTORS THAT YOU SHOULD CONSIDER BEFORE
PURCHASING THE SHARES OF COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF
THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ______________, 2008
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TABLE OF CONTENTS
PAGE
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Prospectus Summary ................................................... 3
Risk Factors ......................................................... 4
Forward-looking Statements ........................................... 10
Use of Proceeds ...................................................... 10
Selling Shareholder .................................................. 10
Plan of Distribution ................................................. 13
Description of Securities ............................................ 14
Interests of Named Experts and Counsel ............................... 15
Limitation on Liability and
Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities .................................................... 15
Where You Can Find
More Information ................................................... 15
Incorporation by Reference ........................................... 16
You should rely only on the information contained in this prospectus or
any supplement. We have not authorized anyone to provide information that is
different from that contained in this prospectus. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of our common stock.
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED IN GREATER
DETAIL ELSEWHERE IN THIS PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN ALL THE
INFORMATION YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD
READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE MAKING AN INVESTMENT DECISION,
INCLUDING "RISK FACTORS" AND THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
RELATED NOTES. REFERENCES IN THIS PROSPECTUS TO "TALON INTERNATIONAL", "WE,"
"OUR" AND "US" REFER TO TALON INTERNATIONAL, INC. AND OUR CONSOLIDATED
SUBSIDIARIES.
TALON INTERNATIONAL, INC.
Talon International, Inc. specializes in the manufacturing and
distribution of a full range of apparel accessories including zippers and trim
items to manufacturers of fashion apparel, specialty retailers and mass
merchandisers. We manufacture and distribute zippers under our TALON(R) brand
name to manufacturers for apparel brands and retailers such as Levi Strauss &
Co., Abercrombie & Fitch, Wal-Mart, Kohl's, The Gap and JC Penney, among others.
We also provide full service outsourced trim design, sourcing and management
services and supply specified trim items for manufacturers of fashion apparel
such as Abercrombie & Fitch, Victoria's Secret, American Eagle, Motherhood,
Express, Polo Ralph Lauren and others. Under our TEKFIT(R) brand, we develop and
sell apparel components that utilize a patented technology, including a stretch
waistband.
We were incorporated in the State of Delaware in 1997. We were formed
to serve as the parent holding company of Tag-It, Inc., a California
corporation, Tag-It Printing & Packaging Ltd., which changed its name in 1999 to
Tag-It Pacific (HK) LTD, a BVI corporation, Tagit de Mexico, S.A. de C.V.,
A.G.S. Stationery, Inc., a California corporation, and Pacific Trim & Belt,
Inc., a California corporation. All of these companies were consolidated under a
parent limited liability company in October 1997. These companies became our
wholly owned subsidiaries immediately prior to the effective date of our initial
public offering in January 1998. In 2000, we formed two wholly owned
subsidiaries of Tag-It Pacific, Inc: Tag-It Pacific Limited, a Hong Kong
corporation, and Talon International, Inc., a Delaware corporation. During 2006
we formed two wholly owned subsidiaries of Talon International, Inc. (formerly
Tag-It Pacific, Inc.): Talon Zipper (Shenzhen) Company Ltd. in China, and Talon
International Pvt. Ltd., in India. On July 20, 2007 we changed our corporate
name from Tag-It Pacific, Inc. to Talon International, Inc. The address of our
principal executive office is 21900 Burbank Blvd., Suite 270, Woodland Hills, CA
91367 and our telephone number is (818) 444-4100. Our website address is
www.talonzippers.com. The information that can be accessed through viewing our
website is not part of this prospectus.
ABOUT THE OFFERING
This prospectus may be used only in connection with the resale by the
selling shareholder of up to 1,750,000 shares of our common stock. We will not
receive any of the proceeds from the sale of shares of our common stock offered
by the selling shareholder pursuant to this prospectus. On April 11, 2008, we
had 20,291,433 shares of our common stock outstanding.
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RISK FACTORS
Investing in our common stock involves a high degree of risk. You
should carefully consider the following risk factors and all other information
contained in this prospectus before purchasing our common stock. The risks and
uncertainties described below are not the only ones facing us. Additional risks
and uncertainties that we are unaware of, or that we currently deem immaterial,
also may become important factors that affect us. If any of the following risks
occur, our business, financial condition or results of operations could be
materially and adversely affected. In that case, the trading price of our common
stock could decline, and you may lose some or all of your investment.
OUR GROWTH AND OPERATING RESULTS COULD BE MATERIALLY, ADVERSELY
AFFECTED IF WE ARE UNSUCCESSFUL IN RESOLVING A DISPUTE THAT NOW EXISTS REGARDING
OUR RIGHTS UNDER OUR EXCLUSIVE LICENSE AND INTELLECTUAL PROPERTY AGREEMENT WITH
PRO-FIT. Pursuant to our agreement with Pro-Fit Holdings, Limited, we have
exclusive rights in certain geographic areas to Pro-Fit's stretch and rigid
waistband technology. We are in litigation with Pro-Fit regarding our rights. In
the past, we had derived a significant amount of revenues from the sale of
products incorporating the stretch waistband technology. Our business, results
of operations and financial condition could be materially adversely affected if
we are unable to reach a settlement in a manner acceptable to us and ensuing
litigation is not resolved in a manner favorable to us. Additionally, we have
incurred significant legal fees in this litigation, and unless the case is
settled, we will continue to incur additional legal fees in increasing amounts
as the case accelerates to trial.
IF WE LOSE OUR LARGER CUSTOMERS OR THEY FAIL TO PURCHASE AT ANTICIPATED
LEVELS, OUR SALES AND OPERATING RESULTS WILL BE ADVERSELY AFFECTED. Our results
of operations will depend to a significant extent upon the commercial success of
our larger customers. If these customers fail to purchase our products at
anticipated levels, or our relationship with these customers terminates, it may
have an adverse affect on our results because:
o We will lose a primary source of revenue if these customers
choose not to purchase our products or services;
o We may not be able to reduce fixed costs incurred in
developing the relationship with these customers in a timely
manner;
o We may not be able to recoup setup and inventory costs;
o We may be left holding inventory that cannot be sold to other
customers; and
o We may not be able to collect our receivables from them.
IF CUSTOMERS DEFAULT ON INVENTORY PURCHASE COMMITMENTS WITH US, WE WILL
BE LEFT HOLDING NON-SALABLE INVENTORY. We hold significant inventories for
specific customer programs, which the customers have committed to purchase. If
any customer defaults on these commitments, or insists on markdowns, we may
incur a charge in connection with our holding significant amounts of non-salable
inventory and this would have a negative impact on our operations and cash flow.
OUR REVENUES MAY BE HARMED IF GENERAL ECONOMIC CONDITIONS WORSEN. Our
revenues depend on the health of the economy and the growth of our customers and
potential future customers. When economic conditions weaken, certain apparel
manufacturers and retailers, including some of our customers may experience
financial difficulties that increase the risk of extending credit to such
customers. Customers adversely affected by economic conditions have also
attempted to improve their own operating efficiencies by concentrating their
purchasing power among a narrowing group of vendors. There can be no assurance
that we will remain a preferred vendor to our existing customers. A decrease in
business from or loss of a major customer could have a material adverse effect
on our results of
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operations. Further, if the economic conditions in the United States worsen or
if a wider or global economic slowdown occurs, we may experience a material
adverse impact on our business, operating results, and financial condition.
BECAUSE WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS, WE MAY NOT BE ABLE
TO ALWAYS OBTAIN MATERIALS WHEN WE NEED THEM AND WE MAY LOSE SALES AND
CUSTOMERS. Lead times for materials we order can vary significantly and depend
on many factors, including the specific supplier, the contract terms and the
demand for particular materials at a given time. From time to time, we may
experience fluctuations in the prices, and disruptions in the supply, of
materials. Shortages or disruptions in the supply of materials, or our inability
to procure materials from alternate sources at acceptable prices in a timely
manner, could lead us to miss deadlines for orders and lose sales and customers.
