SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13G
(Rule 13d-102)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO RULE 13d-1(b), (c) AND (d)
AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(b)
(AMENDMENT NO. __)*
ELEC COMMUNICATIONS, CORP.
-----------------------------------
(Name of Issuer)
Common Stock, par value $0.001 per share
----------------------------------------
(Title of Class of Securities)
284739109
---------
(CUSIP Number)
September 28, 2007
--------------
(Date of Event which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which this Schedule
is filed:
|_| Rule 13d-1 (b)
|X| Rule 13d-1 (c)
|_| Rule 13d-1 (d)
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 284739109
--------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Laurus Master Fund, Ltd.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 98-0337673
--------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
--------- ----------------------------------------------------------------------
3 SEC USE ONLY
--------- ----------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
--------- ----------------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock. *
SHARES ---- --------------------------------------------------------------
BENEFICIALLY 6 SHARED VOTING POWER: 2,346,601 shares of Common Stock. *
OWNED BY ---- --------------------------------------------------------------
EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. *
REPORTING ---- --------------------------------------------------------------
PERSON 8 SHARES DISPOSITIVE POWER: 2,346,601 shares of Common Stock. *
--------- ----------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,346,601 shares of Common Stock
--------- ----------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
|X|
--------- ----------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
9.99%
--------- ----------------------------------------------------------------------
12 TYPE OF REPORTING PERSON
CO
--------- ----------------------------------------------------------------------
---------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Calliope Capital Corporation
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 57-1237865
---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
---------- ---------------------------------------------------------------------
3 SEC USE ONLY
---------- ---------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------- ---------- ------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock. *
SHARES ---- --------------------------------------------------------------
BENEFICIALLY 6 SHARED VOTING POWER: 2,346,601 shares of Common Stock. *
OWNED BY ---- --------------------------------------------------------------
EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. *
REPORTING ---- --------------------------------------------------------------
PERSON 8 SHARES DISPOSITIVE POWER: 2,346,601 shares of Common Stock. *
---------- ---------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,346,601 shares of Common Stock
---------- ---------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
|X|
---------- ---------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
9.99%
---------- ---------------------------------------------------------------------
12 TYPE OF REPORTING PERSON
CO
---------- ---------------------------------------------------------------------
--------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
--------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Erato Corporation
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 57-1237862
--------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
--------- ----------------------------------------------------------------------
3 SEC USE ONLY
--------- ----------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------- ----------------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock. *
SHARES ---- --------------------------------------------------------------
BENEFICIALLY 6 SHARED VOTING POWER: 2,346,601 shares of Common Stock. *
OWNED BY ---- --------------------------------------------------------------
EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. *
REPORTING ---- --------------------------------------------------------------
PERSON 8 SHARED DISPOSITIVE POWER: 2,346,601 shares of Common Stock. *
--------- ----------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,346,601 shares of Common Stock
--------- ----------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
|X|
--------- ----------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
9.99%
--------- ----------------------------------------------------------------------
12 TYPE OF REPORTING PERSON
CO
--------- ----------------------------------------------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Laurus Capital Management, LLC
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 13-4150669
---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
---------- ---------------------------------------------------------------------
3 SEC USE ONLY
---------- ---------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------- ---------- ------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock. *
SHARES ---- --------------------------------------------------------------
BENEFICIALLY 6 SHARED VOTING POWER: 2,346,601 shares of Common Stock. *
OWNED BY ---- --------------------------------------------------------------
EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. *
REPORTING ---- --------------------------------------------------------------
PERSON 8 SHARES DISPOSITIVE POWER: 2,346,601 shares of Common Stock. *
---------- ---------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,346,601 shares of Common Stock
---------- ---------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
|X|
---------- ---------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
9.99 %
---------- ---------------------------------------------------------------------
12 TYPE OF REPORTING PERSON
OO
---------- ---------------------------------------------------------------------
--------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
--------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Valens Offshore SPV I, Ltd.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
--------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
--------- ----------------------------------------------------------------------
3 SEC USE ONLY
--------- ----------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
