I don't think there is much room to doubt that was the plan all along, that is to build up AP to Cognate and ultimately offer them stock plus warrants in exchange, on demand by Cognate. We may never know if this agreement was in writing from the get-go. Funny that many people were complaining that insiders were not buying any NWBO shares, but the letting those invoices go unpaid was going on in front of all investors' noses all along, clearly marked 'AP to related party'. If investors did not read the balance sheets and cash flow statements every quarter, they were not doing the most basic DD.
I don't think that LP was so devious nor willing to do something fraudulent and fraught with legal risk as to invent spending that was not in itself totally justifiable. And because nothing can be deduced without looking at the invoices, I will ignore that claim completely. So lets compare the two methods Toucan has to provide cash 1) Toucan pays NWBO directly for shares in an offering under the same terms as everybody else, i.e. with 100% warrant coverage at the market like everybody else; then NWBO pays the AP due to Cognate, natch and only fair or 2) Cognate lets NWBO slide on a large and constantly increasing tab, almost certainly with implicit agreement with NWBO that the AP will eventually get traded for shares at the market with 100% warrant coverage.
What's the difference? Is one any cleaner legally? Is there any difference in results to NWBO? It might be that #1 can be called stealthy because it's not announced in a 10-k that Cognate is buying shares. That might have gotten investors to buy stock based on insider buying while the unpaid AP was less obvious, though really only just slightly less obvious to a reader of the 10-Qs - imo it's pretty hard to even consider that to have been sneaky, tho some seem to disagree. But I'd say that #2 is safer from attack that LP was trading on insider info. Just my personal opinion, but I think that when you pay long overdue AP at any arbitrary time is impossible to find a judge who would accept that was improper, of course. And given that everybody who was willing to pay $1M or more (actually the threshold was much lower, probably $100k) in an offering was able to get 100% warrant coverage, I'm certain that there was plenty of legal cover for Cognate (Toucan, really) to get the same as a perfectly equitable arrangement. Tho again some here dispute that, even exW, one of LP's biggest critics, sees that the way I do, as a basically fair and unassailable transaction.
Maybe #2 was just a tad less fair to other stock traders, however, the sliding overdue AP to Cognate was always on the books and anybody who missed that simply wasn't pay the right amount of attention. As far as NWBO was concerned, I don't think there was a material difference. Well, maybe a small difference in that if the AP were all paid exactly on time then just *might* have made Cognate pay just a bit more. OTOH, having a steady flow of stock offerings to Cognate announced in 8-ks might have even ended up having a much more negative effect on the pps from making it just a bit more obvious how much cash NWBO was bleeding. As it was the price took an outsized hit just about every time they did an offering to sell anybody new stock, that's for sure.
I dunno but it seems pretty close to a wash to NWBO. Meanwhile building up the AP then finally exchanging it for shares plus warrants at the market seems like it probably saved Toucan and LP from ongoing attacks and possibly provided them with a bit of legal cover just in case anybody tries to sue them over it. NWBO had the choice to try to do a 3rd party raise and pay off the long overdue AP at any time. It's hardly Cognates fault that NWBO wasn't paying them. This is just a WAG on my part with no legal training, but maybe only taking NWBO shares once after the bills we very long overdue gives Cognate/Toucan more legal cover vs a possible string of crys of 'insider trading'.
AI
