THE NEXT LOTTO and UNDER THE RADAR PICKS

[learner1156]

I found this while getting ready to put in an order. I have read a lot of scary comments about Cornell - any comments?

Not bashing - I don't know enough to even begin to comment LOL.

From http://www.equitygroups.com/otcbb/igpg/messages/72743.html


Financing Expenses

To obtain funding for our ongoing operations, we entered into securities purchase agreements during fiscal 2006 with Cornell Capital Partners, LP (“Cornell”), for the sale of $5,000,000 in secured convertible debentures and 12,000,000 warrants from which we received total net proceeds of $4,265,000 after fees associated with the transaction. The convertible feature of the debenture allows Cornell the option to have the note repaid with shares of our common stock. In accordance with accounting rules, the $5.0 million face amount of the note was discounted into both: 1) a derivative liability (to reflect the beneficial conversion feature) in an amount of $1.306 million, and 2) a warrant liability (to reflect the warrant value) in the amount of $3.694 million.

The derivative liability is marked to market at the end of each reporting period. As of June 30, 2006, after adjustment, we revalued this derivative liability and recorded a non-cash expense of $1.299 million. Generally, as the common stock price increases, gains are recorded because fewer shares are required to repay the debt. Conversely, as the common stock price decreases losses are recorded because more shares are required to repay the debt. We also recorded a non-cash expense of $1.931 million to reflect the amortization of the discount on the debenture.