In Response to a Comment

In Response to a Comment

on May 31, 2006

Somebody posted the following comment:

"I'm a bit confused by what's going on here. WIll Microvision actually pull in $25m selling these warrants? Is there enough demand for the warrants to make that amount?

If Microvision doesn't make enough money from selling the warrants in short order to cover its ongoing expenses, what happens then? Not in a position to turn a real profit every quarter doesn't exactly give them the capital to keep developing. Short of receiving a shot of spare cash from someplace, wouldn't they be forced to close shop in rather short order?"

Here's the deal (finance whizzes feel free to correct/elaborate): The company issued 10.8M NEW shares @ $2.21 per share. This increases the total number of shares to around 36M. In addition to the shares of stock, each person buying the 10.8M new shares through MDB Capital receives a warrant which costs the new investor an additional 12 cents for each warrant.

So the 10.8M shares @ 2.21 ($23.8M) PLUS the 10.8M warrants @ 12 cents ($1.3M) results in $25.1M in CASH in Microvision's bank account as soon as the deal closes (I'm sure there's fees and stuff. All this is in the SEC filings I linked to below.)

I would guess that would be about a year's worth of operating capital, maybe longer if some product revenue starts jumping or we get some killer contract or what have you.

My prior post was about buying the warrants, MVISW, versus owning the stock, MVIS.

My personal decision is that MVIS stock is better for me as it is equity in the company and as I mentioned has unlimited upside. :-)

MVIS has a lot more money in the bank after this transaction then they've had since I can remember.

ANOTHER POINT I should add is that should the stock stabilize over $5.30, MVIS will be able to 'pull the warrants' and effectively automatically exercise the warrant which I think would be worth an additional $28.6M in CASH in the bank to MVIS should all the warrants get pulled (also resulting in another 10.8M shares added to the outstanding shares).

ALL INFO is in the SEC filings. I would read them five times over. All this is just my best effort at understanding the transaction and is not the gospel truth.

Thanks.

Comments

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