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To: V$gas.Com who wrote (23486)	4/3/1999 12:46:00 PM
From: findstock	Read Replies (1) \| Respond to of 44908

Please tell me the mechanics of how a BB stock trading at less than .50 can be shorted, how they (the shares) are marginable and how they are collatoralized? Zeev, these questions are directed to you. I know you have no control over other factions of this thread, but I hope that only you answer them. One last question, Was it Ditchdigger that brought you over here, an if so did you rely mainly on what he told you for your earlier statements? Vegas, again remember people worry about some manipulating a stock up and never think about someone FORCING A STOCK PRICE DOWN....most shorting on a bb can only be done in Canada, it is enormeously expensive, and HUGE risk involved several brokerage houses have been ruined doing that game, however, of course if you are going to short and you KNEW you could force the price down more, it would kinda take the risk out of it wouldn't you think, that practice is also practiced on this thread, make no mistake about that....always unusual don't you think that certain poster only come around when the price is down or doesn't go up, or there is panic in the air....hummmmmmmm

To: V$gas.Com who wrote (23486)	4/3/1999 3:50:00 PM
From: Zeev Hed	Read Replies (4) \| Respond to of 44908

Thanks, I went through it and the most recent s-8. I presume everyone knows that the Chaiorman gets paid $360,000 annually and got on top of it a grant of 5 MM shares. I also presume everyone knows that the "incentive option plan" was increased from 10 MM shares to 17.5 Mm shares, thus a total of 22 MM new shares. The PP is floorless alright, but it is only for $2 MM. I have doubts (but not certainty) that this will suffice, since the company had some $6 MM in accrued liabilities (and a blocked $80,000 of cash on hand), if the stock goes to $.1 that will translate into an additional 20 MM shares, if it goes to $.05, management will have to come to the majority holders and authorize increases in the total share authorized (now 114 MM?). The most recent burn rate I could identify is about $3 MM per quarter, but since a lot of new people have come on board, pick your own number. The $30 MM with Signature is surely nice, however, they have moved from commissions to billable time (apparently they were losing money on a commission basis). Maybe someone knows what they can get per hour on billable time so that gross margins can be determined. In a "labor intensive" environment the gross margin might not be 10%, this figure is important, since it might be a nucleous of business that can support the Chairman's excessive salary and the rest of the overhead. If it is a typical 10%, they'll need four times as much just to break even, before they pay any interest. As for the floorless, yes it can be used as a failproof collateral to short the stock, but if I was in the bandits' shoes, I would take my 30% on the spot (by selling the stock today and delivering converted stock). That would be the best oputcome for stockholders, since at current prices it would mean only some 10 MM additional shares. Since I could not find a registration statement (typically an S-3) relative to this floorless, I have to assume that some of the recent decline is due to simply selling short against the block without converting. That might lead into a death spiral, since at 25% lower price, 30% more shares can shorted, at 50% lower price 100% more shares can be shorted and so on. As the price goes down, the number of shares on eventual conversion increases leading the further devaluation of the common's stake in the company. For an example look at TTRIF, they started with some 25 MM shares and about 18 to 24 months later and a leaky floorless they now have 180 MM shares. The stock went from 3 to 1/8. As to your questions on the prior post, yes, the document relates to the period ending 12/98, but typically, the going concern type of comment is updated with new material, and since the $2 MM in floorless is metioned in the document, I presume the going concern note is post that financing. As I mentioned above, $2 is not sufficient to turn this company around. The Chairman may consider taking a 66% paycut to start with. I believe I responded above to the Signature question. As for the conversion, since there was no S-3 filed for the floorless, they cannot yet convert. In the approriate K-8 the whole details of the floorless should probably be outlined including the obnligation of registering the shares and possible anti floorless or anti shorting covenant might be included (such were present in the AIPN and I believe the RNTK covenant but to no avail, AIPN went from $7 to a recent low of 9/16 and RNTK from $3 to a recent low of 15/32). The machanism of shorting vary, if there are shares in the broker's margin accounts the shares sold short are borrowed there. Even if these are not marginable). Institutions that ended up holding large block of the stock would lend these as well, and finally Canadian brokers, Bahamah and Cayman Islands and Isle of Man brokers do it without borrowing shares. Since the bandit holds a piece of paper untitling him to acquire shares for $2 MM at 30% discount to the average closing bid over the last few days, the paper is the best collateral one can think off (if the stock take offs, you call the conversion and you still get the 30% discount of the LAST FIVE TRADING DAYS). It is like trading knowing what the shares will be five days hence. Actually, I came here because TideGlider mentioned my name and the term Floorless, I have a search function on this in my engine to continue and discharge my civic responsibility to warn investors of the potential financial calamity any floorless brings on the holders of the common stock. He did not "call" me to the flag, (VBG), my search engine did. Zeev Please excuse the fact that this lengthy document is not proof read. It would take too much additional time.