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Biotech / Medical : SNRS- Sunrise Technologies -- Ignore unavailable to you. Want to Upgrade?

To: BARRY ALLEN who wrote (2930)	8/2/1999 9:25:00 PM
From: gbh	Read Replies (1) \| Respond to of 4140

Barry, although I agree with you that something with this whole situation sounds quite nefarious, I did watch this stock on Level 2 for at least a month prior to the panel. At certain times I noticed all of the following market makers selling/shorting heavily. Most of this is documented on the RB board. NFSC - I know it sounds strange that Fidelity would be selling/shorting but it did occur. FAHN - still selling/shorting to this day. KINN - this is Kinnard, and they were non-existant until late in the game when their analyst issued his sell. Of course AVLN also heavily shorted, but interestingly, they disappeared from Level 2 for awhile completely. On the RB board we speculated they were squeezed out of existence :). I guess not. Anyway, the point is, the shorting was not isolated to AVLN by any means. gary

To: BARRY ALLEN who wrote (2930)	8/2/1999 10:56:00 PM
From: Duke	Respond to of 4140

Subject: July 23, 1999, Vcall interview with Analyst Richard Leza on Sunrise Tech: John G. Kinnard & Co. Analyst Richard Leza to discuss (SNRS) vcall.com Excerpt from that interview: WHAT HAPPENS TO COMPANY NEXT? DO THEY HAVE THE ABILITY TO PROVIDE ADDITIONAL TRIAL RESULTS? POTENTIALLY GAIN APPROVAL OR WHAT HAPPENS? THERE IS NOTHING SPECIFIC AVAILABLE YET. The FDA hasn't officially Rejected or accepted. I don't know what process the company is going to have to go through in terms negotiating of what further data. I can tell you one source that was their, suggested the FDA eluded to the fact that they wanted to see more data. 300 patients, out to those 24 mo., to get a huge sampling that statistically significant to true check the regression after 2 years. If that holds up, that's gonna delay things quite a bit. My understanding, though maybe there is more color on this, the company has data on 90 patients, right now at 18 months. So in 6 months, they'll be at 24 months, but they are 210 patients short. So if those numbers are true, that is the bar the FDA is gonna request, basically for them to go back to the panel, they have to out, sign up 210 patients, do the procedure and wait 2 years to get the data; then submit it. Under that scenario I think you are looking at least 3 years before they can re-file with the panel. Now that's not a certainty, may not be the outcome. But that's what could happen. Like I said the FDA has not officially rejected it, and that may not be the outcome but it's a fair scenario that could be what happens. That could reset the clock 2 ½ -3 years on them. LETS TALK ABOUT THE FINANCIAL IMPLICATIONS. WHAT KIND OF RESOURCES DO THEY HAVE TO THEM NOW? CAN THEY FUND OPERATIONS? CAN THEY FUND FURTHER TRIALS? At the end of the 3rd quarter they have roughly $21.4 million. Burn rate, 1 MILLION, 1 AND A QUARTER MIL BURN RATE rate a month. If I assume 4 million a quarter, they have enough money through the end of the year. If they have to go back and start again with the clinical trials, there burn rate goes up to 5 possibly 6 million a quarter depending on how aggressive they are. Regardless, if they have to go back, they'll have to raise money by year-end. YOU ANTICIPATE THEY WILL NEED TO RAISE 50 MILLION TO FUND OPERATION THROUGH YEAR 2000. DO YOU CONSIDER THAT A CONSERVATIVE, AGRESSIVE ESTIMATE? I believe that is a number that will get them through the year 2000. So from that point of view, I suppose its conservative, depends how much they get access to will determine that. I think 15 million a year is a good number. WHAT ARE THE PROSPECTS FOR THIS COMPANY TO GO OUT AND RAISE CAPITAL GIVEN THE BLOW THEY HAVE RECENTLY TAKEN? It will not only make it harder, but more expensive. But it doesn't mean they can't do it. What they did in the past, they did a lot of convertible notes and warrants, and the general way that they structured it was a 20% discount to the market at that time. What they would do is sell the convertible notes, convertible at whatever price w/5% interest rate, and then attach a bunch of warrants with an exercise price. In the past what they have done, it's always been below the current market price. And they give those warrants with the notes. So their effective interest rate, an all-inclusive cost, to get this capital in most of these notes is @ 20-25%. So I think that's a very good indicator, especially at this level the kind of thing they'll need to do to entice the new investor to come into this because now you've got certain regulatory risks whereas before everything appeared to be going smoothly. So you might have had regulatory risk but it wasn't at the forefront of their mind, so now they will have to offer better terms. I certainly would not expect them to do a straight stock offering. THEREFORE TO RAISE ADDITIONAL CAPITAL WILL BE AT THE EXPENSE OF THE EXISTING STOCKHOLDERS IN TERMS OF ADDITIONAL DILUTION? Yes.