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Technology Stocks : WAVX Anyone?
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To: Agenda who wrote (1372)3/17/1998 11:39:00 PM
From: Wahoograd  Read Replies (2) of 11417
 
An investment advisor familiar with Reg D financings has given me the following probable structure:

The initial investment equals $3 million worth of current stock discounted at 15% from market price.

No shares can be converted prior to 90 days.

The investor is more concerned with downside protection than upside potential. Consequently, the return to the investor would be limited to 10% or 15% of the initial $3 million once conversion takes place

For the best scenario: If after 90 days the stock price equals $5 then the Reg D investor can only convert to 600,000 - plus another 10 or 15%. The market would not get flooded with over 3 million new shares. If the price is higher than $5 then fewer than 600,000 shares are converted, etc.

On the other hand, if the stock price should hypothetically be 50 cents after 90 days (assuming IBM and other OEMs fall through) then the Reg D investor can convert to 6 million shares - plus another 10 or 15%. This is obviously not the scenario we want!
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