CESY currently has 4,314,358,079 shares outstanding.
From the proxy materials filed yesterday:
Issuance of Shares Under Preferred Stock Financing and SEDA Financing; Dilutive Effect.
The Company issued 1,000,000 shares of Common Stock to Cornell under the Preferred Stock Financing. As of the date hereof, the Company has not received any definitive SEDA documents and therefore it is unable to compute the exact number of shares to be issued to Cornell thereunder. The dilution effect of the issuance of the Series F Preferred Stock is that upon conversion of the Series F Preferred Stock, the holder thereof would receive shares of the Company’s Common Stock pursuant to the terms of the Series F Preferred Stock Certificate of Designation. This would in-turn result in increasing the total number of outstanding shares of Common Stock, which would dilute the earnings per share of the Company at such time. Since there is no way of knowing if or when Cornell may exercise its conversion rights or what the earnings of the Company would be at such time, the Company is not able to quantify the actual dilutive effect at this time. Nonetheless, if all of the shares of Series F Preferred Stock issued by the Company are subsequently converted to shares of Common Stock of the Company, and/or the Company issues a significant number of shares of its Common Stock under the SEDA Financing, then the existing stockholders of the Company would experience significant dilution with respect to their voting rights, earnings per share, dividends and liquidation preferences. Accordingly, although the Company cannot compute the exact magnitude of such dilution at this time because the definitive SEDA documents have not yet been executed, Celerity can compute the maximum dilutive impact under the Preferred Stock Financing and the SEDA Financing in a “worse case scenario”, which would yield the following results if we assume (a) all 1,000,000 shares of Series F Preferred Stock were converted into shares of Common Stock of the Company, (b) the Company drew-down the entire $50 million to be made available under the SEDA Financing, and (c) the stock price at the time of the SEDA draw-downs was $0.0014 per share (i.e., a recent closing price of Celerity’s stock):
• with regard to the Preferred Stock Financing, if all 1,000,000 shares were converted, the Company would issue 1,000,000,000 shares of its Common Stock (i.e., 1,000,000 [# of preferred shares] divided by $0.001 [the conversion price]);
• with regard to the SEDA Financing, if the Company drew-down all $50 million under the SEDA, the Company would issue 36,443,148,688 shares of its Common Stock ($50,000,000 [amount available under SEDA] divided by ($0.0014 [recent stock price] multiplied by x 98% [purchase price discount])); and
• therefore, if the Company issued a total of 37,443,148,688 shares of its Common Stock, the dilutive impact would be as follows based on the Company’s financial statements for the period ending September 30, 2005:
Inputs
Recent Stock Closing Price as of 12/6/05: $ 0.001400
Retainage of Offering Proceeds from SEDA Financing (expressed as a percent; based on term sheet): 0.05
Estimated Offering Expenses for SEDA Financing: $ 85,000.00
Total # of Shares to be Issued: 37,443,148,688
Shares Outstanding as of 9/30/05: 4,390,579,206
Net Tangible Book Value as of 9/30/05: $ 17,494
Total Amount of SEDA: 50,000,000
Outputs
Gross Proceeds: 51,372,000
Net Proceeds: 48,718,400
Assumed Offering Prices (reflecting 2% purchase price discount under SEDA; based on term sheet): 0.001372
# Shares to be Issued: 37,443,148,688
Shares Outstanding: 4,390,579,206
Net Tangible Book Value: 17,494
Dilution Calculation
Net Asset Value (“NAV”) Per Share: 0.000004
Pro Forma Net Asset Value: 48,735,894
Pro Forma NAV Per Share: 0.001165
Increase in NAV to Existing: 0.001161
Dilution Per Share: 0.000207
sec.gov |
