sc13ga-tmen031010.htm

On or about September 28, 2009, Empire Capital, the Empire Overseas Fund and the Enhanced Fund entered into an 8% Secured Convertible Promissory Note in the amount of $133,333, respectively (collectively, the “New Notes”). In connection with the issuance of the 8% Secured Convertible Promissory Notes, the Original Notes (dated April 24, 2009) were amended and restated to the terms of the new 8% Secured Convertible Promissory Notes. The Original Note participants were: Empire Capital, Empire Overseas Fund, Enhanced Fund, Scott Fine (individually) and Peter Richards (individually), each in the amount of $100,000 (collectively the “Original Notes”). The Notes bear interest at the rate of 8% per annum and become due and payable on the earlier to occur of (i) the closing of the Second Tranche of the Series B Convertible Preferred Stock financing contemplated by that certain Term Sheet dated September 16, 2009 and executed by the Investors (the “Financing”) or (ii) December 31, 2010. Upon the closing of the Second Tranche of the Financing, the entire outstanding principal amount of the Notes, plus any accrued and unpaid interest thereon, shall convert automatically into the securities to be issued in the Financing (the “Financing Securities”) at the price per share at which such Financing Securities will be issued in the Financing. In connection with the issuance of the New Notes, on September 28, 2009 Empire Capital, the Empire Overseas Fund and the Enhanced Fund each received Common Stock Purchase Warrants (the “Warrants”) entitling each entity to purchase, at a purchase price of $0.50 per share (subject to adjustment for certain extraordinary corporate events as set forth in the Warrant, the “Exercise Price”), 533,332 shares of Common Stock. The Warrants may be exercised at any time on or before September 30, 2014, subject to the Company’s right to accelerate the expiration date in the event the closing price for the Common Stock exceeds $0.78 per share (200% of the closing price on September 28, 2009) for a period of 30 consecutive trading days. The Warrants contain other conventional terms, including provisions for adjustment in the Exercise Price and/or the securities issuable upon exercise in the event of certain specified extraordinary corporate events, such as stock splits, combinations and stock dividends. In connection with the amendment of the Original Notes, on September 28, 2009 the Company amended the following outstanding Common Stock Purchase Warrants that had been issued in connection with the issuance of such Original Notes, in order to reduce the exercise price thereof to $0.50 per share: Empire Capital; the Empire Overseas Fund, the Enhanced Fund, Scott Fine and Peter Richards (500,000 shares respectively). The reduction in exercise price did not affect the number of shares of the Common Stock issuable upon exercise of such outstanding warrants.

On or about November 19, 2009, Empire Capital, the Empire Overseas Fund and the Enhanced Fund each entered into a Securities Purchase Agreement (the “SPA”) whereby each acquired, respectively, 141,484 Series B Convertible Preferred shares of the Company in exchange for the cancellation of the principal and accrued and unpaid interest on their Original Notes and New Note (as defined above). In addition, Empire Capital, the Empire Overseas Fund and the Enhanced Fund each subscribed an additional $100,000 in cash to the Second Tranche of the Financing and in return, each received Warrants currently exercisable into 400,000 Common Stock shares of the Company at an exercise price of $0.50 per share. Mr. Fine and Mr. Richards also entered into the SPA and in exchange for the cancellation of the principal and accrued and unpaid interest on each individual's Original Note, Mr. Fine and Mr. Richards each received 43,566 Series B Convertible Preferred shares of the Company. Neither Mr. Fine nor Mr. Richards subscribed additional cash in connection with Second Tranche of the Financing. Each Series B Convertible Preferred share of the Company has a stated value of $2.40 and is convertible, at any time at the option of the Reporting Persons, into ten (10) shares of the Company's Common Stock, par value $0.001 per share, resulting in an effective purchase price of $0.24 per share of Common Stock. The Warrants may be exercised, at an exercise price of $0.50, at any time on or before November 30, 2014, subject to the Company's right to accelerate the expiration date in the event the closing price for the Common Stock exceeds $0.60 per share (200% of the closing price on November 19, 2009) for a period of 30 consecutive trading days. The Warrants contain other conventional terms, including provisions for adjustment in the Exercise Price and/or the securities issuable upon exercise in the event of certain specified extraordinary corporate events, such as stock splits, combinations, and stock dividends. The SPA provides that Empire Capital, the Empire Overseas Fund and the Enhanced Fund will purchase additional shares of the Company's Series B Convertible Preferred Stock and additional Warrants at two subsequent closings upon the satisfaction of certain conditions set forth in the SPA. The SPA also grants to all Reporting Persons a right of first refusal to participate in any subsequent financing of the Company prior to November 19, 2011 (subject to certain conventional exceptions) in order to permit the Reporting Persons to maintain their fully-diluted ownership interest in the Company's Common Stock. The form of the SPA and Warrant can be viewed as Exhibits to the Company's Form 8-K filed with the Securities and Exchange Commission on November 24, 2009.

