Donny, you will enjoy this. SCON is paying U.S. Cellular to take shipments. Simply amazing.
For every 25 dollars of product sold to US Cellular they get a warrant to buy a share of stock at 4 bucks. And best of all they vest immediately during and the end of the quarter when the sales were made.
As of April 1, 2000, U.S. Cellular had a total of 71,120 vested warrants and 928,880 unvested warrants.
So they bought $1,778,000 (71,120 * $25)worth of product, Today for that purchase they have $2,204,751 of equity for a nice profit of $426,000 plus of course the FREE equipment. SWEET HEART DEALS don't get better than that. And thats if they did not sell up high too.
Un F- ENG Believble
Check out the lingo in the SEC docs
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On August 27, 1999, the Company signed a five-year sales agreement with United States Cellular Corporation ("U.S. Cellular"), one of the nation's ten largest cellular service providers. Under the terms of the agreement, U.S. Cellular will purchase a minimum of 100 SuperFilter(R)Systems by December 31, 2000 and may purchase up to 400 additional SuperFilter(R) systems by August 27, 2004. In connection with this agreement, the Company issued to U.S. Cellular a warrant to purchase up to 1,000,000 shares of common stock at $4.00 per share. U.S. Cellular earns the right to exercise the warrant (a concept also known as vesting) at the rate of one share of common stock for every $25 of SuperFilter(R) purchases. The warrant expires August 27, 2004.
The Company is recording a portion of the fair value of the warrant each quarter as a non-cash charge. For 1999 this charge has been recorded as a discount to its commercial revenue. The vested portion of the warrant during any given quarter depends on the volume of sales to U.S. Cellular, market price of the Company's stock, and expected volatility during that quarter. The Company calculates the dollar value of the portion vesting during the quarter using the Black-Scholes option-pricing model and the closing price of the Company's common stock on the NASDAQ on the last trading day of the quarter.
As a result, the Company cannot reasonably predict the amount or timing of future non-cash charges relating to this warrant.
However, the Company expects the amount of these charges to increase significantly in 2000 because of the significant rise in the market price of the common stock during the first quarter of 2000. The 1999 charge of $124,000 was based on the vesting of 48,980 warrants and market prices of $3.13 to $5.00 per share of common stock. The right to purchase another 951,020 shares was still unvested as of January 1,2000, and the common stock traded as high as $115 per share between January 1,2000 and March 24, 2000.
In August 1999 the Company issued warrants to United States Cellular Corporation to purchase 1,000,000 shares of common stock at a price of $4.00 per share. These warrants are subject to vesting conditional on U.S. Cellular's purchases of the Company's commercial products. At December 31, 1999, warrants to purchase 48,980 shares of common stock had vested and are exercisable under the agreement. These warrants are exercisable until August 27, 2004. |
