Hi, Roger. Sorry to step in but maybe some thoughts here:
I read thru the 8-k you presented and have some questions and some remarks. The 8-k you mentioned was from the 4-Aug 1998, a follow up was an S-3 dated 26-Aug 1998, amended on 26-Oct 1998 (60 days!):
Short selling not forbidden:.
4.14 HEDGING TRANSACTIONS. The Company understands that Purchaser is a so-called "hedge" fund and the Company hereby expressly agrees that Purchaser shall not in any way be prohibited or restricted from any purchases or sales of any securities or other instruments of, or related to, the Company or any of its securities, including, without limitation, puts, call, futures contracts, short sales and hedging and arbitrage transactions. Neither Purchaser nor any of its affiliates shall engage in any conduct with the purpose of manipulating the market price of the Common Stock. . Uh-oh!
Timing is important and so I have a question:
4.13 SHARE AUTHORIZATION. The Company covenants and agrees that it shall (i) solicit by proxy the authorization and approval (the "SHAREHOLDER APPROVAL") of the Rule 4460(i) Authorization by the stockholders of the Company in its Proxy Statement for the next annual meeting of stockholders of the Company, and in any event, not later than six months following the date of the Closing, ...
Hmmm. Q1: Has another effective S-3 already been filed? Problem is here that selling out and converting thereafter is a win-win for the lender. I see that there is an S-3/amendment at Oct 26 1998, it registers 5,765.428 shares for sale:
www2.edgar-online.com
Important are the dates listed here:
Each share of Series A Preferred Stock is convertible into a number of shares of Common Stock equal to the quotient obtained by dividing (i) one thousand plus the product of 60x(N/365), where N is equal to the number of days from the closing to, and including, the date of conversion, by (ii) a conversion price which is $6.03 per share until July 28, 1999 (or January 27, 1999 in the event the Company has not signed and announced a material contract or contracts for the sale of batteries by January 27, 1999). After the applicable date, the conversion price will be the lower of $6.03 and 101% of the average of the two (2) lowest of the closing bid prices of the Common Stock for a period of 10-15 consecutive trading days ending on the trading day immediately preceding the conversion date (the "Variable Conversion Price"). When the variable Conversion Price is applicable, the number of shares of Common Stock issuable upon conversion will be inversely proportional to the market price of the Common Shares at the time of conversion at any time when the market price is less than $6.03 (i.e., the number of shares will increase as the market price of the Common Shares decreases);
...
Q2: So, it is at $6.03 now and will decline earliest at 27 Jan 1998 - on the other hand they filed an S-3/A already now? Why?
And Q3: There are some shares already in Baccarat but none in the company called: "CC Investments"
SELLING SECURITYHOLDERS
Common Stock Beneficially Common Stock Beneficially Owned
Name Owned Prior to Offering (1) Offered Hereby After Offering (2) Percent (2)
------------------------ --------------------------- -------------- ------------------- -----------
CC Investments, LDC (3) 1,314,880 5,519,674 0 0
Gemini Capital LLC (4) 0 87,500 0 0
Baccarat Electronics, Inc. (5) 4,252,634 149,254 4,103,380 16.1%(6)
...
So Baccarat will own 4.1 Mio after the selling but most is sold by CC investments - they registered to sell more ( 5.5M) than they have actually (which is 1.3M) ??
Finally an S-8 was registered on Nov 20, registering 3M shares for a so called "1997 stock option plan" The company issues -buys -acquires anywhere 3 Mill shares as underlying for options which are NOT ISSUED yet. But they may agree to accept other stock or a receivable as payment.. which is odd in my eyes.
www2.edgar-online.com
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted options; when and how the option shall be granted; the provisions of each option granted (which need not be identical), including the time or times during the term of each option within which all or portions of such option may be exercised; and the number of shares for which an option shall be granted to each such person. ... blabla
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 9 relating to adjustments upon changes in stock, the stock that may be sold pursuant to options granted under the Plan shall not exceed in the aggregate three million (3,000,000) shares of the Company's common stock. If any option granted under the Plan shall for any reason expire or otherwise terminate without having been exercised in full, the stock not purchased under such option shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares of reacquired shares, bought on the market or otherwise.
.... Note the "otherwise" ...[acquired], maybe from baccarat?
And (c): (c) The purchase price of stock acquired pursuant to an option shall be paid, to the extent pertained by applicable statutes and regulations, either:
(i) in cash at the time the option is exercised, or
(ii) at the discretion of the Board or the Committee, either atthe time of the grant or exercise of the option,
(1) by delivery to the Company of other common stock of the Company,
(2) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other common stock of the Company) with the person to whom the option is granted or to whom the option is transferred pursuant to subparagraph 5(d), or
(3) in any other form of legal consideration that may be acceptable to the Board or the Committee. In the case of any deferred payment arrangement, interest shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement.
Q4: So, the company does not necessarily get money for their acquired options, but can put it on the balance sheet at the discretion of the chefs? It stinks.
Finally, did you see that Baccarat is owned by a "director" of Valence, Mr. Berg? It has flies. I hate arms-lenght related party transactions against the interests of the common shareholder. We should spread that out to others.
Tread lightly, and a good T'G
C. |
