To: Intrepid1 who wrote (320 ) 7/29/1998 7:02:00 PM From: Zeev Hed Read Replies (1) | Respond to
purething and HCM, I have called Mike Irwin to get his point of view. He said a number of time that it would be irrational for the company to draw on the floorless line if the stock is at the current level, and irrational would be the right term. But then we started to discuss the actual cash outlays expected. Well, their burn rate is indeed $350,000 per month, without payments of $100,000 and then few payments of $200,000 per month to B/EA. I asked if these payments will be made, and the answer was not direct, but my feeling is that they will (otherwise the BE/A floorless kicks in, and they really do not want to hurt present share holders.) However, the reality is that within 3 to 4 months they will be forced to draw on the line, I am guessing that at the end of this month they are probably at a cash position of about let say $1,700,000 (they just got an infusion of $2 MM recently if everyone remembers and probably spent about $300,000 of this since as of the last S-3 they had only some $400,000 which were probably used last month). Well, over the next three months they have to dish out a total of $1,500,000, about a million to cover burn rate and the balance to B/EA. That means they will have less than a month of burn rate in three month. Waiting until the last minute to line up the cash is the most dangerous game in town, you can therefore bet your bottom bucks, that within the next six weeks they will have to find a way to bring the stock back up (for a good period) or suffer the consequences of additional dilution.