WE OPERATE IN AN INDUSTRY THAT IS SUBJECT TO SIGNIFICANT FLUCTUATIONS
IN OPERATING RESULTS THAT MAY RESULT IN UNEXPECTED REDUCTIONS IN REVENUE AND
STOCK PRICE VOLATILITY. We operate in an industry that is subject to significant
fluctuations in operating results from quarter to quarter, which may lead to
unexpected reductions in revenues and stock price volatility. Factors that may
influence our quarterly operating results include:
o The volume and timing of customer orders received during the
quarter;
o The timing and magnitude of customers' marketing campaigns;
o The loss or addition of a major customer;
o The availability and pricing of materials for our products;
o The increased expenses incurred in connection with the
introduction of new products;
o Currency fluctuations;
o Delays caused by third parties; and
o Changes in our product mix or in the relative contribution to
sales of our subsidiaries.
Due to these factors, it is possible that in some quarters our
operating results may be below our stockholders' expectations and those of
public market analysts. If this occurs, the price of our common stock could be
adversely affected. In the past, following periods of volatility in the market
price of a company's securities, securities class action litigation has often
been instituted against such a company. In October 2005, a securities class
action lawsuit was filed against us.
THE OUTCOME OF LITIGATION IN WHICH WE HAVE BEEN NAMED AS A DEFENDANT IS
UNPREDICTABLE AND AN ADVERSE DECISION IN ANY SUCH MATTER COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR FINANCIAL POSITION AND RESULTS OF OPERATIONS. We are
defendants in a number of litigation matters. These claims may divert financial
and management resources that would otherwise be used to benefit our operations.
Although we believe that we have meritorious defenses to the claims made in each
and all of the litigation matters to which we have been named a party, and
intend to contest each lawsuit vigorously, no assurances can be given that the
results of these matters will be favorable to us. An adverse resolution of any
of these lawsuits could have a material adverse effect on our financial position
and results of operations.
We maintain product liability and director and officer insurance that
we regard as reasonably adequate to protect us from potential claims; however we
cannot assure you that it will be adequate to cover any losses. Further, the
costs of insurance have increased dramatically in recent years, and the
availability of coverage has decreased. As a result, we cannot assure you that
we will be able to maintain our current levels of insurance at a reasonable
cost, or at all.
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IF WE ARE UNABLE TO SATISFY THE FINANCIAL COVENANTS IN OUR DEBT
AGREEMENTS IN FUTURE PERIODS, THE LENDER COULD DECLARE THE DEBT OBLIGATIONS IN
DEFAULT, WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR LIQUIDITY, BUSINESS
AND OPERATIONS. Our revolving credit and term loan agreement requires certain
covenants, including a minimum level of EBITDA beginning with the period ending
June 30, 2008. In the event that we fail to satisfy the minimum EBITDA
requirement for three consecutive quarters, the credit agreement will be in
default and the full amount of our outstanding obligations will become due. In
anticipation of us not being able to meet the required covenants due to various
reasons, we either negotiate for changes in the relative covenants or an advance
waiver or would have to reclassify the relevant debt as current. However, our
expectations of future operating results and continued compliance with other
debt covenants cannot be assured and our lender's actions are not controllable
by us. If we are in default under the loan agreement, all amounts due under the
loan agreement can be declared immediately due and payable and, unless we are
able to secure alternative financing to repay the lender in full, the lender
would have the right to exercise its remedies including enforcement of its lien
on substantially all of our assets. Further, if the debt is placed in default,
we would be required to reduce our expenses, including by curtailing operations,
and to raise capital through the sale of assets, issuance of equity or
otherwise, any of which could have a material adverse effect on our financial
condition and results of operations.
OUR CUSTOMERS HAVE CYCLICAL BUYING PATTERNS WHICH MAY CAUSE US TO HAVE
PERIODS OF LOW SALES VOLUME. Most of our customers are in the apparel industry.
The apparel industry historically has been subject to substantial cyclical
variations. Our business has experienced, and we expect our business to continue
to experience, significant cyclical fluctuations due, in part, to customer
buying patterns, which may result in periods of low sales usually in the first
and fourth quarters of our financial year.
OUR BUSINESS MODEL IS DEPENDENT ON INTEGRATION OF INFORMATION SYSTEMS
ON A GLOBAL BASIS AND, TO THE EXTENT THAT WE FAIL TO MAINTAIN AND SUPPORT OUR
INFORMATION SYSTEMS, IT CAN RESULT IN LOST REVENUES. We must consolidate and
centralize the management of our subsidiaries and significantly expand and
improve our financial and operating controls. Additionally, we must effectively
integrate the information systems of our worldwide operations with the
information systems of our principal offices in California. Our failure to do so
could result in lost revenues, delay financial reporting or adverse effects on
the information reported.
THE LOSS OF KEY MANAGEMENT AND SALES PERSONNEL COULD ADVERSELY AFFECT
OUR BUSINESS, INCLUDING OUR ABILITY TO OBTAIN AND SECURE ACCOUNTS AND GENERATE
SALES. Our success has and will continue to depend to a significant extent upon
key management and sales personnel, many of whom would be difficult to replace.
The loss of the services of key employees could have a material adverse effect
on our business, including our ability to establish and maintain client
relationships. Our future success will depend in large part upon our ability to
attract and retain personnel with a variety of sales, operating and managerial
skills.
IF WE EXPERIENCE DISRUPTIONS AT ANY OF OUR FOREIGN FACILITIES, WE WILL
NOT BE ABLE TO MEET OUR OBLIGATIONS AND MAY LOSE SALES AND CUSTOMERS. Currently,
we do not operate duplicate facilities in different geographic areas. Therefore,
in the event of a regional disruption where we maintain one or more of our
facilities, it is unlikely that we could shift our operations to a different
geographic region and we may have to cease or curtail our operations. This may
cause us to lose sales and customers. The types of disruptions that may occur
include:
o Foreign trade disruptions;
o Import restrictions;
o Labor disruptions;
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o Embargoes;
o Government intervention;
o Natural disasters; or
o Regional pandemics.
INTERNET-BASED SYSTEMS THAT WE RELY UPON FOR OUR ORDER TRACKING AND
MANAGEMENT SYSTEMS MAY EXPERIENCE DISRUPTIONS AND AS A RESULT WE MAY LOSE
REVENUES AND CUSTOMERS. To the extent that we fail to adequately update and
maintain the hardware and software implementing our integrated systems, our
customers may be delayed or interrupted due to defects in our hardware or our
source code. In addition, since our software is Internet-based, interruptions in
Internet service generally can negatively impact our ability to use our systems
to monitor and manage various aspects of our customer's trim needs. Such defects
or interruptions could result in lost revenues and lost customers.
THERE ARE MANY COMPANIES THAT OFFER SOME OR ALL OF THE PRODUCTS AND
SERVICES WE SELL AND IF WE ARE UNABLE TO SUCCESSFULLY COMPETE OUR BUSINESS WILL
BE ADVERSELY AFFECTED. We compete in highly competitive and fragmented
industries with numerous local and regional companies that provide some or all
of the products and services we offer. We compete with national and
international design companies, distributors and manufacturers of tags,
packaging products, zippers and other trim items. Some of our competitors have
greater name recognition, longer operating histories and greater financial and
other resources than we do.
UNAUTHORIZED USE OF OUR PROPRIETARY TECHNOLOGY MAY INCREASE OUR
LITIGATION COSTS AND ADVERSELY AFFECT OUR SALES. We rely on trademark, trade
secret and copyright laws to protect our designs and other proprietary property
worldwide. We cannot be certain that these laws will be sufficient to protect
our property. In particular, the laws of some countries in which our products
are distributed or may be distributed in the future may not protect our products
and intellectual rights to the same extent as the laws of the United States. If
litigation is necessary in the future to enforce our intellectual property
rights, to protect our trade secrets or to determine the validity and scope of
the proprietary rights of others, such litigation could result in substantial
costs and diversion of resources. This could have a material adverse effect on
our operating results and financial condition. Ultimately, we may be unable, for
financial or other reasons, to enforce our rights under intellectual property
laws, which could result in lost sales.
IF OUR PRODUCTS INFRINGE ANY OTHER PERSON'S PROPRIETARY RIGHTS, WE MAY
BE SUED AND HAVE TO PAY LEGAL EXPENSES AND JUDGMENTS AND REDESIGN OR DISCONTINUE
SELLING OUR PRODUCTS. From time to time in our industry, third parties allege
infringement of their proprietary rights. Any infringement claims, whether or
not meritorious, could result in costly litigation or require us to enter into
royalty or licensing agreements as a means of settlement. If we are found to
have infringed the proprietary rights of others, we could be required to pay
damages, cease sales of the infringing products and redesign the products or
discontinue their sale. Any of these outcomes, individually or collectively,
could have a material adverse effect on our operating results and financial
condition.
