geob...solid point....and one that crossed my mind as soon as i read the 8k.
they could have just issued the puts to dutchess under the existing $35 mill financing agreement, but instead chose to go this route. on the surface, it doesn't look like a good financial decision..... (BUT....please continue to read...)
<<< they issued a promissory note for $1,380,000
<<< only received $1,150,000 ($230,000 less than note)
<<< plus paid $65,000 "facility fee"
<<< plus issued a convertible debenture in the amount of $330,000 with rights to convert at no worse than $.013 = 25,384,000 shares minimum.
<<< plus must repay the new note with 100% (not 50% as before) of money raised under the old dutchess $35 mill financing agreement.
<<< so we're paying a premium of $230k + $65k = $295,000 to get our hands on the $1,150,000; or about a 26% premium. plus any money not realized due to the agreed upon $.013 max. conversion price on the $330,000 convert debenture.
BUT, by doing this we gained access to the money NOW....and we didn't issue ~ 70,000,000 shares NOW to raise the $1,150,000 under the existing $35 mill agreement.
<<< so by reducing the 70 mill sh we would've issued NOW by the 25 mill sh we guaranteed with the conv. deb., our break even is over the 45 mill shares difference.
<<< and we will pay the $1,380,000 + $65,000 = $1,445,000 and receive $330,000 from the deb. = net payments of $1,115,000
<<< thus, we break even at ~ $.0258 pps {$1,115,000 divided by [$.0258 X 96%] }
<<< meaning that if we tap into the existing $35 mill dutchess deal and the lowest closing price for the previous 5 days (i think 5!) is higher than $.0258, then we've benefited $$$$ wise from doing this deal. and if it's below $.0258/sh, then we've lost $$$$.
<<< so today we closed at $.0325, we'll see where we go from here......
<<< if DNAP does indeed have something significant up their sleeve to jump start the pps with some staying power, then this may have been a no brainer for them to cut this deal...
<<< AS ALWAYS, TIME WILL TELL
ONE OTHER INTERESTING POINT:
<<< 11/17/05 COMPANY ISSUES TOP THREE OPTIONS FOR 15 MILL SHARES EACH.
<<< 11/18/05 COMPANY INKS THIS FINANCING DEAL FOR $1,150,000
BASED ON HISTORY, I WONDER WHAT MILESTONE THEY ACHIEVED TO TRIGGER THE OPTIONS
i truly hope we hear soon......
enjoy!!!!
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