(7) Lincoln Ventures, LLC (“Lincoln”) and Swartz Private Equity, LLC (“SPE” and together with Lincoln, the “Reporting Person”) have shared voting power and shared dispositive power as to these shares. These amounts include 36,900,446 shares (in total between Lincoln and SPE, each of which hold warrants to purchase Common Stock of the Company) issuable upon exercise of outstanding warrants exercisable within 60 days of August 31, 2006. The documents governing the terms of such warrants contain a provision prohibiting Lincoln and SPE, as applicable, from exercising warrants for shares of Common Stock if doing so would result in the Reporting Person and their affiliates beneficially owning shares of Common Stock that represent more than 9.99% of the outstanding shares of Common Stock as determined under Section 13(d) of the Securities Exchange Act of 1934. This percentage assumes that Lincoln and SPE may be deemed to be affiliated and under common control.

Two things are obvious from the above 10K excerpt:

• Swartz and Lincoln are considered to be a single entity, the "Reporting Person"
• The reported share ownership from the table includes 36,900,446 shares NOT YET ISSUED as of the filing, but expected to be issued (warrant conversion) within 60 days of August 31, 2006.

If my interpretation is correct, that means at the date of filing that S&L probably owned 9.98% total (4.99% apiece for a total of 36,900,000 shares) and had up to 5% apiece more coming their way with warrant conversion (36,900,000 more shares).

According to the filings, a net increase of 24,936,000 shares occurred between 10/2/06 and 11/3/06 instead of 36,900,000. I'm wondering whether this has anything to do with "the additional consideration to the warrant holders" that was part of the PTSC/TPL agreement. See excerpt from 8/31 10Q:

As additional consideration to the warrant holders for providing approval for the transaction, the Company agreed to reset the per share exercise price of approximately 35,000,000 warrants to $0.015 for which the warrant holders also conveyed other warrants to acquire 12,000,000 shares back to the Company.

Maybe the increase in share count is a result of S&L exercising warrants for the 35MM shares (plus a little more) and PTSC retiring warrants for 12MM shares. Gets you 23MM shares added to the count while S&L still gets their 36.9MM.

Make sense? Comments welcome.