Replies to post #10480 on CarbonMeta Technologies Inc (COWI)

[HarryOsbornJr]

On March 20, 2008, Innova Robotics and Automation, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Yorkville Advisors LLC (the “Investor”) providing for the sale by the Company to the Investors of (i) 14% Secured Convertible Debentures in the aggregate principal amount of $300,000 (the “Debentures”) due on March 20, 2010 (the “Repayment Date”) and (ii) warrants to purchase 10,000,000 shares of common stock (the “Warrants”). Terms defined will have the same meaning as in the Purchase Agreement or the Debenture.


The Debentures are convertible into shares of the Company’s common stock at $0.02. On each Installment Date, the Company shall pay to the Investor an amount equal to the lesser of (a) $13,044 and (b) the Principal amount under the Debenture as of such Installment Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest.


The Warrants to purchase 10,000,000 shares of Common Stock have an exercise price of $0.02 per share. The Warrants have a term of five (5) years and shall be exercised on a cash basis.


The Company will have the right to redeem any or all of the amounts outstanding under the Debentures with 3 trading days advance written notice to the Investor, subject to certain limitations. The Company shall pay a redemption premium equal to ten percent (10%) of the principal amount being redeemed.

The Investor has agreed not to short any of the shares of Common Stock of the Company.

[j_t]

So, I have only scanned it, but on first blush it looks at the very least like Innova is increasing its debt to Cornell by $300,000 in the form of a 14% debenture. In addition, they are rolling all the previous debentures (the ones at 10% and 12%) into one new one at 14%.

I don't know, but that sounds like they are refinancing everything at a higher interest rate, which sounds more like sinking than swimming. So, they are now paying 14% on the principal of more than $2,700,000?? ($1,900,000 (outstanding) + 600,000 + 300,000), and they still have to honour additional (over and above the debenture) warrants for 10,000,000 shares at 2 cents no matter what. And it looks like Cornell can still convert the principal at the lower of 2 cents or the lowest price from the 30 days before they chose to convert. Yikes!! That is like $350,000 - $400,000 in interest charges per annum, and Cornell can still convert a gazillion shares anytime they want. Sigh.

Again, is this right? And, if it is, is this why there seemed to be a bunch of shares dumped cheap just after that meeting a few weeks ago. Did the select group of investors decide enough is enough?

If I am reading this wrong, please let me know. I will look it over in detail in the next 24 hours because I may have misinterpreted something (that dense financial language again). My apologies in advance if I am in error.

jt