I'm sure that anyone who bought IMON has not read the SEC filings. May I suggest the the 424B3 filed on 1/11/99?
sec.gov
Here are a few highlights:
When you buy IMON, you are buying shares in a company that prior to a planned merger was called "California Pro Sports". The company is on the verge of going bankrupt, has ceased all operations but still has management and overhead expenses, and had zero sales in 1998:
"Recently, the Company has generated significant operating losses and has failed to generate positive cash flow. As a result, the Company has, and continue to experience, shortages of working capital to fund day to day operations. ImaginOn also has generated significant operating losses and has failed to generate positive cash flow.
The shortages of working capital and insufficient cash flow have, from time to time, prevented the Company from making prompt payment of current obligations. As a result, the Company is subject to numerous claims for collection of past due amounts and are past due on certain of its debt obligations."
Why would anyone want to merge with the worthless California Pro Sports? Amazingly, they found that ImaginOn was willing to merge, if they could get 1.5 times as many shares as the California Pro Sports outstanding:
"on January 30, 1998, the company signed an agreement and plan of merger with ImaginOn, whereby there would be an exchange of 100% of the outstanding shares of ImaginOn for an amount equal to 60% of the outstanding post merger common stock of California Pro."
In other words, the owners of the old ImaginOn value themselves at 1.5 times zero, which is zero. Why do you suppose they place such a low value on themselves? What about all the sales from WebZinger version 1.0 through 5.0?
"Through June 30, 1998 ImaginOn has had no significant revenues and had a loss from operation of $946,512 and $930,754 for the year ended December 31, 1997 and six months ended June 30, 1998,
respectively."
Since the merger had not yet happened, the owners of the old ImaginOn have had over a year during which time they've been free to back out of the merger with the worthless California Pro Sports. If they saw any hope for their software products, they would have backed out. the only hope that the old ImaginOn owners see are to merge with a public company so that they can dump their shares on the public before the combined company enter bankruptcy.
Finally, the company has a floorless convertible that converts at
"65% of the closing bid price of the Common Stock on NASDAQ averaged over the five trading days immediately prior to the date of conversion". I've never seen such a great discount on a floorless convertible, but when you're on the edge of bankruptcy you don't have many choices for financing. For those who are not familiar with the effects of a floorless convertible on a stock's price, you're about to learn! |