--------- ----------------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock. *
SHARES ---- --------------------------------------------------------------
BENEFICIALLY 6 SHARED VOTING POWER: 2,346,601 shares of Common Stock. *
OWNED BY ---- --------------------------------------------------------------
EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. *
REPORTING ---- --------------------------------------------------------------
PERSON 8 SHARES DISPOSITIVE POWER: 2,346,601 shares of Common Stock. *
--------- ----------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,346,601 shares of Common Stock
--------- ----------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
|X|
--------- ----------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
9.99%
--------- ----------------------------------------------------------------------
12 TYPE OF REPORTING PERSON
CO
--------- ----------------------------------------------------------------------
---------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
--------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Valens Capital Management, LLC
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
--------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
--------- ----------------------------------------------------------------------
3 SEC USE ONLY
--------- ----------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------- ----------------------------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock. *
SHARES ---- --------------------------------------------------------------
BENEFICIALLY 6 SHARED VOTING POWER: 2,346,601 shares of Common Stock. *
OWNED BY ---- --------------------------------------------------------------
EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. *
REPORTING ---- --------------------------------------------------------------
PERSON 8 SHARES DISPOSITIVE POWER: 2,346,601 shares of Common Stock. *
--------- ----------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,346,601 shares of Common Stock
--------- ----------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
|X|
--------- ----------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
9.99%
--------- ----------------------------------------------------------------------
12 TYPE OF REPORTING PERSON
OO
--------- ----------------------------------------------------------------------
---------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON: David Grin
---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
---------- ---------------------------------------------------------------------
3 SEC USE ONLY
---------- ---------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
-------------------- ---------- ------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock. *
SHARES ---- --------------------------------------------------------------
BENEFICIALLY 6 SHARED VOTING POWER: 2,346,601 shares of Common Stock. *
OWNED BY ---- --------------------------------------------------------------
EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. *
REPORTING ---- --------------------------------------------------------------
PERSON 8 SHARES DISPOSITIVE POWER: 2,346,601 shares of Common Stock. *
--------- ----------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,346,601 shares of Common Stock
--------- ----------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
|X|
--------- ----------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
9.99 %
--------- ----------------------------------------------------------------------
12 TYPE OF REPORTING PERSON
IN
--------- ----------------------------------------------------------------------
--------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
--------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Eugene Grin
--------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
--------- ----------------------------------------------------------------------
3 SEC USE ONLY
--------- ----------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
------------------- ---------- -------------------------------------------------
NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock.*
SHARES ---- --------------------------------------------------------------
BENEFICIALLY 6 SHARED VOTING POWER: 2,346,601 shares of Common Stock. *
OWNED BY ---- --------------------------------------------------------------
EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. *
REPORTING ---- --------------------------------------------------------------
PERSON 8 SHARES DISPOSITIVE POWER: 2,346,601 shares of Common Stock. *
--------- ----------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,346,601 shares of Common Stock
--------- ----------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
|X|
--------- ----------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
9.99 %
--------- ----------------------------------------------------------------------
12 TYPE OF REPORTING PERSON
IN
--------- ----------------------------------------------------------------------
--------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
Item 1(a). Name of Issuer: eLEC Communications Corp.
Item 1(b). Address of Issuer's Principal Executive Offices:
75 South Broadway, Suite 302
White Plains, New York 10601
Item 2(a). Name of Person Filing: Laurus Master Fund, Ltd.
This Schedule 13G is also filed on behalf of Laurus Capital
Management, LLC, a Delaware limited liability company, Calliope
Capital Corporation, a Delaware Corporation, Erato Corporation, a
Delaware corporation, Valens Offshore SPV I, Ltd., an exempted
company incorporated with limited liability under the laws of the
Cayman Islands, Valens Capital Management, LLC, a Delaware limited
liability company, Eugene Grin and David Grin. Laurus Capital
Management, LLC manages Laurus Master Fund, Ltd. Calliope Capital
Corporation and Erato Corporation are wholly owned subsidiaries of
Laurus Master Fund, Ltd. Valens Capital Management, LLC manages
Valens Offshore SPV I, Ltd. Eugene Grin and David Grin, through
other entities, are the controlling principals of Laurus Capital
Management, LLC and Valens Capital Management, LLC and share voting
and investment power over the shares owned by Laurus Master Fund,
Ltd., Calliope Capital Corporation, Erato Corporation and Valens
Offshore SPV I, Ltd. Information related to each of Laurus Capital
Management, LLC, Calliope Capital Corporation, Erato Corporation,
Valens Offshore SPV I, Ltd., Valens Capital Management, LLC, Eugene
Grin and David Grin is set forth on Appendix A hereto.
