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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
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KRONOS ADVANCED TECHNOLOGIES, INC., F/K/A TSET, INC.
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(Name of Issuer)
COMMON STOCK, $0.001 PAR VALUE
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(Title of Class of Securities)
50105X106
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(CUSIP Number)
Roman S. Ferber Marguerite M. Donahue
HoMedics, Inc. Seyburn, Kahn, Ginn, Bess & Serlin, P.C.
3000 Pontiac Trail 2000 Town Center, Suite 1500
Commerce Township, MI 48390-2720 Southfield, MI 48075-1195
(248) 863-3000 (248) 353-7620
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 9, 2003
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box. / /
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Section
240.13d-7 for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on 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).
PERSONS WHO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE
NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID
OMB CONTROL NUMBER.
SEC 1746 (11-02)
CUSIP NO. 50105X106
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1 NAMES OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
FKA Distributing Co., d/b/a HoMedics, Inc., IRS I.D. 38-3205159
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC.
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Michigan.
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7 SOLE VOTING POWER
NUMBER OF
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
6,746,171(1)
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
6,746,171(1)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,746,171(1)
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.0%(2)
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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(1) Represents shares underlying a warrant to purchase 6,746,171 shares of the
Issuer's Common Stock which is presently exercisable.
(2) Percentage is based upon 54,527,565 shares of the Issuer's Common Stock
outstanding as of May 9, 2003, as set forth in a capitalization
representation of the Issuer to the Reporting Person on that date, and
assumes exercise of the presently exercisable warrant.
2
CUSIP NO. 50105X106
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1 NAMES OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
Roman S. Ferber
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
PF.
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
NUMBER OF
915,000.
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
6,746,171(3)
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
915,000.
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
6,746,171(3)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,661,171.
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.5%(4)
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14 TYPE OF REPORTING PERSON (See Instructions)
IN.
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(3) Represents shares underlying a warrant issued to HoMedics, Inc. to
purchase 6,746,171 shares of the Issuer's Common Stock which is presently
exercisable. Mr. Ferber is a 41.5% owner of HoMedics and may be deemed to
have shared voting and dispositive power with respect to such shares.
(4) Percentage is based upon 54,527,565 shares of the Issuer's Common Stock
outstanding as of May 9, 2003, as set forth in a capitalization
representation of the Issuer to HoMedics on that date, and assumes
exercise of HoMedics' presently exercisable warrant for the purchase of
6,746,171 shares.
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SCHEDULE 13D
ITEM 1: SECURITY AND ISSUER.
This statement relates to the common stock, $0.001 par value per share
(the "Common Stock"), of Kronos Advanced Technologies, Inc., formerly known as
TSET, Inc., a Nevada corporation, with its principal executive offices at 464
Common St., Suite 301, Belmont, Massachusetts 02478 (the "Issuer").
ITEM 2: IDENTITY AND BACKGROUND.
The persons filing this statement are FKA Distributing Co., d/b/a
HoMedics, Inc. ("HoMedics") and Roman S. Ferber. HoMedics is a Michigan
corporation whose principal business is manufacturing and distributing home
personal health care, wellness and relaxation products worldwide under the
HoMedics(R), TheraP(TM), TherapistSelect(TM) and Body Basics(TM) brand names.
Mr. Ferber is a director and President of HoMedics, and owns 41.5% of its common
stock. The principal office of HoMedics is located at 3000 Pontiac Trail,
Commerce Township, Michigan 48390. All of HoMedics' executive officers and
directors are U.S. citizens. Their names, business addresses and principal
occupations are as follows:
Roman S. Ferber, HoMedics, Inc., 3000 Pontiac Trail, Commerce Township,
MI 48390. Mr. Ferber is a director and President of HoMedics and owns
41.5% of the common stock of HoMedics.
Alon D. Kaufman, HoMedics, Inc., 3000 Pontiac Trail, Commerce Township,
MI 48390. Mr. Kaufman is a director, Vice President and Treasurer of
HoMedics.
