Replies to post #7348 on Ocata Therapeutics Inc fka OCAT

[rocky301]

ferretmoney,

You are 100% correct. To further explain to those e-mailing me with questions regarding some "better financing" possibilities on the horizon I put forth the following.

Currently all assets of ACTC, including intellectual property, are pledged to the debt holders. The company assets are about $15MM and approx. $23MM original principle due debtholders as of Sept. 2007. With that said I expect any future financing to be with the same group(s) and possibly even higher discounts than the last one at 20%+. ACTC basically needs to raise their hand for permission to use the rest room. They currently need approval for cash payments of over $1MM per month which they have surpassed some time ago. The restrictions are plenty as noted below. It is the nature of the beast right now and the main reason ACTC has explained why a commercialized product is a top goal...REVENUES....For those asking, the reverse split will change nothing with debt holders, they will still control.
While some regard the debt holders as vultures I would ask what terms you would ask for if you were to put $10MM or so in ACTC? The debt holders will make big money and they have plenty of ways to do it.

(from 10QSB)
Our outstanding indebtedness on our 2005, 2006 and 2007 Debentures imposes certain restrictions on how we conduct our business. In addition, all of our assets, including our intellectual property, are pledged to secure this indebtedness. If we fail to meet our obligations under the Debentures, our payment obligations may be accelerated and the collateral securing the debt may be sold to satisfy these obligations.

The Debentures and related agreements contain various provisions that restrict our operating flexibility. Pursuant to the agreement, we may not, among other things:

•
except for certain permitted indebtedness, enter into, create,
incur, assume, guarantee or suffer to exist any indebtedness
for borrowed money of any kind, including but not limited to,
a guarantee, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom;

•
except for certain permitted liens, enter into, create, incur,
assume or suffer to exist any liens of any kind, on or with
respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or
profits therefrom;

•
amend our certificate of incorporation, bylaws or other
charter documents so as to materially and adversely affect any
rights of holders of the Debentures and Warrants;

•
repay, repurchase or offer to repay, repurchase or otherwise
acquire more than a /de minimis /number of shares of our
common stock or common stock equivalents;

•
enter into any transaction with any of our affiliates, which
would be required to be disclosed in any public filing with
the Securities and Exchange Commission, unless such
transaction is made on an arm's-length basis and expressly
approved by a majority of our disinterested directors (even if
less than a quorum otherwise required for board approval);

•
pay cash dividends or distributions on any of our equity
securities;

•
grant certain registration rights;

•
enter into any agreement with respect to any of the foregoing; or

•
make cash expenditures in excess of $1,000,000 per calendar
month, subject to certain specified exceptions.

These provisions could have important consequences for us, including (i) making it more difficult for us to obtain additional debt financing from another lender, or obtain new debt financing on terms favorable to us, (ii) causing us to use a portion of our available cash for debt repayment and service rather than other perceived needs and/or (iii) impacting our ability to take advantage of significant, perceived business opportunities.

* Our obligations under the Securities Purchase Agreement are secured by substantially all of our assets. * Our obligations under the security agreement, executed in connection with the 2007 Financing, with the holders of the debentures and warrants are secured by substantially all of our assets. As a result, if we default under the terms of the security agreement, such holders could foreclose on their security interest and liquidate all of our assets. This would cause operations to cease.