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CUSIP NO. 04315D400 13D PAGE 4 OF 8
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Item 4. Purpose of Transaction.
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In conjunction with the Issuer's acquisition of its MediaDefender unit on
July 28, 2005, the Issuer completed a $15,000,000 senior secured debt
transaction (the "Senior Financing") and a $30,000,000 convertible subordinated
debt transaction (the "Sub-Debt Financing"). As further described in the
Issuer's current Annual Report on Form 10KSB, filed with the SEC on
March 31, 2008 (the "2008 Annual Report"), multiple events of default currently
exist under both the Senior Financing documents and the Sub-Debt Financing
documents. These events of default date from at least December 31, 2006. The
2008 Annual Report further discloses that the Issuer has been exploring various
alternatives to resolve these events of default and retained Salem Partners,
LLC to serve as a financial advisor to the Issuer in order to explore a
possible sale, merger, consolidation, reorganization or other business
combination involving the Issuer, and the restructuring of the material terms
of the Senior Financing documents, and the Sub-Debt Financing documents.
Due to the continuing nature of these events of default, and the continuing
harm they are causing to the Issuer's business prospects, the Reporting Persons
intend to engage in discussions with the Issuer's debt holders, stockholders,
management, board of directors, and/or third parties (such persons
collectively, "Interested Parties") in an effort to formulate additional plans
or proposals to address the continuing events of default and related issues.
In this regard, the Reporting Persons may determine to attempt to arrange, or
participate in, an extraordinary corporate transaction with respect to the
Issuer, such as an acquisition, a sale of all or substantially all of the
Issuer's assets, a reorganization (within or outside of bankruptcy), a
recapitalization, or a liquidation of the Issuer.
In addition to the foregoing, the Reporting Persons may pursue other
alternatives to maximize the value of their investment in the Issuer. Such
alternatives could involve, without limitation, the Reporting Persons' purchase
of additional common stock, debt, or other securities of the Issuer in the
open market, in privately negotiated transactions or otherwise, and the sale of
all or a portion of the securities of the Issuer now owned or hereafter
acquired by them in the open market, in privately negotiated transactions or
otherwise. Further, depending upon the outcome of their discussions with the
Interested Parties, and future developments with respect to the Issuer, the
Reporting Persons will continue to evaluate and analyze the Issuer, and based
upon such analysis and such other factors which the Reporting Persons may
consider relevant, the Reporting Persons may or may not (1) seek changes in the
present board of directors or management of the Issuer, including proposals to
change the number or term of directors, (2) seek material changes in the
present capitalization or dividend policy of the Issuer, (3) seek other
material changes in the Issuer's business or corporate structure, (4) seek
changes in the Issuer's Articles of Incorporation and By-laws or take other
actions which may impede the acquisition of control of the Issuer by any
person, (5) seek to cause a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities
association, (6) seek to cause a class of equity securities of the Issuer
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934 or (7) take any action similar to any of
those enumerated above, or any other action the Reporting Persons may
determine to be in their interest.
The Reporting Persons have not at this time elected to pursue any particular
course of action. Further, the Reporting Persons reserve the right to revise
their plans or intentions at any time and to take any and all actions that they
may deem appropriate to maximize the value of their investment in the Issuer
in light of their general investment policies, market conditions, subsequent
developments affecting the Issuer and the general business and future prospects
of the Issuer. Accordingly, the Reporting Persons intend to closely evaluate
the performance of the Issuer (including without limitation, the Issuer's
share price, business, assets, operations, financial condition, capital
structure, management and prospects), any plans or proposals made by the Issuer
or its agents or financial advisors or other third parties, and the actions
of other Interested Parties.
The Reporting Persons have no plans or proposals as of the date of this filing
which, other than as expressly set forth above, relate to, or would result in,
any of the actions enumerated in clauses (a) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer.
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(a) CCM Master Qualified Fund, Ltd*, Coghill Capital Management,
LLC+*, and Clint D. Coghill+* have beneficial ownership of 1,943,757++
shares (9.9%++).
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