Everybody has an oops once in a while....I got lazy and didn't do the "sic" thing.
Sounds like a majority of the votes yields a Director's seat, but an increase to the number of authorized shares requires a majority of all POTENTIAL votes. Am I reading that right?
Exactly.
But let's look at the specifics of this, just for fun:
I still think Diwan controls both majorities today.
With less than 4 Mn ordinary shares outstanding...those 75,000 series A shares (675K votes) will have quite an impact on the vote once the IND clears.
Per the proxy :
Only stockholders as of the close of business on October 14, 2019 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting. As of October 14, 2019, there were 3,844,921 shares of our common stock outstanding and entitled to vote, with each share entitled to one vote. In addition, there were 255,714 shares of our Series A Convertible Preferred Stock outstanding and entitled to vote, which vote at the rate of 9 votes per share. So the total POTENTIAL votes are 3,844,921 + (255,714 x 9) or 6,146,347 votes. Hence the number of votes required to approve this change....."to increase the number of authorized shares of our Capital Stock from 8,000,000 Shares, comprised of 7,500,000 Shares of Common Stock and 500,000 Shares of Preferred Stock, to 150,000,000 Shares of Common Stock and 10,000,000 Shares of Preferred Stock"
.....is 3,073,174. That's the magic number.
You use the language..."Diwan controls both majorities today"
....which needs some clarification. The easiest note is pointing out that what matters is ownership as of 10/14, not today. It's a little trickier to assess whose votes Diwan "controls". For the purposes of this analysis I will assume that he "only" controls his own votes, TheraCour's votes, and those of his wife (no slight intended, Meeta).
I am using the Beneficial Ownership table in the Proxy Statement for the following vote totals (note that the table provides beneficial ownership info which by its definition COULD differ from actual votable shares, a glitch that I'm ignoring).
Key: Common + ("A" x 9) = total votes.
TheraCour: 470,959 + 900,000 = 1,370,959
AD: 100,269 + 684,666 = 784,935
MV: 7,352 + 84,492 = 91,844
So the total AD controlled votes (as defined) are 2,247,738. Significantly short of the magic number.
Three things:
That's a lot of math and it should be checked. Anyone who really cares about this issue should do that.
The "controls" definition does not reflect any additional votes of persons/entities that do whatever AD does or advises them to do.
I'm ignoring the Director election math for the moment. I expect that that majority (of those VOTING versus those that could vote) will be easier to meet and besides, who cares.
I think the math reveals an even more interesting issue, though. Remember the struggle we went through to determine the definition of "change of control" that allows the converting of Preferred A for 3.5 shares of common?
The S-1 Registration Statement that was recently withdrawn has a "Description of our Securities" section that reiterates that definition, making it easy for me to find. The first definition is.....
For the purposes of conversion of the Series A, change of control is defined as (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 40% of the voting securities of the Company (other than by means of conversion or exercise of the Series A Preferred Stock and the Securities issued together with the Series A Preferred Stock)
Note re: Rule 13d-5(b)(1)
(1) When two or more persons agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be deemed to have acquired beneficial ownership, for purposes of sections 13(d) and (g) of the Act, as of the date of such agreement, of all equity securities of that issuer beneficially owned by any such persons.
The parenthesized phrase at the end of the change of control definition ("other than, etc......") effectively strips the Preferred A holdings out of the calculation. So the 3 entities only hold 578,580 of the 3,844,921 shares of common out as of 10/14. That's only 15% versus the 40% required by the definition.
I've been confused by this for a while now. Why, given that the common holdings under AD's control (by the 3 entity definition) are and have been so short of the percentage required for the 3.5:1 conversion (with scant prospects to achieve it in anything that could reasonably described as the near future), do they (does he) keep doling the Preferred A shares out as if they are valuable?
Except for the voting power, they don't seem to be. Is it ONLY done for the voting power? |