Item 2(b). Address of Principal Business Office or if none, Residence:
c/o Laurus Capital Management, LLC, 335
Madison Avenue, 10th Floor, New York, NY 10017
Item 2(c). Citizenship: Cayman Islands
Item 2(d). Title of Class of Securities: Common Stock ("Common Stock")
Item 2(e). CUSIP Number: 284739109
Item 3. Not Applicable
Item 4. Ownership:
(a) Amount Beneficially Owned: 2,346,601 shares of Common Stock
(b) Percent of Class: 9.99%
(c) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote: 0 shares of Common
Stock.*
(ii) shared power to vote or to direct the vote: 2,346,601 shares
of Common Stock. *
(iii) sole power to dispose or to direct the disposition of: 0
shares of Common Stock. *
(iv) shared power to dispose or to direct the disposition of:
2,346,601 shares of Common Stock. *
Item 5. Ownership of Five Percent or Less of a Class:
Not applicable
Item 6. Ownership of More than Five Percent on Behalf of Another Person:
Not applicable
Item 7. Identification and Classification of Subsidiary Which Acquired the
Securities: Not applicable
Item 8. Identification and Classification of Members of the Group:
Not applicable
Item 9. Notice of Dissolution of Group: Not applicable
Item 10. Certification:
By signing below, I certify to the best of my knowledge and belief,
the securities referred to above were not acquired and are not held for the
purpose of or with the effect of changing or influencing the control of the
issuer of the securities and were not acquired and are not held in connection
with or as a participant in any transaction having that purpose or effect.
-----------------------------------
* Based on 23,489,506 shares of the common stock, par value $0.10 per
share (the "Shares") outstanding of eLEC Communications Corp., a New York
corporation (the "Company"), as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended May 31, 2007. As of September 28, 2007,
Calliope Capital Corporation ("Calliope"), Erato Corporation ("Erato"), and
Valens Offshore SPV I, Ltd.("Valens Offshore" and together with Calliope and
Erato, the "Investors") held (i) a a warrant (the "February 2005 Warrant") to
acquire 793,650 Shares, at an exercise price of $0.72 per Share for the first
264,550 Shares acquired thereunder, $0.79 per Share for the next 264,550 Shares
acquired thereunder, and $0.95 per Share for the remaining Shares acquired
thereunder, subject to certain adjustments, (ii) a warrant (the "November 2005
Warrant") to acquire 1,202,976 Shares, at an exercise price of $0.10 per Share,
subject to certain adjustments, (iii) a warrant (the "May 2006 Warrant") to
acquire 3,359,856 Shares, at an exercise price of $0.10 per Share, subject to
certain adjustments, (iv) a warrant (the "April 2007 Warrant" and together with
the February 2005 Warrant, the November 2005 Warrant, and the May 2006 Warrant,
the "Earlier Warrants") to acquire 1,200,000 Shares, at an exercise price of
$0.25 per Share, subject to certain adjustments, (v) a warrant (the "A-1
September 2007 Warrant") to acquire 80,513,758 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vi) a warrant (the "A-2
September 2007 Warrant") to acquire 6,709,480 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (vii) a warrant (the "A-3
September 2007 Warrant") to acquire 20,128,439 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (viii) a warrant (the "B-1
September 2007 Warrant") to acquire 14,208,310 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (ix) a warrant (the "B-2
September 2007 Warrant") to acquire 1,184,026 Shares, at an exercise price of
$0.10 per Share, subject to certain adjustments, (x) a warrant (the "B-3
September 2007 Warrant" and together with the A-1 September 2007 Warrant, A-2
September 2007 Warrant, A-3 September 2007 Warrant, B-1 September 2007 Warrant,
and B-2 September 2007 Warrant, the "Later Warrants") to acquire 3,3552,078
Shares, at an exercise price of $0.10 per Share, subject to certain adjustments
and (xi) 467,952 Shares. The Earlier Warrants contain an issuance limitation
