See if this makes sense!
Go2Net sold Preferred shares at the equivalent of $33.06 per common share... assuming Preferred shares are converted into 9,075,782 shares of Common Stock.
The current price of Go2Net stock on March 15, 1999 and June 17, 1999 was higher than the conversion price of the *preferred* shares $33.06. The difference is considered a loss to *common* shareholders.
If the preferred shares are converted to common stock, then there will be more shares of common stock outstanding (dilutive to common shareholders above and beyond the cash infusion Go2Net and its shareholders received when preferred shares were sold).
The extra dilution (current stock price minus $33.06 conversion price) is the value loss being measured for accounting purposes now.
According to the Go2Net June 30, 1999 10Q,
there are 27,815,369 shares outstanding.
However, there are 41,050,743 fully diluted shares... as reported in the Go2Net earnings release July 21, 1999. techstocks.com
Fully diluted shares is currently around 43,000,000.
Included in the fully diluted number are (1) employee options and (2) the preferred shares which convert to 9,075,782 shares of Common Stock.
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From Go2Net's June 30, 1999 10Q
(Adjusted for the most recent 2 for 1 split, June 24, 1999)
On the date of the First Issuance (March 15, 1999) and Second Issuance (June 17, 1999), the price of the Series A Convertible Preferred Stock was at a discount to the price of the common stock into which the preferred stock was then convertible. The discount was recognized as a return to the preferred shareholder and reflected as a dividend.
The Series A Preferred Stock is initially convertible at a
conversion price of $33.06 per share into 9,075,782 shares of Common Stock. |