COUNTERFEIT PRODUCTS ARE NOT UNCOMMON IN THE APPAREL INDUSTRY AND OUR
CUSTOMERS MAY MAKE CLAIMS AGAINST US FOR PRODUCTS WE HAVE NOT PRODUCED AND WE
MAY BE ADVERSELY IMPACTED BY THESE FALSE CLAIMS. Counterfeiting of valuable
trade names is commonplace in the apparel industry and while there are industry
organizations and federal laws designed to protect the brand owner, these
counterfeit products are not always detected and it can be difficult to prove
the manufacturing source of these products. Accordingly, we may be adversely
affected if counterfeit products damage our relationships with customers, and we
incur costs to prove these products are counterfeit, to defend ourselves against
false claims, or we may have to pay for false claims.
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OUR STOCK PRICE MAY DECREASE, WHICH COULD ADVERSELY AFFECT OUR BUSINESS
AND CAUSE OUR STOCKHOLDERS TO SUFFER SIGNIFICANT LOSSES. The following factors
could cause the market price of our common stock to decrease, perhaps
substantially:
o The failure of our quarterly operating results to meet
expectations of investors or securities analysts;
o Adverse developments in the financial markets, the apparel
industry and the worldwide or regional economies;
o Interest rates;
o Changes in accounting principles;
o Intellectual property and legal matters;
o Sales of common stock by existing shareholders or holders of
options;
o Announcements of key developments by our competitors; and
o The reaction of markets and securities analysts to
announcements and developments involving our company.
IF WE NEED TO SELL OR ISSUE ADDITIONAL SHARES OF COMMON STOCK OR INCUR
ADDITIONAL DEBT TO FINANCE FUTURE GROWTH, OUR STOCKHOLDERS' OWNERSHIP COULD BE
DILUTED OR OUR EARNINGS COULD BE ADVERSELY IMPACTED. Our business strategy may
include expansion through internal growth, by acquiring complementary businesses
or by establishing strategic relationships with targeted customers and
suppliers. In order to do so or to fund our other activities, we may issue
additional equity securities that could dilute our stockholders' value. We may
also assume additional debt and incur impairment losses to our intangible assets
if we acquire another company.
WE MAY NOT BE ABLE TO REALIZE THE ANTICIPATED BENEFITS OF ACQUISITIONS.
We may consider strategic acquisitions as opportunities arise, subject to the
obtaining of any necessary financing. Acquisitions involve numerous risks,
including diversion of our management's attention away from our operating
activities. We cannot assure you that we will not encounter unanticipated
problems or liabilities relating to the integration of an acquired company's
operations, nor can we assure you that we will realize the anticipated benefits
of any future acquisitions.
OUR ACTUAL TAX LIABILITIES MAY DIFFER FROM ESTIMATED TAX RESULTING IN
UNFAVORABLE ADJUSTMENTS TO OUR FUTURE RESULTS. The amount of income taxes we pay
is subject to ongoing audits by federal, state and foreign tax authorities. Our
estimate of the potential outcome of uncertain tax issues is subject to our
assessment of relevant risks, facts, and circumstances existing at that time.
Our future results may include favorable or unfavorable adjustments to our
estimated tax liabilities in the period the assessments are made or resolved,
which may impact our effective tax rate and our financial results.
WE HAVE ADOPTED A NUMBER OF ANTI-TAKEOVER MEASURES THAT MAY DEPRESS THE
PRICE OF OUR COMMON STOCK. Our stockholders' rights plan, our ability to issue
additional shares of preferred stock and some provisions of our certificate of
incorporation and bylaws and of Delaware law could make it more difficult for a
third party to make an unsolicited takeover attempt of us. These anti-takeover
measures may depress the price of our common stock by making it more difficult
for third parties to acquire us by offering to purchase shares of our stock at a
premium to its market price.
INSIDERS OWN A SIGNIFICANT PORTION OF OUR COMMON STOCK, WHICH COULD
LIMIT OUR STOCKHOLDERS' ABILITY TO INFLUENCE THE OUTCOME OF KEY TRANSACTIONS. As
of April 11, 2008, our officers and directors and their affiliates beneficially
owned approximately 14.5% of the outstanding shares of our common stock.
8
The Dyne family, which includes Mark Dyne, Colin Dyne, who are also our
directors; Larry Dyne, the estate of Harold Dyne and Jonathan Burstein;
beneficially owned approximately 13.3% of the outstanding shares of our common
stock at April 11, 2008. Additionally, at April 11, 2008 our lender Bluefin
Capital LLC beneficially owned approximately 8.6% of the outstanding shares of
our common stock. As a result, our lender, officers and directors and the Dyne
family are able to exert considerable influence over the outcome of any matters
submitted to a vote of the holders of our common stock, including the election
of our Board of Directors. The voting power of these stockholders could also
discourage others from seeking to acquire control of us through the purchase of
our common stock, which might depress the price of our common stock.
WE MAY FACE INTERRUPTION OF PRODUCTION AND SERVICES DUE TO INCREASED
SECURITY MEASURES IN RESPONSE TO TERRORISM. Our business depends on the free
flow of products and services through the channels of commerce. In response to
terrorists' activities and threats aimed at the United States, transportation,
mail, financial and other services may be slowed or stopped altogether.
Extensive delays or stoppages in transportation, mail, financial or other
services could have a material adverse effect on our business, results of
operations and financial condition. Furthermore, we may experience an increase
in operating costs, such as costs for transportation, insurance and security as
a result of the activities and potential delays. We may also experience delays
in receiving payments from payers that have been affected by the terrorist
activities. The United States economy in general may be adversely affected by
the terrorist activities and any economic downturn could adversely impact our
results of operations, impair our ability to raise capital or otherwise
adversely affect our ability to grow our business.
IF WE ARE UNABLE TO REDEPLOY OUR MANUFACTURING ASSETS TO SOUTHEAST ASIA
OUR MANUFACTURING ASSETS VALUE WOULD BE ADVERSELY AFFECTED. Central to our
operating strategy was to restructure the business model from a fully integrated
manufacturing operation targeted at the South American marketplace to a
supply-chain model employing strategically located contract manufacturers
throughout Southeast Asia. The re-deployment of our manufacturing assets could
require multiple facilities in various geographical locations strategically
located in close proximity to our more significant and important customers
throughout Southeast Asia. If we cannot achieve its plan to redeploy the assets,
the carrying value of our assets would be adversely affected and could result in
significant reductions in the carrying value of the assets and have an adverse
effect on our results of operations.
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FORWARD-LOOKING STATEMENTS
This prospectus contains statements that constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Exchange Act of 1934, both as amended. These forward-looking
statements are subject to various risks and uncertainties. The forward-looking
statements include, without limitation, statements regarding our future business
plans and strategies and our future financial position or results of operations,
as well as other statements that are not historical. You can find many of these
statements by looking for words like "will", "may", "believes", "expects",
"anticipates", "plans" and "estimates" and for similar expressions. Because
forward-looking statements involve risks and uncertainties, there are many
factors that could cause the actual results to differ materially from those
expressed or implied. These include, but are not limited to, economic
conditions, resolution of pending litigation, our ability to satisfy financial
covenants in our credit agreements, competitive pressures and pricing, and our
ability to manage growth. Any forward-looking statements are not guarantees of
future performance and involve risks and uncertainties. Actual results may
differ materially from those projected in this prospectus, for the reasons,
among others, described in the Risk Factors section beginning on page 4. You
should read the Risk Factors section carefully, and should not place undue
reliance on any forward-looking statements, which speak only as of the date of
this prospectus. We undertake no obligation to release publicly any updated
information about forward-looking statements to reflect events or circumstances
occurring after the date of this prospectus or to reflect the occurrence of
unanticipated events.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares to be offered
by the selling shareholder. The proceeds from the sale of the selling
shareholder's common stock will belong to the selling shareholder.