Annette Ferber Adelman, HoMedics, Inc., 3000 Pontiac Trail, Commerce
Township, MI 48390. Ms. Ferber is a director and Secretary of HoMedics.
Shari Ferber Kaufman, HoMedics, Inc., 3000 Pontiac Trail, Commerce
Township, MI 48390. Ms. Kaufman is a director of HoMedics.
During the last five (5) years, HoMedics and Mr. Ferber have not, nor
to the best knowledge of HoMedics, has any other person named in this Item 2,
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which it or he is
or was subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
4
ITEM 3: SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On May 9, 2003, the Issuer granted to HoMedics Warrant No. 1 and
Warrant No. 2, each for the purchase of 6,746,171 shares of common stock (the
"Warrants") at an exercise price of $0.10 per share. The Warrants were issued
pursuant to a Master Loan and Investment Agreement dated May 9, 2003 (the "Loan
Agreement"), under which HoMedics agreed to loan up to $3.5 million to the
Issuer and Kronos Air Technologies, Inc., of which $2.4 million has been
advanced. In addition, HoMedics paid the Issuer $100,000 for the issuance of the
Warrants from HoMedics' general corporate funds. It is presently anticipated
that, if the Warrants are exercised, the funds required to pay the exercise
price would be provided from the general corporate funds of HoMedics.
Mr. Ferber owns 915,000 shares of the Issuer's Common Stock, which were
acquired for aggregate consideration of $98,550. Mr. Ferber funded his purchases
of Common Stock from his personal funds.
None of the funds used to purchase the Warrants or the Common Stock
consisted of funds or other consideration, borrowed or otherwise obtained for
the purpose of acquiring, holding, trading or voting shares of the Common Stock.
ITEM 4: PURPOSE OF TRANSACTION.
HoMedics and Mr. Ferber acquired the securities reported in this
statement for investment purposes. HoMedics and Mr. Ferber may purchase
additional shares of Common Stock from time to time, in the open market or in
private transactions, depending on various factors, including without
limitation, the price of the Common Stock, stock market conditions and the
business prospects of the Issuer. HoMedics and Mr. Ferber may also determine to
dispose of some or all of their beneficial holdings of the Issuer's securities.
They reserve the right to increase or decrease their holdings on such terms and
at such times as they may decide. Except as described above, HoMedics and Mr.
Ferber have no present intention or arrangements or understandings to effect any
of the transactions listed in Items 4(a)-(j) of Schedule 13D.
ITEM 5: INTEREST IN SECURITIES OF THE ISSUER.
HoMedics beneficially owns 6,746,171 shares of the Issuer's Common
Stock, assuming exercise of Warrant No. 1, which is presently exercisable. These
6,746,171 shares represent approximately 11.0% of the shares of the class
outstanding based upon 54,527,545 shares of Common Stock as of May 9, 2003 and
assuming the exercise of Warrant No. 1.
Mr. Ferber personally owns 915,000 shares of the Issuer's Common Stock.
Mr. Ferber is a 41.5% owner of HoMedics and may be deemed to have shared voting
and investment power with respect to the 6,746,171 shares of Common Stock
underlying Warrant No. 1. In the aggregate, these 7,661,171 shares represent
12.5% of the shares of the class outstanding based
5
upon 54,527,545 shares of Common Stock as of May 9, 2003 and assuming exercise
of Warrant No. 1.
In the last sixty (60) days, Mr. Ferber purchased the following number
of shares of Issuer's Common Stock in open market transactions on the dates and
at the prices indicated:
DATE NUMBER OF SHARES PRICE PER SHARE
---- ---------------- ---------------
>
March 19, 2003 15,000 $0.102
March 20, 2003 10,000 $0.106
March 21, 2003 5,000 $0.110
March 24, 2003 10,000 $0.106
March 25, 2003 10,000 $0.106
March 26, 2003 20,000 $0.101
March 27, 2003 20,000 $0.096
March 28, 2003 10,000 $0.100
April 2, 2003 15,000 $0.102
April 3, 2003 10,000 $0.103
ITEM 6: CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
HoMedics entered into the Loan Agreement with the Issuer and Kronos Air
Technologies, Inc. (collectively, the "Borrowers") on May 9, 2003. On the same
date, HoMedics entered into a First Amendment to its Exclusive Licensing
Agreement with Kronos Air Technologies, Inc. (the "Amended License"). The Issuer
issued HoMedics Warrant No. 1 and Warrant No. 2 in connection with the signing
of the Loan Agreement and the Amended License.
