Robert, I think that you may want to go back to the 10 Q and check, if I remember correctly, some 33 MM (getting us to the current 123 MM from the prior 90 MM) shares were the result of the floorless coming down to $1.151 MM. These $1.151 MM floorless still need to be converted, do they not? Furthermore, Bob, they are already a good six weeks in the current quarter and had only $30,000 (restricted) cash on hand, thus somehow, even at your "burn rate of $1,050,000 per quarter, they must have drawn an additional $.5 MM pre new financing.
I also have difficulties seeing a new investor converting at twice the current market, if they like the company, they can go into the market and buy those shares for less than $.10, what rationale will they have to pay twice current price? Unless of course, they do not, or have some hidden goodies (like a ceiling of $.10 but no floor?).
You must remember that the last two registrations covering some 91 MM shares, included none of the "new financing" of $4 MM you are speaking of, nor the $.5 MM in burn rate incurred so far this quarter, thus your starting point should rationally be at least the 90 MM (I think it was 95 MM but you need to recheck that S-2b of May) shares of pre registration plus the 91 MM of the two registrations, before you add share count for the new financing, and the current burn rate, whatever its terms. If the new $4 MM in financing is used to cover the current burn rate of $1.05 MM and the outstanding debt of 2.8 MM, you are left with only $195,000 going into Q4 (six weeks from now)and I am not taking possible other marketing expenses. Even if you assume that the schools will start and buy the cards, when do you expect TSIG to start and engage in opening envelopes full of cash? Is the $195,000 sufficient to hold them afloat until then? I know not.
Zeev |
