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To: Lord Smooth who wrote (1245)	2/19/1998 11:14:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 14347

Schopenhauer: It says clearly "converted at the lesser of", that means unequivocally that the conversion rate is variable not fixed. I am sorry I cannot go into more details, I am extremely busy with a "Private Offering" (only accredited investors) of my own to start a new (of course, I believe it is an exciting company), but reread this paragraph and you will clearly see that if the stock has an average BID of $.5 the $2,000,000 convert to 4 million shares, and if the stock is pushed back to $.125, then these two million bucks are entitled to convert to 16 million shares. Furthermore, since the company is burning cash as if there is no tomorrow, they will go through the whole $10 MM of convertible preferred and then at $.125 you have 80 million new shares and the current holders are diluted to pea nuts. The preferred holders have no risk since they take their money out when they do their "shorting against the block". Of course they call it hedging, but they do it on the back of the current stock holders. Zeev