I don't think anyone has discussed that effective Oct 1, 2012 for a period of 12 months, LQMT is going to have repay $1MM per month plus 8% interest. Miss a payment and the interest jumps to 15%. Payments can be made in cash or stock subject to certain conditions. Warrants have also been granted to the mystery loaner.
That's the way I'm reading it.
"On the first business day of each month beginning on October 1, 2012 through and including September 1, 2013 (the “Installment Dates”), the Company will pay to each holder of a Note an amount equal to (i) one-twelfth (1/12th) of the original principal amount of such holder’s Note (or the principal outstanding on the Installment Date, if less) plus (ii) the accrued and unpaid interest with respect to such principal plus (iii) the accrued and unpaid late charges (if any) with respect to such principal and interest. Prior to maturity, the Notes will bear interest at 8% per annum (or 15% per annum during an event of default) with interest payable monthly in arrears on the Installment Dates and on conversion dates."
"Each monthly payment may be made in cash, in shares of the Company’s common stock, or in a combination of cash and shares of the Company’s common stock. The Company’s ability to make such payments with shares of the Company’s common stock will be subject to various conditions, including the existence of an effective registration statement covering the resale of the shares issued in payment (or, in the alternative, the eligibility of the shares issuable pursuant to the Notes and the Warrants (as defined below) for sale without restriction under Rule 144 and without the need for registration) and certain minimum trading volumes in the stock to be issued. Such shares will be valued, as of the date on which notice is given by the Company that payment will be made in shares, at the lower of (1) the then applicable conversion price and (2) a price that is 87.5% of the arithmetic average of the ten (or in some cases fewer) lowest weighted average prices of the Company’s common stock during the twenty trading day period ending two trading days before the applicable determination date (the “Measurement Period”). The Company’s right to pay monthly payments in shares will depend on the following trading volume requirements in the Company’s common stock: a minimum of $250,000 in average daily trading volume during the Measurement Period, and a minimum of $150,000 in daily trading volume during each day during the Measurement Period, with certain exceptions."
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So if $1MM has to be paid out in shares in Oct, Nov., etc, they will use a formula to determine the price and the number of shares to be issued. At a price of 30 cents, they'll get approx 3.33MM shares on just principal alone (per month). I think you can see why they needed the 100 MM increase of authorized shares.
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