Replies to post #8336 on First American Scientific Corp. (fka FASC)

[TRCPA]

Indeed, we have discussed the idea of bank financing before, although debt financing needn't just come from the banking sector alone.

You'll probably remember this reply to you, then. I thought it summed up the situation quite well.

You may review your post to note how much easier it is to rehash an opinion when it is the opinion itself, only, that one remains focused on expressing. Sometimes taking a breath prior to posting aids the thought process.

Posted by: Fasctrack
In reply to: Jagman who wrote msg# 7630 Date:3/18/2005 11:21:40 AM
Post #of 8336

Asset based loans can certainly secure the loan by assignments of bona fide contract revenue streams and other accounts receivables.

Lender's are not that dumb to allow Borrowers to bonus themselves out loan proceeds. In fact many commercial loan documents preclude the payment of distributions and dividends and even restrict Borrowers from paying additional forms of compensation (i.e. salary increases and bonuses) without the Lender's express written consent. The remedy for a breach of course is to call the loan in default. I don't think Cal would travel down that road.

[terry hallinan]

Jagman,

Diluting OTC companies are always pumped as being "debt free", well duh, it's because they CAN'T borrow.

You have never heard of a convertible?

Recently convertibles have become a heavy point of assault on biotechs.

IDEV's convertibles, due in 2008, were once supposed to provide a floor as well as capping the price according to conventional wisdom among posters. Now it is claimed IDEV's convertibles are a dire threat to its very survival though IDEV has the cash to pay them off in full.

LGND long had an unsavory reputation as a biotech with loads of debt. I don't think it has really shaken a bad rep that included overoptimistic projections of revenues and earnings.

CEPH made a most unusual gamble with an investment banker. It borrowed the money for trials to extend the labeling for Provigil from the rare indication of narcolepsy to general wakefulness. If at the end of some 5 years CEPH could not pay back the debt and interest, the bank would get the drug free as well as still being owed the money. The debt was actually paid very early during the biotech boom.

VRA got funding only under conditions of a reverse split that raised its pps above penny status (meaning under $1 - some regard anything under $5 as a penny stock). It is a penny stock again.

Besides an equity line of credit, IESV has been approved for government-guaranteed bonding for multi-million dollar projects associated with converting dairy cow poop to methane.

Are you absolutely certain, Jagman, there is no opportunity for borrowing? :-)

In truth, all borrowing for a company like FASC is extremely high risk. As bad as using equity is, debt is generally much worse.

Best, Terry