Larry, very confusing, but floorless nevertheless, they have three conversion prices: the "varaible conversion price", the "green floor conversion price" and the "Market conversion price ", the latter will even include the lowest bid if they end up in the pink sheets.
Interesting enough, the company must have available and escrowed authorized shares outstanding to satisfy 200% of the conversion (assuming of course that in a spiral, the company better make sure all the time they enough shares), if the authorized and available becomes less than 175% of the then effective conversion, bang, go back to stock holders and ask for more. That will end up like TTRIF, they asked for unlimited number of shares and got it.
Where is the stock right now? This piece is a little old (April?), if the company did not have too many shares trading maybe the bandits did not put out the hedge yet. Initially they could have I think about 4 MM shares roughly on the hedge side (if memory serves, the company needed to escrow more than 8 MM).
Of course, the document states quite clearly that the company cannot come back in court after the lenders for whatever reasons,including unfair practices, usury etc., and of course, management was forced to acknowledge that extreme dilution is quite a possible outcome, and they agree not to sue, or resist any outsiders asking them to sue. These bandits have learned something in the recent fights with companies coming back at them).
Zeev |
