FAT CATS

[shmolton]

Very interesting theory about MVIS short position...

...from Yahoo board-

How we got here (2 Ratings) 27-Dec-06 09:36 pm

Do you guys remember those stupid posts by Stefi saying how bad Tokman was because he left so much money on the table by not selling LMRA at the high? Just another example of how uninformed he is and how he is about to be hurt by his silly mistake of Shorting a $3 stock.

Anybody that did any research on this company would know that one of the last crap deals Rutkowski stuck this company with was a 10 million dollar financing consisting of convertible notes and warrants. As you can see from the September filing on Sept 25th 2005:

"The Company has pledged 1,750,000 shares of
its Lumera common stock as collateral for the Notes that have been classified as
a "Restricted investment in Lumera" on the Company's consolidated balance sheet."

"The Notes are payable in six equal quarterly
installments beginning in December 2005. The Company can subject to certain
conditions, elect to make the payments in common stock in lieu of cash."

The last 2 payments are due this month and this coming March. After March the 1,750,000 shares are free to be sold if MVIS so desires. This is more than just an excercise to show you how Stefinkim has made an uninformed short, I am going to show you how this is playing out.

As the stock price kept going lower, the holders of those notes were able to short more and more stock as they knew MVIS did not have the excess cash to pay the note and would be forced to issue the noteholders shares to pay for the loan. The note holders would then take the issued shares and cover their short. Surely they were counting on more shares for the last two payments so they shorted even more stock in the 1's and 2's because They figured MVIS would be forced to issue a ton of shares to them at those low prices to cover the loan.

But some things happened along the way these note holders never counted on. First, Lumera skyrockets giving MVIS the ability to sell the rest of their unrestricted shares to raise some money and the increase in Lumera helped the MVIS stock price. Remember, the higher the price, the less shares that will have to be issued to cover the loan. What people did not realize at first is that MVIS was starting to rise on its own merits not just because of Lumera. The note holders never dreamed the MVIS board would actually fire the conducter of their gravey train, Rutkowski, and bring in a guy like Tokman. They also never dreamed(lets be honest who really did) that Tokman would accomplish as much as he did in such a short time.

As the story began to unfold, real investors became interested in this company. This allowed MVIS to do the last raise in a pure stock deal at $2.39 per share. It seemed like a steep discount, but I would imagine this deal was being negotiated before MVIS got the pop from the move in Lumera.

All of the sudden MVIS has an extra 8 million in cash they can use to pay of the remainder of the loan. Uh Oh, what the hell are the note holders going to do with all those shares they shorted against the notes? They are going to have to use the cash to buy in their shorts. But you have to see the higher the price goes the more incredibly screwed they are because they were shorting in the 1's and 2's. For example, if there was 5 million dollars left on the last two payments on the loan and they were shortin at an average $2 a share they would have 2.5 million shares short. They figure they will cover the short with the payments in stock from MVIS. Uh Oh, no stock coming!! Not only no stock coming but they are having to cover at higher prices.

Combine this with the incredible progress the folks at MVIS made on the IPM resulting in real fundamental interest from investors and the scum pipe deal makers are finding themselves in a world of pain. As news starts to roll in and deals are done with major OEM's for the IPM MVIS stock price will continue to rise. The theoretical 5 million in cash would only be enough to cover 1 million shares at $5 a share. They would still have another 1.5 million shares to cover!

What you have here is a brilliant CEO, mind boggling disruptive technology, and a company on the verge of having their technology in hundreds of millions of products world wide. The kicker to the whole thing is you have a the note holders, that were so used to getting fat at the Rutkowski buffet, completely upside down in their position. They are left wondering how the hell they are going to cover their short position with an ever increasing share price. Stefinkim will tell you from future financings, not a chance! Tokman would never deal with those people and they will never have the opportunity to particpate again. This is completely verified by the increasingly favorable deals MVIS has been doing with MDB capital.

So when Stefinkim says there is 1.3 million shares available under $3.30, he wishes because that is what it would take to cover a portion of this brutal short position these people have found themselves in. You could very well be on the verge of a short death spiral. Of course I do not expect much more from Stefinkim, after all he was the brilliant guy who gave us the $7.90 conversion price!!

The perfect storm!! All posts are of course just my humble opinion.