Berblady said, lost among a morass of EOM in Yahoo!
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(71/F) Aug 18 1998
9:22PM EDT
I haven't read the whole proxy, and I have to study the issue that pt777 and InvestorCG have raised regarding compensation and options.
But I was stopped cold when I started to read the proxy. Right there, near the beginning, item 2). "To approve issuance of Common Stock pursuant to a $20,000,000 equity based line of credit ..."
That sounds to me like we're going to issue more stock. Now, I'm not the sharpest knife in the drawer when it comes to financial mumbo-jumbo, but when I start adding things up, I get something like this:
66,304,258 shares of Common Stock outstanding (us and others).
3,194,218 shares that could be acquired by directors and officers through exercise of stock options and warrants during the 60 day period ending Oct. 7, 1998. (Footnote (B) on page 3 of proxy.)
And, assuming the $20,000,000 loan is translated into shares at current market value of approx. $1.50, that's another 13,333,333 shares.
Total: 82,831,809 shares
Somebody please tell me I've got this all wrong.
I remember at the NY shareholders meeting that they kept telling us, and emphasizing, that the best thing about this credit agreement was that they only had to take the first $3,500,000 (I believe that's the number) and didn't have to take the rest of it. Now it appears that they're taking the rest of it. Trouble finding a licenser for Oncolym?
I also posted in my report on that meeting that a young investment banker predicted that TCLN would have to take all of it, because penalties for not doing so would be very severe. Looks like his prediction was accurate.
I also remember them saying, over and over again, that they didn't want to do anything that would be dilutive and that they were determined to protect shareholder value.
(continued)
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Berblady, 'protect shareholder value' primarily meant the Board and Management shareholder value, as you can see. On the $20m convertible to equity, that was at 15% discount I believe, so at the current share price, $1.40, it is more like $1.20 per share than $1.50, so there will be more shares than you thought for the $20m. This is diluting you further, involuntarily since you were not offered the opportunity to participate by buying more shares.
So I guess if all $20m of new stock is sold at $1.20, then there would end up about 87m shares.
Maurice
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