Has Brilliant Digital Entertainment (BDE, Market cap $50 Million+/-, 9.4 million shares) been discussed on this thread? The S-3 appears to describe not one but three convertibles that to my reading appear to qualify as floorless. I would appreciate the thread's comments.
S-3 filed 7/1/99
edgar-online.com
Page 10 of S-3
OUR SALE OF SHARES AT A PRICE BELOW THE MARKET PRICE OF OUR COMMON STOCK WILL
HAVE A DILUTIVE IMPACT ON OUR STOCKHOLDERS.
We have entered into a securities purchase agreement with an investor that allows us to sell to the investor up to $6,000,000 worth of shares of our common stock at a discount to the then-prevailing market price of our common stock. The table below sets forth percentages of our common stock the investor would own if we elected to sell the entire $6,000,000 worth of stock under the purchase agreement. The percentages are based on our closing share price of $6.375 on June 25, 1999, and on assumed prices of $4.78 and $3.71, which prices represent a 25% and 42% decline, respectively, in our June 25, 1999 closing share price. The percentages are also based on the number of shares of common stock outstanding on June 25, 1999. We cannot issue to the investor more than 19.99% of our common stock that was outstanding at the time we entered into the securities purchase agreement, which equals 13.8% of our common stock outstanding on June 25, 1999.
Page 11
Percentage Percentage of
Discount to Assumed Outstanding
Market Price Market Price Common Stock
------------ ------------ ------------
0% $ 6.38 8.3%
25% $ 4.78 10.8%
42% $ 3.71 13.8%
Additionally, we have issued to a selling stockholder a debenture which may be converted into common stock at a discount to the then-prevailing market price of our common stock. Accordingly, the issuance of shares under the securities purchase agreement and the debenture will have a dilutive impact on our stockholders. As a result, our net income or loss per share could be materially decreased in future periods, and the market price of our common stock could be materially and adversely affected. These discounted sales could have an immediate adverse effect on the market price of the common stock. We also have agreed to issue to our financial advisor a fee in shares of common stock having an aggregate market price equal to 2% of the purchase price of the shares of common stock to be issued and sold under the securities purchase agreement. The issuance or resale of these shares would have a further dilutive effect on our common stock and could adversely affect its price. Downward pressure on the market price of our common stock could encourage short sales of common stock by the investor (to the extent permitted by, and pursuant to, the securities purchase agreement) or others. A short sale is a sale of stock that is not owned by the seller. The seller borrows the stock for delivery at the time of the short sale, and buys back the stock when it is necessary to return the borrowed shares. If the price of the common stock declines between the time the seller sells the stock and the time the seller subsequently repurchases the common stock, then the seller sold the shares for a higher price then he purchased the shares and may realize a profit. Material amounts of short selling could place further downward pressure on the market price of the common stock.
Page 12
$1,000,000 convertible
The debenture may be converted by Roseworth or any other holder of the debenture into shares of our common stock at a conversion price per share equal to the lower of 95% of the market price (as defined below) of our common stock or $6.00.
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