Hamid: I went back to the Sep 26 S-3, and found that out of the 21 MM shares registered, about 13.5 MM are actually notes covertibles at 80% of the last 5 days closing. Thus we have ourselves a floorless situation gentlemen.
If we follow the the EXSO example, after the first bounce from 1/8 (when the volume induced me to call a wrong bottom) it went back over the next two weeks and drifted down all the way to 1/6. In the case of EXSO we had a top floor to the total number of shares authorized, here, I believe this number is 200 MM. Furthermore, Rubin is financing the show and his debt must have a similar structure (his earlier 2 MM shares and another Rubin's 7 MM shares at I presume the $.4/share).
What I am trying to say is that the number of shares outstanding by the time this game might be over (depending how low the shares will sink) might very well be not 45 MM shares as we are assuming but closer to 70 or more (if we drop to the pennies range much much more).
Now let us examine the interest of the various parties here, of the 13.5 MM shares registered (as notes thus floor less) 9 MM are between the two Rubins (I would assume the are related, but I might be wrong). Why should they be interested during the conversion period to have the price high? The lower the stock sink, the higher proportion of the company the Rubin's end up with. I would say, in view of that that we have not seen the bottom as yet.
There is a possibility that we go allthe way to 1/32 at which point the rubinn's may convert and get something like 90 MM shares, out of a total of about 120 MM shares. If I was in the Rubin's shoes, why not, I risk my personal capital to get this company out of the mud, I could have bought it out of bankrupcies and left nothing to the current share holders, so why should I not own 75% of the company? It is better than the less than 50% I would get if I convert right now.
We do not have management 's intersts on our side as we had with EXSO, and we do not have a top (yet) on the number of shares issuable.
Zeev |
