"As referenced above, the transaction includes a $5 million equity put option agreement for the Company�s common stock, ... In connection with the Company�s election to exercise its equity put rights in the aggregate amount of $2.5 million during the quarter ended June 30, 2006, the Company and the investment funds agreed that the Company would issue its secured convertible promissory notes (�Put Notes�) to the funds instead of the Company�s common shares. The Put Notes are convertible into shares of the Company�s common stock at the Put Conversion Price calculated at the time of each election. Two Put Notes in the aggregate principal amount of $1.5 million are convertible at $2.05 per share and a third Put Note in the principal amount of $1 million is convertible at $1.92 per share. The Put Notes provide that all principal under the notes shall automatically convert to shares of the Company�s common stock at the Put Conversion Price upon the earlier of (i) the date that the Company obtains approval of its shareholders for the conversion of the Put Notes, or (ii) August 31, 2006. The Put Notes do not require the repayment of principal in cash except in the event of default by the Company of its obligations under the notes. All outstanding principal under the Put Notes accrue interest, payable in cash, at the rate of 8% per annum. The Company�s obligations under the Put Notes are secured by the assets of the Company. The $2.5 million Put Notes are included in the Company�s short term debt during the period ended June 30, 2006."
I believe that the company has already received $2.5 million of the $5 million available. Confirmation appears on page 3 of the 10-Q in the Statements of Cash Flows in the June 30, 2006, column: "Proceeds from Convertible Debt 2,500,000." Also, the end of the quote in Note 6 above is, "The $2.5 million Put Notes are included in the Company�s short term debt during the period ended June 30, 2006."
It also seems to me that at least $2 million of the $2.5 million received during the 2nd quarter was spent during the 2nd quarter since the June 30 Cash and cash equivalents are only $403,259.