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Gold/Mining/Energy : Nuvo Research Inc
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To: Tom Johnson who wrote (12067)2/4/2003 8:38:32 PM
From: Montana Wildhack  Read Replies (2) of 14101
 
Hi Tom,

As I posted on January 9, that was the period when it
was a Holmes mystery where the missing money was which
I pegged then at $1.714 million US to January 01.

Message 18425318

The solution to the mystery was the loan against the Markham
property for $1.3 million US.

And although she appeared to use only an average of $628k
a month in cash over the first 6 months - we are not far
from the estimate:

$1,714 - 1,300 = 414K missing

versus:

$628k for Dec less $34k cash on hand = $594k missing

In my opinion then as at January 31 there is approximately
$1,222 US in interim financing of some type which will
become evident on the Feb 28 statements.

The rights offering in my opinion is the correct strategy
at this time. There isn't much question about getting the
RO approved since its normal course of business and there's
nothing unusual about it. Since this is DMX we did it in
a somewhat unusual way though. DMX announced the intention
then set the price, and then proceeded to obtain approval
it appears.

She may have done this to let shareholders know she had a
financing strategy and to let them realize there would be
no more Acqua draws. In some ways this is the cart before
the horse and I suspect she was seriously considering
another option until shortly before the RO intention was
announced.

This rights offering has to be approved by at least 10
seperate jurisdictions and while it takes the same amount
of time either way - this way the shareholders have to wait
until all jurisdictions are covered in the blanket circular
that will be mailed.

For those that think there is some message in the price
I put it to you that currently there is a contingency on
the stock that it may be diluted by 25%.

Follow this math and see if the stock is higher or lower.

The shares were trading at $2.85 roughly when this was
announced. Diluting that by 25% gives you $2.14. However
at $2.11 the rights are worth $.0275 making the package
worth $2.1375. Only now have we come to the equivalence
of the $2.85.

There is a material potential turbocharge on any good news
that might come our way such as Canadian final approval
and the expected launch date. That charge is at the ratio
of 125%.

That is for every (or any) $1 in stock rise holders on the
date of record will be making $1.25.

In the opinion of the brokers and investment bankers I
talked to if the stock is trading at a reasonable premium
to the exercise price most of the offering will be taken.
A reasonable premium was considered anything north of $2.50
or 25% above the exercise price.

That there is no activity at the moment, and in the very
small volumes there is some erosion, can be covered by small
investors getting nervous.

As with other situations its easy to view things the way
you want. I think Rebecca announced it when she decided
to do it - not when she was ready to proceed.

Wolf
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