Fuse Science Inc (DROP)

[ID Supermoney]

Bgrass1 is slightly correct but got the general idea!!!

Item 3.02. Unregistered Sales of Equity Securities.



On March 14, 2013, Fuse Science, Inc. (the “Company”) repurchased its outstanding Series A Warrants (the “Series A Warrants ”) from the holders thereof (the “Holders”) through an exchange offer. The Series A Warrants were originally issued on February 9, 2012 pursuant to a Securities Purchase Agreement dated February 7, 2012, among the Company and the Holders and were scheduled to expire on February 8, 2017. Accordingly, the Company believed that the Series A Warrants, which were currently exercisable on a “cashless basis,” represented a significant market “overhang” which has now been eliminated.



Under Exchange Agreements entered into among the Company and the Holders, (a) Holders of Series A Warrants to purchase an aggregate of 21,181,965 shares of our common stock agreed to exchange their Series A Warrants for an aggregate of 38,127,538 shares of our common stock (the “Exchange Shares”) (1.8 shares of our common stock for each share of common stock issuable upon exercise of the Series A Warrants) and (b) Holders of Series A Warrants to purchase an aggregate of 5,703,815 shares of our common stock agreed to exchange their Series A Warrants for (i) an aggregate of 8,555,723 Exchange Shares (1.5 Exchange Shares for each share of common stock issuable upon exercise of the Series A Warrants) and (ii) newly issued five-year warrants to purchase an equal number shares of our common stock, exercisable on a “cash only” basis at an exercise price of $0.30 per share (the “Exchange Warrants”). If exercised in full, the Exchange Warrants would generate $2.6 million in capital to the Company. The Exchange Warrants provide for registration of the underlying shares of common stock under the Securities Act of 1933 (the “Securities Act”) subsequent to the expiration of the Series B Warrants that we issued on March 7, 2013 pursuant to a Securities Purchase Agreement dated March 4, 2013 that we entered into with a group of investors.



The Holders also agree to certain volume restrictions on the resale of the Exchange Shares acquired by them.

They gained 17 million common shares!

And gained almost another 3 million warrants over 5 YEARS!!

So they have in essence INCREASED the O/S a min of about 20 million shares as of FRIDAY!!

Say 80 million O/S Friday is now 100 million O/S Monday!!

a 25% haircut in PPS on Friday -Monday!!

Reason for the drop on Friday!!

Market cap stays the same!!


ID