SELLING SHAREHOLDER
On June 27, 2007, we entered into a Revolving Credit and Term Loan
Agreement (the "Loan Agreement") with Bluefin Capital, LLC. Pursuant to the Loan
Agreement, Bluefin Capital provided us with a $5.0 million revolving credit
facility and a $9.5 million term loan. At closing, $9.5 million of the proceeds
were deposited in escrow and $3.0 million were reserved under the revolving
credit facility for the purpose of fully paying obligations under our existing
convertible debentures maturing in November 2007. During July 2007, waivers were
obtained from all holders of the convertible debentures allowing for early
payment of their notes without penalty, and as of July 31, 2007, all of the note
holders had been paid in full. All loans made under the Loan Agreement become
due and payable on June 30, 2010. Interest on the $9.5 million term loan is
payable quarterly and accrues at an annual rate of 8.5%. The amount we may
borrow under the revolving credit facility is determined by a percentage of
eligible accounts receivable and inventory, up to a maximum of $5.0 million.
Interest under this revolving credit facility is payable monthly, with the
interest rate equal to the prime rate plus 2%. Our domestic and foreign
operating subsidiaries executed a Guaranty Agreement with the lender providing
for a guaranty of all obligations under the Loan Agreement. As collateral for
the loans, we and our operating subsidiaries granted the lender a security
interest in all of our assets pursuant to a Collateral Agreement and other
collateral documents. The Loan Agreement contains customary negative and
affirmative covenants, including limitations on additional indebtedness. The
Loan Agreement includes customary default provisions, and all outstanding
obligations may become immediately due and payable in the event of a default or
a change of control.
In connection with the financing arrangements made available under the
Loan Agreement, we issued to Bluefin Capital 1,500,000 shares of our common
stock for an aggregate purchase price of
10
$1,500 and warrants to purchase a total of 2,100,000 shares of our common stock.
The warrants were immediately exercisable and had a term of 5 years. The
warrants initially had an exercise price of $0.95 per share with respect to
700,000 shares, $1.05 per share with respect to 700,000 shares, and $1.14 per
share with respect to 700,000 shares. These exercise prices were modified and
the warrants were subsequently redeemed, as discussed below.
On November 19, 2007, we entered into an Amendment No. 2 to Loan
Agreement with Bluefin Capital (the "Amendment"), which amends the Loan
Agreement. The Amendment modifies the Loan Agreement to, among other amendments,
(a) extend until June 30, 2008 (with a further extension to March 31, 2009 if we
complete a qualified financing transaction) the date on which we are first
required to comply with the "EBITDA" covenant in the Loan Agreement; (b) provide
additional time to meet other non-financial covenants; and (c) provide that if
we complete a qualified equity financing prior to June 30, 2008, Bluefin Capital
will accept 25% of the net proceeds of the equity offering as a prepayment under
the Loan Agreement, in lieu of a prepayment of 50% of such proceeds as
originally required in the Loan Agreement. In consideration for the
modifications set forth in the amendment, we issued Bluefin Capital an
additional 250,000 shares of common stock and reduced the exercise price of the
warrants to purchase 2,100,000 shares of the Company's common stock issued on
June 27, 2007 in connection with the execution of the Loan Agreement from a
weighted average exercise price of $1.05 per share to $0.75 per share. The
exercise price remained subject to adjustment for certain dilutive issuances
pursuant to the terms of the warrants. In addition, if we complete a qualified
equity financing, we agreed to issue Bluefin Capital an additional 500,000
shares of common stock and to further reduce the exercise price of the warrants
to the price of warrants issued in the financing, if lower.
As of March 31, 2008, we entered into a further amendment to the Loan
Agreement with Bluefin Capital, LLC. This amendment modified the Loan Agreement
to, among other things, increase the percentage of eligible accounts receivable
and inventory that we may borrow against under the revolving credit line, amend
the financial covenants that we must comply with beginning with the quarter
ending June 30, 2008, amend certain other non-financial covenants, and extend to
May 15, 2008 the date by which we are required to register the shares of our
common stock previously issued to the selling shareholder. Pursuant to the
amendment, we also redeemed the warrants to purchase 2,100,000 shares of our
common stock previously issued to the selling shareholder in exchange for the
issuance of an additional term note in the principal amount of $1,000,000.
Interest on the additional term note accrues at the rate of 8.5% per annum and
is due at maturity on June 30, 2010. The additional note is otherwise subject to
the terms and conditions of the loan agreement.
In connection with the Loan Agreement, on June 27, 2007, we entered
into a Registration Rights Agreement, pursuant to which we agreed to file a
registration statement on Form S-3 to register the resale by Bluefin Capital of
the shares of common stock issued pursuant to the Loan Agreement and the shares
of common stock issuable upon exercise of the warrants. The registration
statement on Form S-3 to register the aforementioned securities was filed with
the Securities and Exchange Commission on August 10, 2007.
In connection with the Amendment No. 2, we agreed to cause the
additional 250,000 shares of common stock that were issued to be subject to an
effective registration statement under the Securities Act of 1933, as amended,
on or prior to April 15, 2008. We also agreed that the 250,000 shares that were
issued in connection with the Amendment would be entitled to all other benefits
of the Registration Rights Agreement, as if such shares were "Shares" under and
as defined in the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, we agreed to use our
commercially reasonable best efforts to cause the registration statement to be
declared effective under the Act as promptly as
11
possible after the filing thereof, but in any event not later than 180 days
after June 27, 2007. This deadline has been extended to May 15, 2008 by the
amendment described above. We also agreed to keep the registration statement
effective at least for a period ending with the first to occur of (i) the sale
of all of the shares covered by the registration statement and (ii) the
availability under Rule 144 for the holder to immediately and freely resell
without restriction all of the shares covered by the registration statement. The
Registration Rights Agreement (as amended by the terms of the Amendment) also
provides that if (i) the registration statement is not timely filed, or is not
declared effective under the Act by April 15, 2008, or (ii) in the event that
certain other conditions are not satisfied, then we must pay the holder a fee of
$1,000 multiplied by the number of calendar days during which the events
referred to above are continuing, provided however that the aggregate of such
fees payable shall not exceed $700,000.
Bluefin Capital is the selling shareholder under this prospectus. Other
than the transactions described above, there is not currently, nor has there
been within the past three years, any material relationship between us or our
affiliates and Bluefin Capital.
SELLING SHAREHOLDERS TABLE
The following table sets forth: (1) the name of the selling shareholder
for whom we are registering shares for resale under this registration statement;
(2) the number of shares of our common stock beneficially owned by the selling
shareholder prior to this offering; (3) the number of shares of our common stock
offered by the selling shareholder pursuant to this prospectus; and (4) the
number of shares, and (if one percent or more) the percentage of the total of
the outstanding shares, of our common stock to be beneficially owned by such
selling shareholder after this offering, assuming that all of the shares of our
common stock beneficially owned by such selling shareholder and offered pursuant
to this prospectus are sold and that such selling shareholder acquires no
additional shares of our common stock prior to the completion of this offering.
Such data is based upon information provided by the selling shareholder.
Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting or investment power with respect to
securities. Unless otherwise indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. Shares of our common stock subject to options from the Company
that are currently exercisable or exercisable within 60 days of April 11, 2008
are deemed to be outstanding and to be beneficially owned by the person holding
the options for the purpose of computing the percentage ownership of that person
but are not treated as outstanding for the purpose of computing the percentage
ownership of any other person.
The information presented in this table is based on 20,291,433 shares
of our common stock outstanding on April 11, 2008.
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING AFTER OFFERING
------------------------- -------------------------
PERCENTAGE NUMBER OF PERCENTAGE
OF SHARES SHARES BEING OF SHARES
NAME OF SELLING SHAREHOLDER NUMBER OUTSTANDING OFFERED NUMBER OUTSTANDING
---------------------------- ----------- ----------- ----------- ----------- -----------
Bluefin Capital, LLC (1) ... 1,750,000 8.6% 1,750,000 0 --
(1) Cecilio Rodriguez, as CFO of ComVest Capital Management, LLC, which is
the managing member of Comvest Capital, LLC, which is the managing
member of Bluefin Capital, LLC, exercises voting and dispositive power
over the shares held by this selling shareholder. The address of
Bluefin Capital, LLC is One North Clematis Street, Suite 300, West Palm
Beach, Florida 33401.
