I posted this on the Rande Is..Fishing thread, any comments here:
PLCO(P,W) I am new to this play so excuse if the following has been hashed out before:
It appears that in addition to the 5+ million common and
36+ million in preferred equivalents there is an extra 19.5 million shares through a convertible note.
These were obtained at the equivalent of 3.25 million preferred shares (19.5/6) at a cost of $.20 per preferred
or $.033 per common.
These holders could already be shorting the P's (good news)
or ready to dump 3.25 million P's cheaply obtained (at $.20)
on the open market:
Here are the details from the SEC filings:
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....On a pro forma basis, assuming
the immediate conversion of the 5,833,903 outstanding shares of Series E Stock
into 35,003,418 shares of Common Stock, the 750,000 outstanding shares of Series
F Stock into 1,500,000 shares of Common Stock, and the ultimate conversion of
the Frampton and EACF debentures into 19,500,000 shares of Common Stock, the
tangible net book value per share of Common Stock would be $0.07 based on the
$4,171,436 tangible net book value and the 61,552,275 shares of Common Stock
outstanding on a pro forma basis......
In addition, given that the Company has issued debentures to
Frampton and EACF in consideration of an aggregate $650,000 loan made by same to
the Company, and given that such debentures are convertible into Series E Stock
at a price of $0.20 per share (at Frampton's and EACF's respective options), the
Company may be required to issue an additional 3,250,000 shares of Series E
Stock pursuant to the debentures whereupon any time two years after issuance of
the Series E Stock, same are convertible into an aggregate of 19,500,000 shares
of Common Stock. See Risk Factor No. 18 - "Possible Future Dilution."
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Under the Frampton and EACF agreements, Frampton lent $500,000 and EACF
lent $150,000 in the form of a convertible, subordinated debenture due December
31, 1999. The debentures each bear a 5% interest rate and are convertible into
the Company's Series E Stock at the lenders' respective options. The conversion
price initially was $0.10 per share. That price was discounted 50% from the then
current market price (November 10, 1998) reflecting a discount for the
illiquidity of the shares, which do not carry any registration rights.
Subsequently, in May 1999, the lenders agreed to amend the conversion price to
$0.20 per share, which represented the full market price of the shares on the
date of the original business transaction. |
