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Microcap & Penny Stocks : Eat At Joe's (BB:JOES)
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To: Vic Glassley who wrote (59)10/28/1998 9:26:00 AM
From: VALUESPEC   of 343
 
Private placements can really hurt the price of a small cap. Many will short these small caps before the PP is done which drives the price down.

<<The Preferred Stock is convertible into Common Stock at the lower of a fixed conversion price or 75% (80% for the Series D Preferred Stock) of the average closing bid price for the Company's Common Stock for the 5 trading days preceding the date of the conversion notice. The fixed conversion prices for the Series A, B, C and D Preferred Stock are $2.19, $1.7928, $1.55 and $1.65
respectively. >>

That was taken from the SEC filed dated October 13, 1998. It appears that there is no real floor on the conversion price. Can anyone confirm my belief? The conversion is done at the lower of either price. If JOES trades around .50 for five days, the PP holders get more shares.

Some will benefit by the shorting by getting more shares; Some will benefit by just shorting the stock since they know the bias will be downwards.

I hope this explains what is going on.

Here is a link to the SEC documents:
edgar-online.com

You will notice that JOES current bills are much more than its current assets. This means they must have PP's in the future, too.

Although JOES stores appear to be doing OK, the PP's will probably make it hard for shareholders to prosper for some time to come, IMO.

I am keeping an eye on new openings to see how they are coming along. If the openings are late, that should tell you something, too.

JOES: $ 0.55

VALUESPEC

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