"The increase in the net loss is primarily due to non-cash interest charges of $9,217,000 and $15,703,000 recorded in the current period in our condensed consolidated statements of operations on the note conversion beneficial conversion feature and warrant derivative liability, decreased revenues and gross margin, increased operating expenses and an increase in interest expense. "
The $15.7M has to do with the issuance of those warrants for DMRJ to purchase 50M shares tied into the Zapata deal. They were to be canceled if the deal does not happen so that non-cash charge should go away.
The $9.2M is due to reprising options on the $7M debt from $1.09 to $0.19 and the fact the stock was trading at $0.44 on the date they were repriced. They had to record the difference between $0.19 and $0.44 per share as a "beneficial conversion feature.
What a mess, but at least those warrants for 50M shares go away, they were canceled when the Zapata deal went away.
DMRJ converted the $7M in debt to 7000 Series H Preferred shares in August, Those are convertible to common stock at $0.19 a share but makes no sense for them to do so. The 7000 Series H shares are worth $1000 each so they get their money back. It also removed $7M in debt from what could be challenged, kind of sneaky on DMRJ's part. Also those shares are distributed between 3 entities:
"Between August 11, 2016 and August 23, 2016, DMRJ converted $7,000,000 of principal into 7,000 Series H Convertible Preferred Stock shares, of which DMRJ assigned 4,401.54 shares of Series H Convertible Preferred Stock to Platinum Partners Value Arbitrage Fund LP and distributed 1,467.18 shares to ED&F Man Capital Markets Limited and 1,131.28 shares to Prime Capital (Bermuda) Limited."
That looks rather fishy!! Who are these other two entities?
