"The dilution is not as bad as I thought actually."???
The dilution is not even known yet at this point, other than an initial 55 MILLION shares, before even one dime of the "credit line" has, or will be "tapped". This is simply S-1 filing NUMBER ONE. There's gonna be a lot more filed, for a lot more shares, each time they draw down a bit on the "credit line". Read the S-1, this is just "round one" to get the first draw or two going. This isn't all the dilution that's coming- not by a long, long, long shot. The S-1 makes that crystal clear- they have to file another one of these each time they tap-out the share block in each prior S-1 filing.
That's part of the entire, extensive "legal-eze" of Magna requiring this S-1 filing as part of their terms, IMO. It makes BHRT state that dilution "may" become enormous, as in staggering enormous, depending on "numerous" factors beyond their control- such as when Magna decides to sell the shares they receive, how many shares Magna will get as that is an unknown- aka, they will get more shares if the price drops and BHRT needs, or decides to, "draw" on the credit line, etc.
Look a the dilution "projection table" (PAGE 43, S-1 Filing) they, Magna made them insert in that filing- it shows scenarios with the share price going all the way down to .003 and like 800 MILLION plus shares dilution as being possible. Why else would they print it and make um put it in a legal disclosure, SEC filed, public available document?
Thus, no one knows yet what the dilution even is or will be- other than, just the initial dilution to get this train rolling is massive IMO and the shares are cheap ( 30 million plus at 6/10ths of one cent, and 10 million or so at approx. 1 cent or less). That many low priced shares, being sold continually at the volumes this thing has been trading at (what was Friday, maybe $5K total dollars for the day, some days it's trading less than 100K shares a day?). So how long to unwind 40 or 50 MILLION low priced shares and soak them up? They will pin the price down, lower probably than even this 1.5 cent range, IMO. Then the credit line will be tapped and you'll have more, free trading low priced shares to just keep throwing logs on the fire.
The real dilution hasn't even gotten started yet or hit the market as free trading IMO.
Read the S-1 filing, skip all the fluff in it- a lot is just the last 10-K and stuff regurgitated. Just follow the parts that detail out Magna's dealings.
All this filing means is they are setting out 143 MILLION shares- but they don't even know how much money that will bring them (other than the $205K), cause they don't know what the price will be when/if they "draw" on the credit line. The lower the price goes, the less money they'd get per draw for a given number of shares (that is Magna's "game", their entire biz in nut shell IMHO). Simple as that. But Magna makes um page HUGE fees, up-front, before they ever see a single dime. What a business to be in.
S-1 filing, PAGE 13:
"The Offering
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, 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 upon conversion of the Convertible Note, (ii) 9,109,128 shares of common stock that we issued to Magna 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 as Additional Commitment Shares and (iv) 87,812,591 shares of common stock that we may issue to Magna 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.
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 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, 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 is dependent upon a number of factors, including the extent to which Magna converts the Convertible Note into shares of our common stock and the number of Shares we ultimately issue and sell to Magna under the Purchase Agreement.
The Total Commitment of $3,000,000 was determined based on numerous factors, including our estimated operating expenses for the next two years. While it is difficult to estimate the likelihood that we will need the full Total Commitment, we presently believe that we may need the full Total Commitment under the Purchase Agreement.
"
Notice, we may receive SUBSTANTIALLY LESS. SUBSTANTIALLY, means "a lot", like maybe HALF for instance would be considered "substantially less" IMO.
Then PAGE 43, of S-1 Filing (the dilution) project table- why would they run it all the way out to .003 per share? Unless they feel the need to legally cover themselves, IMO? If it goes that low, they just say, "Hey, it was all DISCLOSED right in black n white in the ole SEC filed S-1. Didn't you read the risks?"
PAGE 43:
"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
"
Remember, before that table would even kick-in, they've already had to issue/set aside approx. 55 MILLION shares to Magna, just for the $205K "note" and then the up-front "fees".
Scenario: what if Magna uses the low priced "note" shares to drive the price down? Then what? It would mean Magna would get MORE SHARES for issuing BHRT LESS MONEY each time. Look at that table- taken all the way out to .00365 per share and 800 MILLION plus shares. Why would they print that and file it it's not a possibility and needed legal disclosure?
And their expenses, BHRT's have BALLOONED despite very, very little R&D spending, aka "trial" spending (about $3K per month, per last 10-Q filed) yet spending/expenses exploded upward- look at page 90 of this S-1. (sales, general and admin costs- a big chunk is salaries, which for two people have increased enormously in the past 2 yrs, see SEC filings going back 2 yrs)
PAGE 90:
"Marketing, general and administrative expenses were approximately $3,182,397 in the nine month period ended September 30, 2014, an increase of $1,432,121 from marketing, general and administrative expenses of approximately $1,750,276 in the nine month period ended in September 30, 2013. The increase in marketing, general and administrative expenses is attributable, in part, to stock based compensation paid in the current period of $293,342 for services and increase in employee compensation and service providers."
$3 MILLION in "general expenses" in just the first 9 months of this yr, while almost nothing's been spent on R&D or "trials". Spending/expenses are up $1.4 MILLION from just a yr ago period- yet they're not conducting anything on the key, phase II/III "trials" for "LACK OF FUNDING" per their own wording in the last filed 10-Q statement.
There's no way IMO to know that, "the dilution isn't as bad as I thought actually", cause the dilution is 100% a total unknown at this point per the company's and Magna's own words in that S-1 just filed. Impossible to even guess, IMO, how much dilution is going to occur in the next 12 to 24 months at this point. But, it appears a certainty IMO, that it's going to be a LOT, from reading this S-1 filing.
