Financing Considerations

• Shareholder Value: Raising a large amount of capital at one point in time can erode shareholder value, particularly if the isser only needs a portion of the capital near term and/or if share values are depressed.
• Protecting Share Price: Typical financing structures (e.g., PIPES, registered directs) do not incorporate trading limits, which may result in too much stock hitting the market at once.
• Regulatory Risk: Facilities controlled by the issuer (e.g., ATM, equity lines) create significant regulatory/10b-5 risk.
• Cost of Capital: The true cost must include not only the discount, but also the value of warrants, potential costs of penalties and make-goods, cost of management's time, regulatory risk, impact of share overhang and any lack of controls on trading of new shares.