prohibiting the Investors from exercising or converting those securities to the
extent that such exercise would result in beneficial ownership by the Fund of
more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance
Limitation"). The Later Warrants contain an issuance limitation prohibiting the
Investors from exercising or converting those securities to the extent that such
exercise would result in beneficial ownership by the Fund of more than 9.99% of
the Shares then issued and outstanding (the "9.99% Issuance Limitation"). The
4.99% Issuance Limitation and the 9.99% Issuance Limitation may be waived by the
Investors upon at least 61 days prior notice to the Company and shall
automatically become null and void following notice to the Issuer of the
occurrence and during the continuance of an event of default (as defined in and
pursuant to the terms of the applicable instrument). Calliope and Erato are
wholly owned subsidiaries of Laurus Master Fund, Ltd. (the "Fund"). The Fund is
managed by Laurus Capital Management, LLC. Valens Offshore is managed by Valens
Capital Management, LLC. Eugene Grin and David Grin, through other entities, are
the controlling principals of Laurus Capital Management, LLC and Valens Capital
Management, LLC and share sole voting and investment power over the securities
owned by the Investors reported in this Schedule 13G.
CUSIP No. 284739109
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
October 24, 2007
----------------
Date
Laurus Master Fund, Ltd.
/s/ Eugene Grin
----------------
Eugene Grin
Director
CUSIP No. 284739109
APPENDIX A
A. Name: Laurus Capital Management, LLC, a Delaware limited
liability company 335 Madison Avenue, 10th Floor
New York, New York 10017
Place of
Organization: Delaware
B. Name: Calliope Capital Corporation, a Delaware
corporation c/o Laurus Capital Management, LLC
335 Madison Avenue, 10th Floor
New York, New York 10017
Place of
Organization: Delaware
C. Name: Erato Corporation, a Delaware corporation
c/o Laurus Capital Management, LLC
335 Madison Avenue, 10th Floor
New York, New York 10017
Place of
Organization: Delaware
D. Name: Valens Offshore SPV I, Ltd., an exempted
company incorporated with limited liability under
the laws of the Cayman Islands
c/o Valens Capital Management, LLC
335 Madison Avenue, 10th Floor
New York, New York 10017
Place of
Organization: Cayman Islands
E. Name: Valens Capital Management, LLC, a Delaware limited
liability company 335 Madison Avenue, 10th Floor
New York, New York 10017
Place of
Organization: Delaware
F. Name: David Grin
Business 335 Madison Avenue, 10th Floor
Address: New York, New York 10017
Principal Director of Laurus Master Fund, Ltd.
Occupation: Principal of Laurus Capital Management, LLC
Citizenship: Israel
G. Name: Eugene Grin
Business 335 Madison Avenue, 10th Floor
Address: New York, New York 10017
Principal Director of Laurus Master Fund, Ltd.
Occupation: Principal of Laurus Capital Management, LLC
Citizenship: United States
CUSIP No. 284739109
Each of Laurus Capital Management, LLC, Calliope Capital Corporation, Erato
Corporation, Valens Offshore SPV I, Ltd., Valens Capital Management, LLC, David
Grin and Eugene Grin hereby agree, by their execution below, that the Schedule
13G to which this Appendix A is attached is filed on behalf of each of them,
respectively.
Laurus Capital Management, LLC,
Calliope Capital Corporation,
Erato Corporation
By Laurus Capital Management, LLC,
individually and as investment manager
/s/ Eugene Grin
-----------------------------------------
Eugene Grin
Authorized Signatory
October 24, 2007
Valens Offshore SPV I, LLC
By Valens Capital Management, LLC
individually and as investment manager
/s/ David Grin
-----------------------------------------
David Grin
Authorized Signatory
October 24, 2007
/s/ David Grin
-----------------------------------------
David Grin
October 24, 2007
/s/ Eugene Grin
-----------------------------------------
Eugene Grin
October 24, 2007