12
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
shareholder. Sales of shares may be made by selling shareholder, including its
donees, transferees, pledgees or other successors-in-interest directly to
purchasers or to or through underwriters, broker-dealers or through agents.
Sales may be made from time to time on the OTC Bulletin Board or any exchange
upon which our shares may trade in the future, in the over-the-counter market or
otherwise, at market prices prevailing at the time of sale, at prices related to
market prices, or at negotiated or fixed prices. The shares may be sold by one
or more of, or a combination of, the following:
o a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction (including crosses in which the same broker acts
as agent for both sides of the transaction);
o purchases by a broker-dealer as principal and resale by such
broker-dealer, including resales for its account, pursuant to
this prospectus;
o ordinary brokerage transactions and transactions in which the
broker solicits purchases;
o through options, swaps or derivatives;
o in privately negotiated transactions;
o in making short sales or in transactions to cover short sales;
o put or call option transactions relating to the shares; and
o any other method permitted under applicable law.
The selling shareholder may effect these transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. These broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling security holder and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The selling
shareholder has advised us that it has not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of its shares.
The selling shareholder may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the selling
security holder. The selling shareholder may also enter into options or other
transactions with broker-dealers or other financial institutions which require
the delivery of shares offered by this prospectus to those broker-dealers or
other financial institutions. The broker-dealer or other financial institution
may then resell the shares pursuant to this prospectus (as amended or
supplemented, if required by applicable law, to reflect those transactions).
The selling shareholder and any broker-dealers that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions
under the Securities Act. The selling shareholder may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against liabilities, including liabilities arising under the
13
Securities Act. We have agreed to indemnify the selling shareholder and the
selling shareholder has agreed to indemnify us against some liabilities in
connection with the offering of the shares, including liabilities arising under
the Securities Act.
The selling shareholder will be subject to the prospectus delivery
requirements of the Securities Act. We have informed the selling shareholder
that the anti-manipulative provisions of Regulation M promulgated under the
Securities Exchange Act of 1934 may apply to its sales in the market.
The selling shareholder also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
provided it meets the criteria and conform to the requirements of Rule 144.
Upon being notified by a selling shareholder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required pursuant to Rule 424(b) under the Securities Act,
disclosing:
o the name of each such selling shareholder and of the
participating broker-dealer(s);
o the number of shares involved;
o the initial price at which the shares were sold;
o the commissions paid or discounts or concessions allowed to
the broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation
to verify the information set out or incorporated by reference
in this prospectus; and
o other facts material to the transactions.
In addition, if required under applicable law or the rules or
regulations of the Commission, we will file a supplement to this prospectus when
a selling security holder notifies us that a donee or pledgee intends to sell
more than 500 shares of common stock.
We are paying all expenses and fees in connection with the registration
of the shares. The selling shareholder will bear all brokerage or underwriting
discounts or commissions paid to broker-dealers in connection with the sale of
the shares.
DESCRIPTION OF COMMON STOCK
For a full description of our common shares, please see the documents
identified in the section "Incorporation by Reference" in this prospectus. As of
the date of this prospectus, we are authorized to issue 100,000,000 shares of
common stock. As of April 11, 2008, we had 20,291,433 issued and outstanding
shares of common stock, and had reserved an additional (1) 1,063,813 shares of
common stock for issuance upon exercise of outstanding warrants, (2) 2,837,235
shares of common stock for issuance upon exercise of outstanding options, and
(3) 2,600,000 shares of common stock for issuance pursuant to future awards
under our 2007 Stock Plan. Each share of common stock is entitled to one vote in
the election of directors and other matters.
No shareholders have pre-emptive purchase rights to purchase shares of
common stock.
14
Our transfer agent is American Stock Transfer & Trust Company.
INTERESTS OF NAMED EXPERTS AND COUNSEL
LEGAL MATTERS
Stubbs Alderton & Markiles, LLP, Sherman Oaks, California, will pass
upon for us the validity of the common stock offered by this prospectus.
EXPERTS
The consolidated financial statements of Talon International, Inc. at
December 31, 2007, and for each of the three years then ended, appearing in this
registration statement have been audited by Singer Lewak Greenbaum & Goldstein,
LLP, independent registered public accounting firm, as set forth in their report
which is incorporated by reference elsewhere herein, and are included in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law authorizes a court
to award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the 1933 Act. Our Bylaws
provide that we shall indemnify our director and officers to the fullest extent
not prohibited by the Delaware General Corporation Law, subject to limited
exceptions. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. This prospectus, which constitutes part of the
registration statement, does not contain all the information set forth in the
registration statement or the exhibits and schedules which are part of the
registration statement, portions of which are omitted as permitted by the rules
and regulations of the SEC. Statements made in this prospectus regarding the
contents of any contract or other document are summaries of the material terms
of the contract or document. With respect to each contract or document filed as
an exhibit to the registration statement, reference is made to the corresponding
exhibit. For further information pertaining to us and the common stock offered
by this prospectus, reference is made to the registration statement, including
the exhibits and schedules thereto, copies of which may be inspected without
charge at the public reference facilities of the SEC at 100 F Street, N.E., Room
1580 Washington, D.C. 20549. Copies of all or any portion of the registration
statement may be obtained from the SEC at prescribed rates. Information on the
public reference facilities may be obtained by calling the SEC at
1-800-SEC-0330. In addition, the SEC maintains a web site that contains reports,
proxy and information statements and other information that is filed through the
SEC's EDGAR System. The web site can be accessed at HTTP://WWW.SEC.GOV.
15
We are subject to the information and periodic reporting requirements
of the Securities Exchange Act of 1934 and, in accordance with those
requirements, will continue to file periodic reports, proxy statements and other
information with the SEC. These periodic reports, proxy statements and other
information will be available for inspection and copying at the SEC's public
reference rooms and the SEC's website referred to above.
INCORPORATION BY REFERRENCE
The SEC allows us to "incorporate by reference" certain information we
file with the SEC, which means that we can disclose important information to you
by referring to those documents. We incorporate by reference the documents
listed below. The information we incorporate by reference is an important part
of this prospectus.
The documents we incorporate by reference are:
1. Our Annual Report on Form 10-K for the year ended December 31,
2007, filed April 15, 2008 (File No. 001-13664);
2. Our Current Report on Form 8-K dated January 15, 2008, filed
January 22, 2008 (File No. 001-13669);
3. Our Current Report on Form 8-K dated February 4, 2008, filed
February 6, 2008 (File No. 001-13669);
4. Our Current Report on Form 8-K dated March 27, 2008, filed on
March 28, 2008 (File No. 001-13669);
5. Our Current Report on Form 8-K dated April 3, 2008, filed on
April 8, 2008 (File No. 001-13669);
6. Our Current Report on Form 8-K dated April 15, 2008, filed on
April 16, 2008 (File No. 001-13669); and
7. The description of our capital stock contained in our
Registration Statement on Form 8-A filed December 4, 1997
(File No. 001-13669), including any amendment or report filed
for the purpose of updating such description.
We will provide to each person, including any beneficial owner, to whom
a prospectus is delivered, upon written or oral request and at no cost to the
requester, a copy of an or all of the reports or documents that have been
incorporated by reference in the prospectus contained in this Registration
Statement but delivered with the prospectus.
You may request a copy of these filings, as well as a copy of the
documents required to be delivered to employees pursuant to Rule 428(b), at no
cost, by writing or calling us at Talon International, Inc., 21900 Burbank
Boulevard, Suite 270, Woodland Hills, California 91367, (818) 444-4100,
Attention: Secretary. You may also obtain copies of these filings from our
website, which may be accessed at HTTP://WWW.TALONZIPPERS.COM.
You should rely only on the information contained in this prospectus or
any supplement and in the documents incorporated by reference above. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus or any supplement or in the
documents incorporated by reference is accurate on any date other than the date
on the front of those documents.
16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table itemizes the expenses incurred by the Registrant in
connection with the offering. All the amounts shown are estimates except the
Securities and Exchange Commission registration fee. The Registrant will bear
all expenses of registration incurred in connection with this offering. The
selling shareholder whose shares are being registered will bear all selling and
other expenses.
