Intellect Neurosciences Inc. (fka ILNS)

[BioInfo]

ILNS Fully Diluted (potential) market cap only $6M
Please let me know if I dont intrepret correctly the 8K from Dec 17, 2010 (link here http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=7614976-3427-7019&type=sect&dcn=0001144204-10-067109)

Item 1.01 Entry into a Material Definitive Agreement

Agreement to Enter into Financing Agreements

On December 15, 2010, the Board of Directors (the “Board”) of Intellect Neurosciences, Inc. (OTCBB: ILNS) (the “Company”) approved a binding term sheet (the “Term Sheet”) containing the material terms of a transaction (the “Transaction”) to be entered into among the Company, as obligor, and certain existing shareholders of the Company and any new lenders who participate in the Transaction (the “Lenders”).

1. Pursuant to the Term Sheet, the Lenders will purchase $500,000 principal amount of convertible notes The Notes will have a three-year maturity and will bear interest at the rate of 14% per annum, due at the maturity of the Notes.
2. Principal and accrued interest on the Notes will be convertible into common stock of the Company at an initial conversion price of $.0025 per share, subject to customary anti-dilution protection in the case of stock dividends, stock splits, reverse splits, reorganizations and recapitalizations.
3. In addition, the Company will grant the Lenders five-year warrants (the “Warrants”) to purchase common stock of the Company at an initial exercise price of $.0025 per share with an aggregate exercise price equal to the purchase price of the Notes, subject to customary anti-dilution protection in the case of stock dividends, stock splits, reverse splits, reorganizations and recapitalizations.
4. Company will issue to the Lenders shares of Convertible Preferred Stock with an initial aggregate liquidation preference equal to $10 million. The Preferred Stock will be convertible into common stock of the Company at an initial conversion price of $.0025 per share, subject to customary anti-dilution protection in the case of stock dividends, stock splits, reverse splits, reorganizations and recapitalizations.
5. The Term Sheet provides the Lenders with a nine-month option to invest up to an additional $500,000 on substantially the same terms.

Now How much dilution:
1. Current OS Shares = 800M
2. Potential additional $500,000 at 0.0025 = Add 200M Shares
3. Potential $10M for preffered stock at 0.0025 = Add 4B Shares (Preferred Shares, not common)
4, Potential OS Shares (1B common, 4B preffered)= 5B
5. Market cap assume all dilution today @ 5B shares @ 0.0012 = $6M fully diluted.
6. The company that has 4 large pharma licencing on ILNS IP for their late stage phase 3 trials and spending over $1B on worldwide largest trials ever in AD, you are telling me that ILNS technology is worth only $6M, come on!

The sad thing is that these if ILNS does a reverse split, we get hosed as all the shares above are non-dilutive and they are getting at 0.0025 and they can sell post RS and kill everyone.
As of now, $6M market cap with dilution that may not happen for 3 years is insane! Thoughts?