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Re: hweb2 post# 198

Saturday, 04/09/2005 3:05:33 AM

Saturday, April 09, 2005 3:05:33 AM

Post# of 236
Hweb...this is from the 10k.

Total non-operating expense of $1,816,000 increased $1,779,000 or 4808% for the year ended December 31, 2004 when compared to $37,000 for the year ended December 31, 2003. This increase is primarily due to non-operating, non-cash charges recorded in 2004 in relation to the Secured Convertible Term Note ("Note") issued in October 2004. These non-operating, non-cash charges resulted from mark to market charges on derivatives and warrants and interest and debt issuance costs associated with the Note. Since the fair value of the warrants and derivatives is tied in large part to our stock price, in the future, if our stock price increases between reporting periods, the warrants and derivatives become more valuable. As such, there is no
way to forecast what the non-operating, non-cash charges will be in the future or what the future impact will be on our financial statements.

Does anyone have an idea how this will play out?
Jason

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