Explanation of the Share Dilution Issue: Focus on the word "Estimation" because as I understand this, based on the SB2 there was written in that there was an "Estimation" of 11 million shares the
COULD be issued.
By LOCKING UP the stock and giving the stock to breath, THAT 11 million shares can be reduced dramatically to somewhere in the range of 3 to 4 million shares. It's only an "Estimation" and as I understand, only a worse case estimation. Some of these people held their investment for a year, as a result, are entitled to very substantial discounts based on the time period.
This was explained to me as THESE Investors have ALL AGREED to "RE- Adjust" their discount to the Market and bring it in line, so that there is no great fluctuation.
As an example: This means that when the stock is at $1.00 they may get stock at $.87 cents, they WILL NOT get stock at $.40 cents. To me this was VERY Important and in my thinking, this should be viewed as very positive. For if there is a big difference in the price of the stock, people could just keep selling until it gets to that range and this can kill momentum of the stock.
However, Joe explained to me that Eat At Joe's RE-ADJUSTED "ALL" of the Discount were given on the convertible preferred shares. SO, they are not only Re-Adjusted but also LOCKED UP.
Joe said he will likely put another press release out in the future to EXPLAIN this more clearly to the investment community. He admitted that he may have not explained it as clearly as he should have because he wanted to be sure and remain SEC compliance and likely was too conservative.
Joe went on to explain how these convertible share holders, based on the agreement that they signed, these share holders are entitled to a discount to the current market price at the time of conversion. However, By Locking it Up,
#1. The stock can trade without fear of these shares being dumped into the buying momentum .
#2. These share holders have not only waved all of the additional discounts they were entitled to AND also agreed to a much smaller return than original entitled to get.
THIS is VERY significant, WHY? Because you get rid of DILUTION.
I will post on another issue later, as I want to keep it to one issue at a time, so there is no confusion.
The above is how I understood this issue as Joe explained it to me. If it is thought that I have misunderstood anything, I suggest you call Joe and let him explain it to you personally.
My impression of Joe is, that he is forthright, very willing and ready to help investors understand.
What really impressed me the most is the DRIVE and Belief in himself and the Management team which he has put together to make Eat At Joe's successful and not just remain a nice little company but in time, a 200 unit company with annual revenue in excess of $100 million.
In my next post I will share some things which Joe shared with me about this Management Team.
Regards,
Malcolm |
