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Technology Stocks : TAVA Research - No Discussion

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To: C.K. Houston who wrote (672)	7/15/1998 8:37:00 PM
From: CalculatedRisk	Read Replies (2) of 810

TAVA Research: TAVA paying 22% annual interest on new loan. On March 27th, TAVA borrowed $4 Million from a "hard money" lender. These are the types of lenders that poor performing companies like TAVA (heavy losses, strong negative cash flow) use to obtain funds. The terms of the loan are contained in TAVA's recent 10-Q filing: "Promissory note payable to an investment company net of a discount of $315,000. Interest at the rate of 11.5% per annum is payable quarterly." The discount is based on granting warrants for 155,000 shares of TAVA stock at $6.25. TAVA is taking a discount of $315,000 over the term of the loan. The actual discount should be higher, since the value of the warrants is closer to $500K. If the loan is not paid in full by December 31st of this year, TAVA will grant additional warrants to the lender at the lower of $6.25 or a formula based on market price. To compute the total interest, we need to add the 11.5% stated interest rate with the discount over the 9 month term of the loan. (We use 9 months as the term, since additional warrants will be issued in Dec '98 and Dec '99). This gives a total interest rate of 22%. Regards, Bill

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