Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Harvard Scientific (HVSF)Hot$$- male impotency medicine -- Ignore unavailable to you. Want to Upgrade?

To: Amots who wrote (2775)	1/17/1998 7:33:00 PM
From: Afaq Sarwar	Read Replies (3) \| Respond to of 3906

Amots Dramen, You have made valid points in your post. I agree with you. Lets start with some basic to see why this may not be a bad deal for the share holders: This company has couple of good product ideas. The ED product and the Psoriasis product. Some basic work has been completed with these products. ED product has completed Phase 1, the drug and the delivery system for the product are patented in US, and the application for the international patent has received preliminary favorable review. The Ed product appears to have major improvement over the competition (VVUS)in two ways. First the delivery is more comfortable, and second, the drug does not require refrigeration for at least up to six month. If the company is successful it can tap into a multi billion dollar ED market. The Psoriasis product appear to be in the very early stage of the development. There are also risks: We dont know if the company be able to complete all FDA requirement and get approval. We also do not know if they will be successful in positively resolving their conflict with VVUS over the patent issue. It is easy to see that it is a typical high risk and high reward micro cap situation. The real risk/reward odds are essentially the same for the insiders as well as outsiders. To develop the product financing is essential. At such an early stage any one risking their capital will expect reward/return. But all financing, in the final analysis, will be tied with the present perceived valuation of the company. At present, that appears to be very low. So, any financing, from insiders or outsiders will reflect that high risk. With this background, it becomes clear that the financing deal offered by Dr. See and Tom Waite though not the best, is better than the alternatives. One alternative we are already aware of is the financing deal that is presently in place through the off shore investor. The financing by Dr. See and Tom Waite is better in several ways. The total maximum impact of the financing is fully known. The rate of conversion is known and improves over time in a significant way. Finally, no discount is used for the conversion. Therefore, for example, unlike the off shore investors, there is not incentive to short the stock prior to conversion. Also, being insiders, they will have to disclose the sales of their shares. Those off shore guys never did. Another way to look at this deal to see why it is not a bad deal may require some imagination. Imagine, if you will, that this deal was announced prior to the announcement of the international patent and drug stability test news. At that time the stock was trading at around 30 cents. Now, I am sure every one would have been thrilled with the news of this deal at that time. We would have been excited with the fact that the insiders were coming in to buy the company shares at market price with intention to buy still more at 200% and 400% increased price in the future. But just because the news was release two day later when the stock happened to have gone up, we all seem to be complaining. The same is true if the price goes down to the same old level, suddenly this would appear to be a good deal. Some may say that it will not go down that low anymore. Well, is it not good? It is important to note that if the company was interested in manipulation, they could very easily have rearranged the order of the news. So the bottom line is this for me. If the company is successful we will have no reason to complain about how the success was financed. We will simply be happy that it was. If it is not successful, this deal does not change much. Also it is important to remember that a week ago the stock was trading at 30 cents and any one of us could have bought at that price. If we did not buy and they did, then it is not fair to complain at their good fortune. Regarding the selling of their shares: may be it would have been psychologically better for those who may not have any confidence in the management to have the sales of these new shares restricted for certain time period. However, it is important to note that both Tom Waite and Dr. See already have millions of shares. So if the basic confidence is not there, then even the restriction would not do much good. How someone would define which shares are being sold, new or the old ones. Being the insiders they are going to be able to sell these new shares in the same way they would sell their old shares. So for all practical purposes, this really does not matter much. I guess if some one simply does not has any trust or confidence in the product and management, this may be a good time for them to get out of their misery. With the stock up about 300% from recent lows may represent a great opportunity to cut losses. For those who have the trust and confidence, or are comfortable with risks, potential rewards are worthwhile. Tomas, the company will issue a 8K for this deal. Sorry for the overly long post. Afaq Sarwar