Did you talk to the TA within the last couple of days? If so, I guess it is possible that the Series A Preferred holders could have converted within the past week, right? As we can see from the filings, had that conversion taken place in February, it would have meant that there were 17.0M shares out. From the 10Q, we know this didn't happen because the filing still listed the 2100 Series A preferreds as out. Here are facts as I read them from the filings:
1) Going by the 10Q which is two months old, total out is 10+M shares.
2) 2100 Series A preferreds out. These were issued to 4 offshore companies/individuals namely Balmore Funds SA, Austos Anstalt Schaar, Lampton Inc, & Dora Fried. These are convertible according to the formula to class A common shares.
3) 50000 Series B preferred out. These were issued to Steve Schatzman and A Gimestein. These aren't worth anything moneywise, but were issued to those two to ensure that they have majority control of HVAR when the series A preferreds are converted. These shares are worth 400 votes each.
4) Drop dead date in converting the shares is 8/14/98 (from GA BARD's post).
5) Formula for conversion of the Series A preferreds is 1000 divided by 0.70*avg price of stock for 5 days before conversion.
My read on what's happening, and this is only my read. Ga Bard, I respect your DD, and would welcome your comments to correct me if you would. If the Series A preferreds have already been converted, item 5 is a moot issue. The shares are already out which explains the oversupply of shares which is causing the stock to move the way it's been moving. If they haven't been converted, then one can expect the price to go even lower. This is because, the Series A holders will want it that way. The lower the price goes, the more shares they get. I don't know what the average closing prices are for the last 5 days, but assuming the average is 0.17 - yesterday's close -, the Series A holders got a total of 8403 shares for each series A or a total of 17.65M shares. Add this to the original outstanding share count of 10+M, and now, you're looking at a totally diluted share count of 27.65M shares. When this number comes out in the next report, one can bet that this would cause the stock to tank. What can we do about it? Nothing really. The Series A holders got us again.
Other piece of info from the 10Q, the company should have received $2.835M for the converted series A shares, so they have fresh money to use for expansion.
More tidbit: the Dan Marino story isn't as fresh as I thought. He has actually been paid for at least a few months to do promo for the company. He actually was one of the selling shareholders (for 99,000 shares) in the last filings.
Last bit: I don't know if anything has been announced or if some big buyers have come in within the last 15 minutes that I'm typing this thing, but one should probably not hold their breath on this until after August 14. As part of their deal with the Series A holders, the company was not allowed to raise capital of more than $2.5M until after that date.
I'm really still high on this company, I still believe they will rise in value because of the promo and the products, but I believe it will go down some more before it goes up. There's just too much dilution for the price to hold up. I sold my shares at a 50% loss, wait 30 days, hopefully pick the stock back up at lower prices.
Good luck to y'all.
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