On or about March 10, 2010, Empire Capital, the Empire Overseas Fund and the Enhanced Fund each entered into a Bridge Loan Agreement with the Company, effective March 1, 2010. The Bridge Loan Agreement provides the Company with cash for their operations prior to the satisfaction of the Third and Fourth Tranche conditions in that certain SPA dated November 19, 2009. The Bridge Loan Agreement contains a provision whereby in the event an investor makes an “advance” to the Company, the number of Warrant Shares issuable at the Third or Fourth Tranche Closing shall be increased by a factor of 25%, resulting in 250% Warrant coverage versus 200% Warrant coverage. Empire Capital, the Empire Overseas Fund and the Enhanced Fund advanced funds by each entering into a 3% Secured Convertible Promissory Note (collectively, the “Bridge Notes”) in the amount of $233,333, respectively. The Bridge Notes are due and payable on February 28, 2011 at the interest rate of 3% per annum (based on a 365-day year) and are convertible, at any time and from time to time, into shares of Common Stock of the Company at a price of $0.24 per share. Pursuant to the Bridge Notes, each of Empire Capital, the Empire Overseas Fund and the Enhanced Fund received 41,667 Series B Convertible Preferred shares of the Company and Warrants currently exercisable into 833,333 Common Stock shares (for the $100,000 Third Tranche advance) and 55,555 Series B Convertible Preferred shares of the Company and Warrants currently exercisable into 1,111,108 Common Stock shares (for the $133,333 Fourth Tranche advance). Each Series B Convertible Preferred share of the Company has a stated value of $2.40 and is convertible, at any time at the option of the Reporting Persons, into ten (10) shares of the Company's Common Stock, par value $0.001 per share, resulting in the effective purchase price of $0.24 per share of Common Stock. The exercise price for the Warrants issued to Empire Capital, the Empire Overseas Fund and the Enhanced Fund at the Third and Fourth Tranche Closings for the surrender of the Bridge Notes is $0.30 per share. The Bridge Notes contain other conventional provisions, including for the acceleration of repayment obligations upon certain specific Events of Default. In addition, pursuant to a Security Agreement also effective March 1, 2010, each of Empire Capital, the Empire Overseas Fund and the Enhanced Fund was granted a security interest in all the assets of the Company (excluding only the shares of capital stock of the specific subsidiary, CASTion Corporation, to which no interest was granted).

In connection with the foregoing, Empire Capital has the power to dispose of and the power to vote the shares of Common Stock, Preferred Shares and/or Warrants beneficially owned by it, which power may be exercised by its general partner, Empire GP. By reason of the provisions of Rule 13d-3 of the Securities Exchange Act of 1934 (the “Act”), Empire GP may be deemed to own beneficially the shares owned by Empire Capital.

CUSIP No. 883906406 13G Page 11 of 12 Pages

Item 6 (continued)

The Empire Overseas Fund, the Enhanced Fund and the Charter Oak Funds have the power to dispose of and the power to vote the shares of Common Stock, Preferred Shares and/or Warrants beneficially owned by them, which power may be exercised by their investment manager, Empire Management. By reason of the provisions of Rule 13d-3 of the Act, Empire Management may be deemed to own beneficially the shares owned by the Empire Overseas Fund, the Enhanced Fund and the Charter Oak Funds.

Mr. Fine and Mr. Richards, as Members, direct the operations of Empire GP and Empire Management. Mr. Fine and Mr. Richards each have an interest in the Issuer by virtue of converted Warrants. In addition, by reason of the provisions of Rule 13d-3 of the Act, each may be deemed to beneficially own the Common Stock, Preferred Shares and/or Warrants beneficially owned by Empire Capital, the Empire Overseas Fund, the Enhanced Fund and the Charter Oak Funds. Each of Mr. Fine and Mr. Richards disclaim beneficial ownership of the shares of Common Stock, Preferred Shares and/or Warrants reflected in this filing, except to the extent of his individual sole ownership and with respect to any respective pecuniary interest in such securities pursuant to Section 13 of the Act.