DNAprint Genomics (DNAG)

[Don'tDrinkTheKoolAid]

MORE PROBLEMS DOH! Dutchess Notes Default $4.38 Million
Look at the penalty another $1.7 Million

If there is an event of default with any promissory note to Dutchess, Dutchess has the right to convert the residual amount to a convertible debenture which can convert into our common stock at the lesser of (i) fifty percent of the lowest closing bid price during the fifteen trading days immediately preceding the maturity date or (ii) 100% of the lowest bid price for the twenty trading days immediately preceding the conversion date. At September 30, 2007, all of the Dutchess notes which total $4,380,758 were not paid when due. Dutchess has the right to switch the residual amount of these notes to a three-year convertible debenture; however, they have not exercised this right at September 30, 2007 nor at the time this report was issued.


Since we are in default of $4,380,758 of Dutchess Notes due to not making the minimum principal payments, the Dutchess documents purport to give Dutchess the right to charge us liquidated damages of up to 30% of the face amount of these notes. Dutchess has not exercised this right at September 30, 2007 nor at the time this report was issued. At September 30, 2007, we recorded a default penalty accrual in the amount of $1,729,500 for these potential liquidated damages. This is an estimate based upon the maximum amount that the Dutchess documents purport to give Dutchess the right to charge us and this estimate may change with time. Dutchess has the right to convert the $1,729,500 of potential liquidated damages to a convertible debenture which can convert into our common stock at the lesser of (i) fifty percent of the lowest closing bid price during the fifteen trading days immediately preceding the maturity date or (ii) 100% of the lowest bid price for the twenty trading days immediately preceding the conversion date. These potential liquidated damages are recorded at fair value in accordance with FASB 155, Accounting for Certain Hybrid Financial Instruments, as amended.