AMOUNT
-------
Registration fee - Securities and Exchange Commission ............ $ 101
Legal fees and expenses .......................................... $15,000
Accounting fees and expenses ..................................... $40,000
Miscellaneous expenses ........................................... $ 1,000
-------
Total ....................................................... $56,101
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Certificate of Incorporation and Bylaws provide for the
indemnification by us of each of our directors, officers and employees to the
fullest extent permitted by the Delaware General Corporation Law, as the same
exists or may hereafter be amended. Section 145 of the Delaware General
Corporation Law provides in relevant part that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper. Delaware law further provides that nothing
in the above described provisions shall be deemed exclusive of any other rights
to
II-1
indemnification or advancement of expenses to which any person may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
Our Certificate of Incorporation provides that a director of our
company shall not be liable to us or our stockholders for monetary damages for
breach of fiduciary duty as a director. Section 102(o)(7) of the Delaware
General Corporation Law provides that a provision so limiting the personal
liability of a director shall not eliminate or limit the liability of a director
for, among other things: breach of the duty of loyalty; acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law; unlawful payment of dividends; and transactions from which the director
derived an improper personal benefit.
We have entered into separate but identical indemnity agreements with
certain of our directors and certain of our officers (the "Indemnitees").
Pursuant to the terms and conditions of the indemnity agreements, we agreed to
indemnify each Indemnitee against any amounts which he or she becomes legally
obligated to pay in connection with any claim against him or her based upon any
action or inaction which he or she may commit, omit or suffer while acting in
his or her capacity as a director and/or officer of our company or our
subsidiaries, provided, however, that Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the company and, with respect to any criminal action, had no
reasonable cause to believe Indemnitee's conduct was unlawful.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
NON-QUALIFIED OPTIONS
During the first quarter of 2006, we granted non-qualified options to
purchase shares of our commons stock to the following executive officers:
o As of January 16, 2006, we granted Stephen P. Forte, our Chief
Executive Officer at the time, an option to purchase 900,000
shares of common stock at an exercise price of $0.37 per
share, which vests over a period of three years;
o As of January 26, 2006, we granted Lonnie D. Schnell, our then
newly appointed Chief Financial Officer, an option to purchase
400,000 shares of common stock at an exercise price of $0.59
per share, which vests over a period of four years; and
o As of March 1, 2006, we granted Wouter van Biene, our then
newly appointed Chief Operating Officer, an option to purchase
325,000 shares of common stock at an exercise price of $0.53
per share, which vests over a period of three years.
Each of the foregoing option grants was issued as an inducement to
employment pursuant to AMEX Company Guide Section 711(a), and were approved by
our Board of Directors, including a majority of the independent directors. The
issuances of these options were exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2) of the
Securities Act.
CREDIT FACILITY WITH BLUEFIN CAPITAL, LLC
In connection with the financing arrangements under the Loan Agreement
with Bluefin Capital, LLC, on June 27, 2007, we issued to Bluefin Capital
1,500,000 shares of our common stock for an aggregate purchase price of $1,500
and warrants to purchase a total of 2,100,000 shares of our common stock. The
warrants were immediately exercisable and had a term of 5 years. The warrants
initially had exercise price of $0.95 per share respect to 700,000 shares, $1.05
per share with respect to 700,000 shares, and $1.14 per share with respect to
700,000 shares. The exercise prices were subject to
II-2
adjustment for certain dilutive issuances pursuant to the terms of the warrants.
The issuance and sale of these shares and warrants was exempt from the
registration and prospectus delivery requirements of the Securities Act pursuant
to Section 4(2) of the Securities Act and Rule 506 thereunder as a transaction
not involving any public offering. Pursuant to subsequent amendments entered
into with Bluefin Capital, LLC, the exercise prices of these warrants were first
modified and the warrants were subsequently redeemed as of March 31, 2008.
On November 19, 2007, we entered into an Amendment No. 2 to Loan
Agreement with Bluefin Capital, LLC, which amended the Loan Agreement. In
connection with the Amendment, we issued to Bluefin Capital an additional
250,000 shares of common stock and agreed to reduce the exercise price of the
warrants to purchase 2,100,000 shares of our common stock issued on June 27,
2007 in connection with the execution of the Loan Agreement to $0.75 per share.
In addition, we agreed that if we complete a qualified equity financing, we
would issue Bluefin Capital an additional 500,000 shares of common stock and
further reduce the exercise price of the warrants to the price of warrants
issued in the financing, if lower. The issuance and sale of the 250,000 shares
was exempt from the registration and prospectus delivery requirements of the
Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506
thereunder as a transaction not involving any public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------
3.1 Certificate of Incorporation of Registrant. Incorporated by reference
to Exhibit 3.1 to Form SB-2 filed on October 21, 1997, and the
amendments thereto.
3.1.2 Certificate of Designation of Rights, Preferences and Privileges of
Series A Preferred Stock. Incorporated by reference to Exhibit A to the
Rights Agreement filed as Exhibit 4.1 to Current Report on Form 8-K
filed as of November 4, 1998.
3.1.3 Certificate of Amendment of Certificate of Incorporation of Registrant.
Incorporated by reference to Exhibit 3.4 to Annual Report on Form
10-KSB, filed March 28, 2000.
3.1.4 Certificate of Amendment of Certificate of Incorporation of Registrant.
Incorporated by reference to Exhibit 3.1.3 to Form 8-K filed on August
4, 2006.
3.1.5 Certificate of Ownership and Merger. Incorporated by reference to
Exhibit 3.1 to Form 8-K filed on July 20, 2007.
3.2 Bylaws of Registrant. Incorporated by reference to Exhibit 3.2 to Form
SB-2 filed on October 21, 1997, and the amendments thereto.
4.1 Specimen Stock Certificate of Common Stock of Registrant. Incorporated
by reference to Exhibit 4.1to Form SB-2 filed on October 21, 1997, and
the amendments thereto.
4.2 Rights Agreement, dated as of November 4, 1998, between Registrant and
American Stock Transfer and Trust Company as Rights Agent. Incorporated
by reference to Exhibit 4.1 to Current Report on Form 8-K filed as of
November 4, 1998.
4.3 Form of Rights Certificate. Incorporated by reference to Exhibit B to
the Rights Agreement filed as Exhibit 4.1 to Current Report on Form 8-K
filed as of November 4, 1998.
4.4 Registration Rights Agreement, dated as of June 27, 2007, by the
Registrant for the benefit of holders, as defined therein. Incorporated
by reference to Exhibit 4.10 to the Registration Statement on Form S-3
filed August 10, 2007.
II-3
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------
5.1 Opinion of Stubbs Alderton & Markiles, LLP.
10.1 Form of Indemnification Agreement. Incorporated by reference to Exhibit
10.1to Form SB-2 filed on October 21, 1997, and the amendments thereto.
10.2 Promissory Note, dated September 30, 1996, provided by Tag-It, Inc. to
Harold Dyne. Incorporated by reference to Exhibit 10.21 to Form SB-2
filed on October 21, 1997, and the amendments thereto.
10.3 Promissory Note, dated June 30, 1991, provided by Tag-It, Inc. to
Harold Dyne. Incorporated by reference to Exhibit 10.23 to Form SB-2
filed on October 21, 1997, and the amendments thereto.
10.5 Promissory Note, dated February 29, 1996, provided by A.G.S.
Stationary, Inc. to Monto Holdings Pty. Ltd. Incorporated by reference
to Exhibit 10.25 of Form SB-2 filed on October 21, 1997, and the
amendments thereto
10.6 Promissory Note, dated January 19, 1995, provided by Pacific Trim &
Belt, Inc. to Monto Holdings Pty. Ltd. Incorporated by reference to
Exhibit 10.26 to Form SB-2 filed on October 21, 1997, and the
amendments thereto.
10.7* Amended and Restated 1997 Stock Incentive Plan. Incorporated by
reference to Exhibit 10.7 to Form 10-Q filed on November 13, 2006.
10.8* Form of Non-statutory Stock Option Agreement. Incorporated by reference
to Exhibit 10.30 to Form SB-2 filed on October 21, 1997, and the
amendments thereto.
10.9 Promissory Note, dated August 31, 1997, provided by Harold Dyne to
Pacific Trim & Belt, Inc. Incorporated by reference to Exhibit 10.32 to
Form SB-2 filed on October 21, 1997, and the amendments thereto.
