KOOP shareholders have a choice
- Bankruptcy or
- Massive dilution
From the 10-Q
As described elsewhere in this report, it is imperative that we complete a
significant financing. We are presently pursuing an offering solely to
accredited investors in a private placement of shares of a newly established
series of convertible preferred stock. A minimum of $5,000,000 and a maximum of
$15,000,000 is being sought in the private placement, subject to an increase to
up to $27,500,000 if all overallotments are exercised in full.
The principal elements of the proposed transaction and a related bridge
financing completed by us are as follows:
. The issuance of up to $27.5 million of Series D 8% Convertible
Preferred Stock. These shares will initially be convertible into our
common stock based on a conversion price of $0.35 per share. Each $1.0
million of preferred shares issued will therefore initially be
convertible into 2,857,143 shares of common stock (78.6 million shares
in total if the full $27.5 million of preferred stock is issued).
. The issuance of warrants and options to purchase up to 19.7 million
shares at an exercise price of $0.35 per share to be granted to new
management, certain affiliates and related persons.
. The issuance of warrants to purchase shares of common stock at an
exercise price of $0.35 per share to the placement agent or its
designees in connection with the placement of the preferred stock,
other than to excluded purchasers. 286,000 warrants will be issued for
each $1 million of preferred stock (approximately 6.2 million warrants
if the full $27.5 million of preferred stock is issued in the manner
currently planned).
. The issuance of warrants to purchase 14.8 million shares of common
stock at an exercise price of $0.35 per share issued in connection
with bridge loans made to us by a merchant bank.
The terms of some of these securities are also subject to adjustment for
certain events, including price-based adjustments related to future financings
and trading prices. Included in the securities identified above are warrants
issued in connection with bridge loans that will receive anti-dilution
adjustments as a result of the permanent financing. The financing provides to
the investors and placement agent the right to designate a majority of the board
of directors and also contemplates the employment of a new senior management
team. Investors will also receive registration rights.
As of the filing of this report, the transaction described above is being
negotiated but is not completed and we cannot assure you that it will be
completed. At such time as the terms are finalized and we complete the
financing, we will report to you by press release and one or more filings with
the SEC regarding the actual terms and conditions, which could vary from those
described above. |
