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Microcap & Penny Stocks : Diversified Senior Services, Inc. (Nasdaq: DISS)
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To: Bernard Deutsch who wrote (10)7/21/1999 6:48:00 PM
From: zonkie   of 14
 
I think the snip below from the S-3 just about sums it up, don't you Bernie? It looks to me like another deal for investors to get the hell away from as fast as they can and not look back.

sec.gov

>>>>>After January 29, 2000, the Series B preferred stock is convertible at a floating rate that may be below the market price of the common stock. As a result, the lower the stock price at the time the holder converts, the more common stock the holder will get upon conversion. To the extent the selling security holders convert and then sell their common stock, the common stock price may decrease due to the additional shares in the market. This could allow the selling security holders to convert their convertible preferred stock into greater amounts of common stock, the sales of which could further depress the stock price. The significant downward pressure on the price of the common stock as the selling security holders convert and sell material amounts of common stock could encourage short sales by others in which the short-sellers borrow common stock at the current market price in hope to buy it in the future at a lower price. This could place further downward pressure on the price of the common stock.

In addition, the conversion of the convertible preferred stock may result in substantial dilution to the interests of other holders of common stock since each holder of convertible preferred stock may ultimately convert and sell the full amount issuable on conversion. Although each selling security holder owning Series B preferred stock may not convert their preferred stock if, as a result, they would own more than 9.99% of the then outstanding common stock, this restriction does not prevent those selling security holders from converting and selling some of their holdings and then converting the rest of their holdings. In this way, an individual selling security holder owning Series B preferred stock could sell more than 9.99% of the outstanding common stock while never holding more than 9.99% at one time. <<<<<<
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