ARTX: the ointment fly
Took a look at the registration statement from FreeEdgar on the ~6mill share convertible.
SHARES ISSUABLE IN CONNECTION WITH OUR SALE OF CONVERTIBLE DEBENTURES
Pursuant to the terms of a Securities Purchase Agreement dated
September 30, 2003 (the "Purchase Agreement") by and between Arotech Corporation
and six institutional investors (the "Investors"), we issued and sold to the
Investors (i) an aggregate principal amount of $5,000,000 in 8% secured
convertible debentures due September 30, 2006 (the "Initial Debentures"),
convertible into shares of our common stock at any time after January 1, 2004 at
a conversion price of $1.15 per share, and (ii) three-year warrants to purchase
up to an aggregate of 1,250,000 shares of our common stock at any time after
January 1, 2004 (the "Initial Warrants") at an exercise price of $1.4375 per
share. The Debentures earn interest at a rate of 8% per annum, payable in cash
or stock quarterly. We are not presently registering any shares for use in
connection with interest payments.
The Investors also have the right, at their option, to purchase up to
an additional $6,000,000 in debentures (the "Additional Debentures" and,
together with the Initial Debentures, the "Debentures") convertible into shares
of our common stock at any time after January 1, 2004 at a conversion price of
$1.45 per share, and to receive warrants to purchase up to an aggregate of
1,500,000 shares of our common stock at any time after January 1, 2004 (the
"Additional Warrants" and, together with the Initial Warrants, the "Warrants")
at an exercise price of $1.8125 per share. We are not presently registering any
of the shares issuable in connection with the Additional Debentures or the
Additional Warrants.
This financing does not look like the death spiral convertible: stockpatrol.com
but, on the other hand, it is understandable why there is some concern re. dilution. There are a LOT of shares available for purchase at LOW prices, so i'm sure there is a perception that there will be continued selling pressure as warrant and debenture holders convert to lock in gains next year.
I would not touch ARTX at 3 when shares "bought" at 1.15 can be sold in a month for what currently is a near triple.
if i am getting this wrong...someone straighten me out.
mike |
