Thanks for posting that. HOMS has two major issues that it needs to address. First, it needs a capital infusion to shore up its balance sheet. Secondly, the conversion of the Series H Convertible Preferred Stock could result in the issuance of 563,000,000 new shares of common stock. As of February 19, 2010, there were 45,294,009 shares outstanding.
10. Series H Convertible Preferred Stock
In March 2008, the Company entered into a stock purchase agreement with YA Global Investments, L.P. (“YA”) pursuant to which the Company sold to YA 10,000 shares of its Series H Convertible Preferred Stock (“Series H Stock”). The Series H Stock is convertible into shares of Common Stock at an initial ratio of 33,333 shares of Common Stock for each share of Series H Stock, subject to adjustments, including Safety achieving certain earnings milestones, as defined, for the calendar years ending December 31, 2009 and 2008.
Safety operates its business on a fiscal year ending June 30. Safety achieved the first milestone for the calendar year ending December 31, 2008. However, based upon information available as of the date of this filing, the second financial milestone for the calendar year ended December 31, 2009, has not been satisfied, resulting in a potential adjustment to the conversion ratio yielding approximately 56,300 shares of Common Stock for each share of Series H Stock, or approximately a potential additional 230,000,000 shares of our Common Stock in the aggregate.
Management is currently discussing with YA the possibility of a waiver or amendment of any adjustment to the Series H Stock conversion ratio, however there can be no assurances YA will waive or amend the adjustment, if any, to the Series H Stock conversion ratio. YA has not exercised its conversion rights as of the date of this filing.
sec.gov |
