Martin, the $5 MM or so financing IS NOT a floorless, it has an ABSOLUTE floor at $.65/share (as of July or so): Here is the quote from their most recent 10Q:
Under the terms of the Series A Convertible Preferred Stock and
warrants, the purchaser may convert the preferred shares and warrants to common
stock of the Company on and after January 12, 1999. Pursuant to the terms of the
investment agreement and the Certificate of Designations filed by the Company
with the Delaware Secretary of State, the conversion price for the preferred
shares will be equal to the average of the daily closing price for the common
stock for the 15 trading days preceding December 31, 1998, provided that (i) if
the average daily closing price is less than $0.70 per share of common stock,
the conversion price shall be $0.70 per share and (ii) if the average closing
price is more than $1.00 per share of common stock, the conversion price shall
be $1.00 per share. However, if the Company's pre-tax earnings per share for the
12-month period ending December 31, 1998 are less than a certain per-share
earnings target, then, notwithstanding the preceding sentence, the conversion
price shall be $0.65 per share of common stock. If the Company fails to obtain
this per-share earnings target, the conversion of the convertible preferred
stock, at $.65 per share, will result in the issuance of an additional 7,692,308
shares of common stock, plus 500,000 shares of common stock upon the exercise of
the warrants, diluting the Company's per-share earnings thereby. The closing of
the sale of the Series A Convertible Preferred Stock and warrants is anticipated
to occur by the end of August, 1998.
That does not mean, of course that USXX is a good or a bad investment, but at least this financing is on quite fair terms, IMHO. Mind you you will end up with a company having close to 40 MM shares and sales not even reaching 10% of that value.
Zeev
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