HoMedics may purchase up to 6,746,171 shares of the Issuer's Common
Stock under Warrant No. 1 at an exercise price of $0.10 per share. Warrant No. 1
is presently exercisable and expires May 9, 2013.
The Issuer also issued Warrant No. 2 to HoMedics under which 6,746,171
shares of the Issuer's Common Stock may be purchased. The exercise price for
shares that HoMedics may purchase under Warrant No. 2 is $0.10 per share.
Warrant No. 2 is not presently exercisable. HoMedics may exercise Warrant No. 2
only if: (i) the Borrowers do not prepay the entire amount of principal and
interest due under the notes issued under the Loan Agreement by November 8,
2005; (ii) the Borrowers are in default under any of the investment documents
referenced in the Loan Agreement; or (iii) the Issuer does not earn, at any time
after May 9, 2003 but prior to November 8, 2005, "revenues" in an aggregate
amount equal to or greater than $3,500,000. For purposes of Warrant No. 2, the
term "revenues" means the gross cash receipts of any contractual relationship
representing the license or sale of Kronos technology to any third party or
parties, but excluding revenues the Issuer earns from research and development
contracts and revenues
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the Issuer receives pursuant to the Exclusive Licensing Agreement dated October
22, 2002 between Kronos Air Technologies, Inc. and HoMedics USA, Inc.
Warrants No. 1 and 2 contain standard anti-dilution provisions. In
addition, if the Issuer issues any Common Stock or security convertible into
Common Stock in a capital raising transaction at a price of less than $0.20 per
share before HoMedics exercises the Warrants, and, following such securities
issuance, the shares of Common Stock purchasable by HoMedics upon exercise of
the Warrant No. 1 or Warrant No. 2, as the case may be, would represent less
than 7.5% of the Issuer's Common Stock on a fully diluted basis, the Issuer
would be required to issue HoMedics additional warrants (without the payment of
additional consideration by HoMedics) in the form of Warrant No. 1 or Warrant
No. 2, as the case may be, such that the number of shares purchasable by
HoMedics under both Warrants, in the aggregate, would represent 15% of the
Issuer's Common Stock on a fully diluted basis. If the Issuer issues any Common
Stock or securities convertible into Common Stock in a capital raising
transaction at a price greater than $0.20 per share, HoMedics is not entitled to
be issued any additional warrants.
The Loan Agreement gives HoMedics a put right for all Common Stock
HoMedics owns under certain circumstances. In general, HoMedics may require the
Issuer to purchase all of its Common Stock if:
- The Issuer shall have issued or agreed to issue any securities
to a "competitor" (as defined in the Loan Agreement) of
HoMedics during the term of the original License Agreement,
the Amended License, or any other license agreement between
HoMedics and either Borrower; and/or
- The Issuer shall have materially breached its obligations
under, or otherwise defaulted under, the original License
Agreement or the Amended License within ten (10) years after
the date of the Loan Agreement (i.e., May 9, 2013).
If HoMedics exercises its put right, the Issuer is required to purchase all
shares offered for sale in HoMedics' put notice at a purchase price equal to the
average closing price per share of the Common Stock (as reported on NASDAQ.com)
for the ten (10) trading days immediately preceding HoMedics' put notice;
provided, however, that the per share price shall not be less than two (2) times
the per share price paid by HoMedics for such shares; and provided further that
if the event triggering HoMedics' put right is the issuance of the Issuer's
Common Stock to a competitor, the per share price determined above shall be
multiplied by a factor of ten (10).
