Fred drops bomb on shareholders for xmas
right after the close of market friday right before xmas.
As of December 12, 2001, Ashton had 68,162,250 shares of Common Stock issued and outstanding. Ashton has reserved approximately 264,000 shares in connection with the conversion of its Series B Convertible Preferred Stock, 95,683,521 shares in connection with the Secured Convertible Note issued to RGC International Investors, LDC ("RGC") in exchange for the remaining shares of Series F Convertible Preferred Stock, par value $0.01 per share, pursuant to a Securities Exchange Agreement dated July 13, 2001, 7,000,000 shares in connection with its obligation under the Equity Line Securities Purchase Agreement with Jameson Drive, LLC, dated July 10, 2001, 5,546,743 shares in connection with the exercise of outstanding warrants, and 12,291,250 shares in connection with the possible exercise of Ashton's options. Of those shares reserved for the possible exercise of Ashton's options, 8,556,416 shares have been already granted, and 3,734,834 shares remain reserved for future grants. In the aggregate, 120,785,514 shares have been reserved for future obligations. This amount exceeds the 31,837,750 authorized and unissued shares by 88,947,764 shares. The shortfall in the number of authorized shares is directly related to the recent decline in Ashton's common stock price.
On August 18, 1999, Ashton completed a private placement for the sale of 20,000 shares of Series F Convertible Preferred Stock (the "Series F Preferred"), with a stated value of $1,000 per share, to RGC for gross proceeds of $20,000,000. Beginning on February 18, 2000, RGC was entitled to redeem the remaining 4,363 shares of Series F preferred for cash. In lieu of such redemption, Ashton and RGC entered into a Securities Exchange Agreement on July 13, 2001 whereby the remaining shares of Series F Preferred were exchanged for a $5.1 million Secured Convertible Note due August 18, 2003. The Secured Convertible Note is convertible into shares of Ashton Common Stock. Pursuant to the Securities Exchange Agreement, Ashton is required to reserve two times the estimated number of shares issuable upon conversion of the Secured Convertible Note, or 95,683,521 shares, based on the November 30, 2001 common stock price of $0.11. If the Secured Convertible Note were converted into Common Stock based on this price, Ashton would issue 47,841,761 shares of Common Stock.
Pursuant to the Stock Purchase Agreement dated January 12, 2000 (the "Agreement") entered into among Universal Trading Technologies Corporation ("UTTC"), Ashton and Kingsway Securities Holdings Limited ("Kingsway"), Kingsway elected to convert all the 123,240 shares of the Series KW Preferred Stock issued by UTTC into Ashton Common Stock. Effective December 12, 2001, all 123,240 shares of the Series KW Preferred Stock were converted into 18,489,274 shares of Common Stock.
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Ashton entered into an Equity Line arrangement with Jameson on February 9, 2001, which was amended on July 10, 2001. The financing arrangement is in the form of a Securities Purchase Agreement and provides for the purchase by Jameson of up to $15 million worth of shares of Ashton Common Stock over a 24-month period. During this period, Ashton may, at its sole discretion, request a draw on the Equity Line by selling Common Stock to Jameson. Jameson will be obligated to buy the shares, subject to the terms of the agreement. The sales price for the shares we sell to Jameson is not fixed, but is based on a formula that is tied to the market price of our Common Stock at the time of the sale. The shares that we sell to Jameson are at a 10% discount to the market price at the time of the sale. The minimum amount that we can draw at any one time is $100,000. The maximum amount that we can sell at any one time is $1 million. We are committed to drawing a minimum of $2.5 million over the term of the agreement, and are limited to drawing a maximum of $15 million.
As of December 12, 2001, Ashton has drawn down gross proceeds of $1.8 million on the Equity Line by selling 12,132,865 shares of the Common Stock to Jameson. On November 30, 2001, the closing price of the Common Stock was $0.11 per share. If Jameson purchased shares based on this price, the actual purchase price would be $0.10 per share, reflecting the 10% discount.
In order for Ashton to fulfill its obligation to sell a minimum of $2.5 million to Jameson, it would be required to draw an additional $700,000. Based on the November 30, 2001 closing price of its common stock, Ashton would be required to issue an additional 7,000,000 shares of Common Stock to satisfy its obligation.
If after the $2.5 million minimum obligation was satisfied, the remaining $12.5 million available under the Equity Line were utilized, an additional 125,000,000 shares of Common Stock would be sold to Jameson based on the November 30, 2001 closing price. No such shares have been reserved for this purpose from Ashton's authorized and unissued shares of common stock, although Ashton filed a registration statement with the Securities and Exchange Commission on November 13, 2001 to register the resale of an additional 10,000,000 shares to be issued in connection with the Equity Line.
Purpose of this Proposal |
