Magna MEGA DILUTION about to begin it looks like. Just a quick read, holy cow. Shares O/S are gonna go through the roof IMO, possibly more "commitment fees" to be paid, etc. If I remember, the Magna documents specifically limited the "draw downs" such that Manga can't own more than 9.99% or something to that effect of the BHRT outstanding shares, yet the amount they're gonna initially allocate here- just to start tapping the credit line, plus the original convertible note, would take Magna up to like 20% of the company's total outstanding. So, they can't even tap it all (this initial offering) it appears, but as Magna begins to dilute more and more, then it appears BHRT would be able to go back and ask for more, while staying under that 9.99% limit or whatever it is.
Easy to see now, IMO, why they upped the A/S to 2 BILLION. This is gonna blow the share count rapidly up, 100 million or more shares just in this step-1 it appears. Wow.
Look at the table they, Magna (remember in the credit line 8-K, it said Magna had to approve any offering documents published, approve the wording, etc) - look at the draw down pricing table- it goes all the way out to shares being priced at .00X cents. WOW !!
From the document:
"As of November 20, 2014, there were 560,564,622 shares of our common stock outstanding, of which 554,375,697 shares were held by non-affiliates. Although the Purchase Agreement provides that we may sell up to $3,000,000 of our common stock to Magna Equities II, LLC, only 143,812,591 shares of our common stock are being offered under this prospectus, which represents (i) 31,000,000 shares of common stock that may be issued to Magna Equities II, LLC upon conversion of the Convertible Note, (ii) 9,109,128 shares of common stock that we issued to Magna Equities II, LLC as Initial Commitment Shares on October 27, 2014, (iii) a maximum of 15,890,872 shares of common stock that we may be required to issue to Magna Equities II, LLC as Additional Commitment Shares and (iv) 87,812,591 shares of common stock that we may issue to Magna Equities II, LLC as Shares pursuant to draw downs under the Purchase Agreement. If all of the 143,812,591 shares offered under this prospectus were issued and outstanding as of November 20, 2014, such shares would represent approximately 20.7% of the total number of shares of our common stock outstanding and 20.9% of the total number of outstanding shares of our common stock held by non-affiliates, in each case as of November 20, 2014.
42
At an assumed purchase price of $0.01460 (equal to 93% of the closing price of our common stock of $0.01570 on November 10, 2014), and assuming the sale by us to Magna Equities II, LLC of all of the 87,812,591 Shares, or approximately 15.7% of our issued and outstanding common stock, being registered hereunder pursuant to draw downs under the Purchase Agreement, we would receive only approximately $1,282,064 in gross proceeds. Furthermore, we may receive substantially less than $1,282,064 in gross proceeds from the financing due to our share price, discount to market and other factors relating to our common stock. If we elect to issue and sell more than the 87,812,591 Shares offered under this prospectus to Magna Equities II, LLC, which we have the right, but not the obligation, to do, we must first register for resale under the Securities Act any such additional Shares, which could cause additional substantial dilution to our stockholders. Based on the above assumptions, we would be required to register an additional approximately 117,666,849 shares of our common stock to obtain the balance of $1,717,936 of the Total Commitment that would be available to us under the Purchase Agreement. We currently have authorized and available for issuance 2,000,000,000 shares of our common stock pursuant to our charter.
The number of shares of our common stock ultimately offered for resale by Magna Equities II, LLC is dependent upon a number of factors, including the extent to which Magna Equities II, LLC converts the Convertible Note into shares of our common stock and the number of Shares we ultimately issue and sell to Magna Equities II, LLC under the Purchase Agreement. The following table sets forth the total number of Shares that would be issued at varying purchase prices for us to receive the entire $3,000,000 in gross proceeds under the Purchase Agreement (without accounting for certain fees and expenses):
Proceeds from the
Total Number of Percentage of Sale of Shares to
Shares to be Currently Magna Equities II,
Assumed Average Issued if Outstanding LLC Under the
Purchase Price(1) Full Purchase Shares (2) Purchase Agreement
$0.00365025 (3) 821,861,516 59% $3,000,000
$0.0073005 (4)410,930,758 42% $3,000,000
$0.01095075 (5)273,953,839 33% $3,000,000
$0.014601 (6)205,465,379 27% $3,000,000
$0.01825125 (7)164,372,303 23% $3,000,000
$0.0219015 (8)136,976,919 20% $3,000,000
____________________
(1) Because the Purchase Price for Shares subject to any Draw Down Notice is the lesser of the Initial Purchase Price and the True-Up Purchase Price (which cannot be less than $0.001), and since we cannot deliver any Draw Down Notice to Magna Equities II, LLC if the Initial Purchase Price would be less than $0.0025, the Purchase Price for Shares subject to any Draw Down Notice will never be less than $0.001 per Share.
"
Wow.
Just at a glance, it looks staggering, what it's gonna do to dilution and more than likely the share price. Why else would Magna make um publish/disclose the possibility of the price going down to .003 and specific details about running out to approx. 1 BILLION shares, etc
This one's gonna be a long, long read- it's quite a document to say the least IMO. But holy cow- even the part that BHRT might owe Magna "up to" another 15 MILLION shares on top of the 9 MILLION already given Magna in just "fees" is staggering IMO. Wild. Never saw a document that looks like this. Gonna probably print this one out and read it with a yellow highlighter to "try" and even follow what the heck this really says.