10.10 Promissory Note, dated October 15, 1997, provided by Harold Dyne to
Pacific Trim & Belt, Inc. Incorporated by reference to Exhibit 10.34 to
Form SB-2 filed on October 21, 1997, and the amendments thereto.
10.11 Promissory Note, dated October 15, 1997, provided by A.G.S. Stationary
Inc. to Monto Holdings Pty. Ltd. Incorporated by reference to Exhibit
10.48 to Form SB-2 filed on October 21, 1997, and the amendments
thereto.
10.12 Promissory Note, dated November 4, 1997, provided by Pacific Trim &
Belt, Inc. to Monto Holdings Pty. Ltd. Incorporated by reference to
Exhibit 10.49 to Form SB-2 filed on October 21, 1997, and the
amendments thereto.
10.13 Form of Investor Rights Agreements dated December 28, 2001.
Incorporated by reference to Exhibit 99.4 to Form 8-K filed on January
23, 2002.
10.14+ Intellectual Property Rights Agreement, dated April 2, 2002, between
the Company and Pro-Fit Holdings, Ltd. Incorporated by reference to
Exhibit 10.69 to Form 10-K/A filed on October 1, 2003.
10.15 Common Stock Purchase Warrant dated December 18, 2003 between the
Company and Sanders Morris Harris Inc. Incorporated by reference to
Exhibit 99.4 to Form 8-K filed on December 22, 2003.
10.16 Form of Common Stock Purchase Warrant, dated as of November 9, 2004.
Incorporated by reference to Exhibit 10.3 to Form S-3 filed on December
9, 2004.
II-4
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------
10.17 Common Stock Purchase Warrant dated as of November 9, 2004, issued by
the Registrant in favor of Sanders Morris Harris Inc. Incorporated by
reference to Exhibit 10.7 to Form S-3 filed on December 9, 2004.
10.18* Employment offer letter dated March 16, 2006 between the Registrant and
Lonnie D. Schnell. Incorporated by reference to Exhibit 10.3 to Form
10-Q filed on May 22, 2006.
10.18.1* Amendment, dated May 25, 2007, to employment offer letter dated March
16, 2006 between the Registrant and Lonnie D. Schnell. Incorporated by
reference to Exhibit 10.31.2 to Form 10-Q filed on August 14, 2007.
10.19* Consulting Agreement dated January 1, 2007 between the Registrant and
Jonathan Burstein. Incorporated by reference to Exhibit 10.1 to Form
8-K filed on January 3, 2007.
10.19* Consulting Agreement effective April 1, 2007 between the Registrant and
Colin Dyne. Incorporated by reference to Exhibit 10.34 to Form 10-Q
filed on May 15, 2007.
10.20* 2007 Stock Plan. Incorporated by reference to Exhibit 10.20 to Form
10-K filed on April 15, 2008.
10.21 Revolving Credit and Tern Loan Agreement dated June 27, 2007, by and
between Tag-It Pacific, Inc. and Bluefin Capital, LLC. Incorporated by
reference to Exhibit 10.35 to Form 10-Q filed on August 14, 2007.
10.21.1 Amendment No. 1 to Loan Agreement dated July 30, 2007, by and between
the Registrant and Bluefin Capital, LLC. Incorporated by reference to
Exhibit 10.21.1 to Form 10-K filed on April 15, 2008.
10.21.2 Amendment No. 2 to Loan Agreement dated November 19, 2007, by and
between the Registrant and Bluefin Capital, LLC. Incorporated by
reference to Exhibit 10.35.2 to Form 8-K filed on November 26, 2007.
10.21.3 Amendment No. 3 to Loan Agreement dated as of March 31, 2008, by and
between the Registrant and Bluefin Capital, LLC.
10.22 Guaranty Agreement, dated June 27, 2007, by Talon International, Inc.,
Tag-It, Inc., A.G.S. Stationary, Inc., Tag-It Pacific Limited, Tag-It
Pacific (HK) Ltd., Tagit de Mexico, S.A. de C. V., Talon Zipper
(Shenzhen) Company, Ltd., and Talon International, Pvt. Ltd. in favor
of Bluefin Capital, LLC. Incorporated by reference to Exhibit 10.36 to
Form 10-Q filed on August 14, 2007.
10.23 Collateral Agreement, dated June 27, 2007, by and among Tag-It Pacific,
Inc., Talon International, Inc., Tag-It, Inc., A.G.S. Stationary, Inc.,
Tag-It Pacific Limited, Tag-It Pacific (HK) Ltd., Tagit de Mexico, S.A.
de C. V., Talon Zipper (Shenzhen) Company, Ltd., and Talon
International, Pvt. Ltd. in favor of Bluefin Capital, LLC. Incorporated
by reference to Exhibit 10.37 to Form 10-Q filed on August 14, 2007.
10.24 Promissory Note, dated June 27, 2007, executed by Colin Dyne in favor
of Tag-It Pacific, Inc. Incorporated by reference to Exhibit 10.40 to
Form 10-Q filed on August 14, 2007.
21.1 Subsidiaries. Incorporated by reference to Exhibit 21.1 to Form 10-K
filed on April 15, 2008.
II-5
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------
23.1 Consent of Stubbs Alderton & Markiles, LLP (included in Exhibit 5.1).
23.2 Consent of Singer Lewak Greenbaum & Goldstein LLP.
24.1 Power of Attorney (Previously Filed).
+ Certain portions of this agreement have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
request for an order granting confidential treatment pursuant to Rule
406 of the General Rules and Regulations under the Securities Act of
1933, as amended.
* Indicates a management contract or compensatory plan.
(a) Financial statements schedules.
The financial statement schedules are incorporated by reference to the
registrant's Annual Report on Form 10-K for the year ended December 31, 2007.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is
II-6
incorporated by reference in the registration statement, shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(5) That, for the purpose of determining any liability under the
Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
PROVIDED, HOWEVER, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
(6) Insofar as indemnification by the registrant for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Los Angeles,
State of California, on April 22, 2008.
TALON INTERNATIONAL, INC.
By: /S/ LONNIE D. SCHNELL
-------------------------------------------------
Lonnie D. Schnell
Chief Executive Officer and Chief Financial Officer
(Principal Executive and Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
NAME TITLE DATE
*
--------------------------- Chairman of the Board of Directors April 22, 2008
Mark Dyne
/S/ LONNIE D. SCHNELL Chief Executive Officer and April 22, 2008
--------------------------- Chief Financial Officer
Lonnie D. Schnell (Principle Executive Officer
and Principal Financial
Officer)
/S/ DAVID HUNTER Vice President April 22, 2008
--------------------------- Corporate Controller
David Hunter (Principal Accounting Officer)
* Director April 22, 2008
---------------------------
Colin Dyne
* Director April 22, 2008
---------------------------
Brent Cohen
* Director April 22, 2008
---------------------------
Raymond Musci
* Director April 22, 2008
---------------------------
Joseph Miller
* Director April 22, 2008
---------------------------
William Sweedler
By: /S/ LONNIE SCHNELL
----------------------------------------
Lonnie Schnell, as attorney-in-fact
S-1
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------
3.1 Certificate of Incorporation of Registrant. Incorporated by reference
to Exhibit 3.1 to Form SB-2 filed on October 21, 1997, and the
amendments thereto.
3.1.2 Certificate of Designation of Rights, Preferences and Privileges of
Series A Preferred Stock. Incorporated by reference to Exhibit A to the
Rights Agreement filed as Exhibit 4.1 to Current Report on Form 8-K
filed as of November 4, 1998.
3.1.3 Certificate of Amendment of Certificate of Incorporation of Registrant.
Incorporated by reference to Exhibit 3.4 to Annual Report on Form
10-KSB, filed March 28, 2000.
3.1.4 Certificate of Amendment of Certificate of Incorporation of Registrant.
Incorporated by reference to Exhibit 3.1.3 to Form 8-K filed on August
4, 2006.
3.1.5 Certificate of Ownership and Merger. Incorporated by reference to
Exhibit 3.1 to Form 8-K filed on July 20, 2007.
3.2 Bylaws of Registrant. Incorporated by reference to Exhibit 3.2 to Form
SB-2 filed on October 21, 1997, and the amendments thereto.
