Here's my amateurish analysis, after reading all this a few times.
Pros:
Obviously there is a relatively long-term relationship between the companies. Hopefully there are also reasons for trust and personality synergism.
Annual Net income for Broadsino is 20x PHOX!!!...cost to PHOX in stock is 6-7MM Preferreds=Common...so for now, a...well, last time I looked, PHOX was .68, ergo a 32%discount....of course, now, at this very moment, PHOX is $1...so no discount on the purchase/merger. But increase in earnings potential is enormous.
Broader Product lines = more stability?
"The Company intends to seek re-listing on a U.S.stock exchange."---I assume this means an elevation from BB listing...more liquidity and notice.
Cons:
Of course any increased liquidity/notice from an exchange listing might lead to "shorting"....which underscores the danger from the Preferreds "floorless" conversion feature....i.e., the possibility of the majority preferreds (10.6MM vs. 4.6) shorting the hell out of the new company stock and driving the price down to convert on a 1-1 basis much lower than the true value.
Somewhere down the line, we are also looking at a 200% dilution...but we are getting 2000% earnings increase!...right? Actual dilution, the 6-7MM Preferreds that are exchanged for all of BROADSINO(where did that name come from!?) when converted will be less than double....so hard to imagine a bad conversion price given the extra eps...
MAJOR CON: Is this deal too good to be true?....what's the hidden danger?....Why is BROADSINO doing this??? Isn't this the equivalent of BROADSINO pooling with PHOX for 2/3 of the final company? If BROADSINO is equivalent to 20x and PHOX is 1x....the final company is 21x...and BROADSINO's cut, after conversion becomes 14x....quite a drop from 20x....???? Again, IS THIS TOO GOOD TO BE TRUE?
The only other major question still remaining, which should be confirmed, is whether or not we DTEC owners are still going to get the 1/7 conversion to PHOX.....and WHEN!!!!!
Please comment!.....
Vox Clamantis in Deserto!
---FRED |
