RE: World Changes - AGAIN" By the same token why would the company accept 12.5 if share price is above 30c by April? No simple explanation here."
The company made this recent offer obviously because they want more money - but do not feel like they need to have it before April (and hopefully not before FDA approval either). I did a quick calculation a few months back and figured that they have sufficient funds until about Sept 2009 based on the burn rate then. If not mistaken, they anticipated submission to FDA early 2009 (meaning "any day now" - wow I can;t believe how much I hate that phrase)
I believe they made this offer because they know that FDA approval will be at worst 6 months from submission - so even if that submission was today, you are looking at the beginning of July 2009 or sooner. Problem is that something unexpected may occur before then or even if nothing occurs, management should always have some buffer of funds in case of the unexpected. Hence, this latest attempt to raise some additional funds.
Now, consider this, if the price manages to reach only $0.20 - 0.30 by April (which is still a nice return from today's price) there is no incentive for any of the warrant holders to excercise based on the previous deal - and as a result, no money for Nuvo. But if the price does reach $0.20 - $0.30, due likely to the build up of FDA approval that will drive the share price up between now and then, this new deal will incent warrant holders to excercise since they will be in the money. (only concern is if these warrant holder's do excercise, should they then try to sell the shares, the price will be under heavy pressure.) Either way, it gives Nuvo some additional funds - the main driver for this latest deal.
Given the April timeframe they put on this offer, it makes me more confident that:
1. Management anticipates the price by April to be higher than $0.125 (they probably anticipate some announcements between now and then that should drive the share price at least 50% of what it is today) in order entice warrant holders to excercise. and
2. Nuvo will have sufficient funds to carry them to FDA ($9MM more if all warrants excercised)
Now think of the alternative....sell a bunch MORE shares today at $0.12 (80MM more shares needed at 0.12 to net proceeds of $9MM - after fees/etc.) with EVEN MORE WARRANTS (Maybe another 40MM) or if they waited until April at say $0.20l ( 50MM more shares will be needed to net $9MM) with MORE warrants (another 25MM) attached?
So rather than having today's 20,012,494 warrants (the "November 2009 Warrants") PLUS 3,901,898 warrants (the "June 2009 Warrants") and 50,000,000 warrants (the "July 2009 Warrants"), YOU WOULD HAVE THOSE 74MM warrants PLUS THE NEW SHARES AND WARRANTS THAT WOULD NOW BE ISSUED. You could potentially have as much as 120MM more if they tried to raise funds today (instead of the current change to existing warrants).
Given the alternative, this current offer seems to make more sense long term - especially if you think by summer you are getting FDA approval and the share price will be much higher then.
If you look at the bulk of the current warrants (70MM), they expire July and November 2009 - on or after an anticipated FDA approval date if submission is made in the next few weeks.
Sorry for the long read - but that's my take.