Norman: I went back to reread the "clarification" of Nov 9. The preferred are a "strange" financial animal, here is the quote:
"2.5 million shares of Series B Convertible Preferred Stock ($1.00 Par Value) authorized, of
which 335,000 shares are outstanding, including the investment of the China Partner, which shares are convertible to GOE
common stock at $0.75 per share (seventy five cents), and which pays a cumulative interest rate of 10%..
So what is the problem? Well, preferred stock can pay dividends not interest . Interest is usually paid on debt or convertible debt. This becomes important once you go down to ask for additional financing, it is also important for various tax reasons (for instance, corporations are not taxed on 80% of dividends they get from other corporations in which they hold securities paying such dividends, interest is regular income.)
I do not want to give the impression that this mix up by itself is a problem, it is only an indication, IMHO, that our corporate captains are mixed up as far as securities of different kinds are concerned, and they should come up to speed.
Zeev |