4.1 Specimen Stock Certificate of Common Stock of Registrant. Incorporated
by reference to Exhibit 4.1 to Form SB-2 filed on October 21, 1997, and
the amendments thereto.
4.2 Rights Agreement, dated as of November 4, 1998, between Registrant and
American Stock Transfer and Trust Company as Rights Agent. Incorporated
by reference to Exhibit 4.1 to Current Report on Form 8-K filed as of
November 4, 1998.
4.3 Form of Rights Certificate. Incorporated by reference to Exhibit B to
the Rights Agreement filed as Exhibit 4.1 to Current Report on Form 8-K
filed as of November 4, 1998.
4.4 Registration Rights Agreement, dated as of June 27, 2007, by the
Registrant for the benefit of holders, as defined therein. Incorporated
by reference to Exhibit 4.10 to the Registration Statement on Form S-3
filed August 10, 2007.
5.1 Opinion of Stubbs Alderton & Markiles, LLP
10.1 Form of Indemnification Agreement. Incorporated by reference to Exhibit
10.1to Form SB-2 filed on October 21, 1997, and the amendments thereto.
10.2 Promissory Note, dated September 30, 1996, provided by Tag-It, Inc. to
Harold Dyne. Incorporated by reference to Exhibit 10.21 to Form SB-2
filed on October 21, 1997, and the amendments thereto.
10.3 Promissory Note, dated June 30, 1991, provided by Tag-It, Inc. to
Harold Dyne. Incorporated by reference to Exhibit 10.23 to Form SB-2
filed on October 21, 1997, and the amendments thereto.
10.5 Promissory Note, dated February 29, 1996, provided by A.G.S.
Stationary, Inc. to Monto Holdings Pty. Ltd. Incorporated by reference
to Exhibit 10.25 of Form SB-2 filed on October 21, 1997, and the
amendments thereto
10.6 Promissory Note, dated January 19, 1995, provided by Pacific Trim &
Belt, Inc. to Monto Holdings Pty. Ltd. Incorporated by reference to
Exhibit 10.26 to Form SB-2 filed on October 21, 1997, and the
amendments thereto.
EX-1
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------
10.7* Amended and Restated 1997 Stock Incentive Plan. Incorporated by
reference to Exhibit 10.7 to Form 10-Q filed on November 13, 2006.
10.8* Form of Non-statutory Stock Option Agreement. Incorporated by reference
to Exhibit 10.30 to Form SB-2 filed on October 21, 1997, and the
amendments thereto.
10.9 Promissory Note, dated August 31, 1997, provided by Harold Dyne to
Pacific Trim & Belt, Inc. Incorporated by reference to Exhibit 10.32 to
Form SB-2 filed on October 21, 1997, and the amendments thereto.
10.10 Promissory Note, dated October 15, 1997, provided by Harold Dyne to
Pacific Trim & Belt, Inc. Incorporated by reference to Exhibit 10.34 to
Form SB-2 filed on October 21, 1997, and the amendments thereto.
10.11 Promissory Note, dated October 15, 1997, provided by A.G.S. Stationary
Inc. to Monto Holdings Pty. Ltd. Incorporated by reference to Exhibit
10.48 to Form SB-2 filed on October 21, 1997, and the amendments
thereto.
10.12 Promissory Note, dated November 4, 1997, provided by Pacific Trim &
Belt, Inc. to Monto Holdings Pty. Ltd. Incorporated by reference to
Exhibit 10.49 to Form SB-2 filed on October 21, 1997, and the
amendments thereto.
10.13 Form of Investor Rights Agreements dated December 28, 2001.
Incorporated by reference to Exhibit 99.4 to Form 8-K filed on January
23, 2002.
10.14+ Intellectual Property Rights Agreement, dated April 2, 2002, between
the Company and Pro-Fit Holdings, Ltd. Incorporated by reference to
Exhibit 10.69 to Form 10-K/A filed on October 1, 2003.
10.15 Common Stock Purchase Warrant dated December 18, 2003 between the
Company and Sanders Morris Harris Inc. Incorporated by reference to
Exhibit 99.4 to Form 8-K filed on December 22, 2003.
10.16 Form of Common Stock Purchase Warrant, dated as of November 9, 2004.
Incorporated by reference to Exhibit 10.3 to Form S-3 filed on December
9, 2004.
10.17 Common Stock Purchase Warrant dated as of November 9, 2004, issued by
the Registrant in favor of Sanders Morris Harris Inc. Incorporated by
reference to Exhibit 10.7 to Form S-3 filed on December 9, 2004.
10.18* Employment offer letter dated March 16, 2006 between the Registrant and
Lonnie D. Schnell. Incorporated by reference to Exhibit 10.3 to Form
10-Q filed on May 22, 2006.
10.18.1* Amendment, dated May 25, 2007, to employment offer letter dated March
16, 2006 between the Registrant and Lonnie D. Schnell. Incorporated by
reference to Exhibit 10.31.2 to Form 10-Q filed on August 14, 2007.
10.19* Consulting Agreement dated January 1, 2007 between the Registrant and
Jonathan Burstein. Incorporated by reference to Exhibit 10.1 to Form
8-K filed on January 3, 2007.
10.19* Consulting Agreement effective April 1, 2007 between the Registrant and
Colin Dyne. Incorporated by reference to Exhibit 10.34 to Form 10-Q
filed on May 15, 2007.
EX-2
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------
10.20* 2007 Stock Plan. Incorporated by reference to Exhibit 10.20 to Form
10-K filed on April 15, 2008.
10.21 Revolving Credit and Tern Loan Agreement dated June 27, 2007, by and
between Tag-It Pacific, Inc. and Bluefin Capital, LLC. Incorporated by
reference to Exhibit 10.35 to Form 10-Q filed on August 14, 2007.
10.21.1 Amendment No. 1 to Loan Agreement dated July 30, 2007, by and between
the Registrant and Bluefin Capital, LLC. Incorporated by reference to
Exhibit 10.21.1 to Form 10-K filed on April 15, 2008.
10.21.2 Amendment No. 2 to Loan Agreement dated November 19, 2007, by and
between the Registrant and Bluefin Capital, LLC. Incorporated by
reference to Exhibit 10.35.2 to Form 8-K filed on November 26, 2007.
10.21.3 Amendment No. 3 to Loan Agreement dated as of March 31, 2008, by and
between the Registrant and Bluefin Capital, LLC.
10.22 Guaranty Agreement, dated June 27, 2007, by Talon International, Inc.,
Tag-It, Inc., A.G.S. Stationary, Inc., Tag-It Pacific Limited, Tag-It
Pacific (HK) Ltd., Tagit de Mexico, S.A. de C. V., Talon Zipper
(Shenzhen) Company, Ltd., and Talon International, Pvt. Ltd. in favor
of Bluefin Capital, LLC. Incorporated by reference to Exhibit 10.36 to
Form 10-Q filed on August 14, 2007.
10.23 Collateral Agreement, dated June 27, 2007, by and among Tag-It Pacific,
Inc., Talon International, Inc., Tag-It, Inc., A.G.S. Stationary, Inc.,
Tag-It Pacific Limited, Tag-It Pacific (HK) Ltd., Tagit de Mexico, S.A.
de C. V., Talon Zipper (Shenzhen) Company, Ltd., and Talon
International, Pvt. Ltd. in favor of Bluefin Capital, LLC. Incorporated
by reference to Exhibit 10.37 to Form 10-Q filed on August 14, 2007.
10.24 Promissory Note, dated June 27, 2007, executed by Colin Dyne in favor
of Tag-It Pacific, Inc. Incorporated by reference to Exhibit 10.40 to
Form 10-Q filed on August 14, 2007.
21.1 Subsidiaries. Incorporated by reference to Exhibit 21.1 to Form 10-K
filed on April 15, 2008.
23.1 Consent of Stubbs Alderton & Markiles, LLP (included in Exhibit 5.1).
23.2 Consent of Singer Lewak Greenbaum & Goldstein LLP.
24.1 Power of Attorney (Previously Filed).
+ Certain portions of this agreement have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
request for an order granting confidential treatment pursuant to Rule
406 of the General Rules and Regulations under the Securities Act of
1933, as amended.
* Indicates a management contract or compensatory plan.
EX-3