The Loan Agreement provides HoMedics with a preemptive right to
purchase its pro rata share of any "New Securities" issued by the Issuer after
May 9, 2003. The term "New Securities" does not include:
- Securities issued in connection with any stock splits, stock
dividends or other distributions payable pro rata to all
holders of the Issuer's Common Stock;
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- Any securities issued to employees, officers, directors,
consultants or other persons pursuant to any stock option
plan, stock purchase plan or other management incentive plan,
agreement, or arrangement approved by the Issuer's board of
directors; and
- Any of the Issuer's Common Stock issued upon conversion,
exercise or exchange of Warrant No. 1 or Warrant No. 2.
The Issuer is required to give HoMedics written notice of its intention to issue
any New Securities which shall contain a full, accurate and complete description
of the price and terms of such proposed sale, and an unconditional offer to sell
to HoMedics its pro rata share of such New Securities on the same terms and
conditions set forth in the notice. HoMedics has ten (10) business days from the
date of such notice to elect to purchase all or a portion of its pro rata share
of the New Securities by giving written notice to the Issuer together with
payment for the New Securities. During the sixty (60) day period following the
expiration of the ten (10) business day election period, the Issuer may issue
the New Securities that HoMedics did not elect to purchase, but only on terms
and conditions and at a price no more favorable to the purchasers thereof than
was specified in the Issuer's notice to HoMedics.
The Issuer signed a Registration Rights Agreement with HoMedics for the
shares which may be purchased under Warrants No. 1 and 2 (and any warrants
issued in connection therewith) on May 9, 2003. The Registration Rights
Agreement grants HoMedics one (1) demand right and piggyback registration rights
with respect to the shares issuable upon exercise of the Warrants.
ITEM 7: MATERIAL TO BE FILED AS EXHIBITS.
10.1 Warrant No. 1 issued by the Issuer to HoMedics dated May 9,
2003, filed as Exhibit 99.6 to the Issuer's Form 8-K Report
filed May 15, 2003 and incorporated by reference.
10.2 Warrant No. 2 issued by the Issuer to HoMedics dated May 9,
2003, filed as Exhibit 99.7 to the Issuer's Form 8-K Report
filed May 15, 2003 and incorporated by reference.
10.3 Master Loan and Investment Agreement by and among the Issuer,
Kronos Air Technologies, Inc. and HoMedics dated May 9, 2003,
filed as Exhibit 99.1 to the Issuer's Form 8-K Report filed
May 15, 2003 and incorporated by reference.
10.4 Registration Rights Agreement between the Issuer and HoMedics
dated May 9, 2003, filed as Exhibit 99.5 to the Issuer's Form
8-K Report filed May 15, 2003 and incorporated by reference.
99.1 Joint Filing Statement by and between HoMedics and Roman S.
Ferber dated May 9, 2003.
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SIGNATURES
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.
Dated: May 19, 2003
FKA DISTRIBUTING CO., d/b/a HOMEDICS, INC.
By: /s/ Roman S. Ferber
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Roman S. Ferber,
President
Roman S. Ferber
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Roman S. Ferber
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EXHIBIT INDEX
10.1 Warrant No. 1 issued by the Issuer to HoMedics dated May 9,
2003, filed as Exhibit 99.6 to the Issuer's Form 8-K Report
filed May 15, 2003 and incorporated by reference.
10.2 Warrant No. 2 issued by the Issuer to HoMedics dated May 9,
2003, filed as Exhibit 99.7 to the Issuer's Form 8-K Report
filed May 15, 2003 and incorporated by reference.
10.3 Master Loan and Investment Agreement by and among the Issuer,
Kronos Air Technologies, Inc. and HoMedics dated May 9, 2003,
filed as Exhibit 99.1 to the Issuer's Form 8-K Report filed
May 15, 2003 and incorporated by reference.
10.4 Registration Rights Agreement between the Issuer and HoMedics
dated May 9, 2003, filed as Exhibit 99.5 to the Issuer's Form
8-K Report filed May 15, 2003 and incorporated by reference.
99.1 Joint Filing Statement by and between HoMedics and Roman S.
Ferber dated May 9, 2003.
10