Yes, it is a material change, however, it would NOT constitute a material change to fiscal year '97 (as far as I know) and therefor should have no impact on the audit of same. The same basically goes for Q1 '98.
You are quite right, we would wind up with X% (X% being 435K divided by whatever Skytex's total outstanding shares, winds up being after all this is said and done) of the total Skytex earnings. However, that is what I was referencing in the outline of where Skytex's earnings would have to be at to generate .10 of net earnings for WRN. Skytex would have to be earning $7.35 per share to generate .10 per share earnings for WRN shareholders. $7.35 per share NET earnings is a lot. Doesn't mean it can't be done, just means it is a lot.
The way I got that number is basically taking 435K shares of Skytex and dividing that by 32 Million (this is just current issued plus escrow, according to the VSE web site), this equals .0135 which means that for each $1.00 earned per share by Skytex each WRN share earns 1.35 cents. If you divide 10 by 1.35 you get the multiplier required to apply to Skytex's earnings to reach the 10 cent level. ie. $7.35 (these are approx. numbers) I have corrected my math here, my earlier posting was using the wrong number of WRN shares to get to the $5.00 figure.
Now the other thing to keep in mind is that if WRN was to take the same deal as Mr. Taylor, except entirely in Stock, WRN would also be very low on cash. Yes, there is potential from the exercise of warrants, but that again adds further dilution.
Now I hope you can see why I hope there is more to this deal than just the surface suggestion from the NR. We can also hope that Skytex really can generate significant earnings and growth. If Skytex can become a $40.00 or $50.00 stock with earnings in the $5.00 range or better then we probably won't mind too much. WRN then will be holding a 15-20 million dollar asset, with generated earnings in the .07 range and again we'd probably see about $1.00 per share in value. That still doesn't help those investors still holding from the $2.00 range.
Salut,
Leigh McBain |
