Hi Rob,
I've been looking at the 8K for more clues... unfortunately, I'm not a lawyer--I don't even play one on TV! But in any case, FWIW, here's what I found.
"The Company will register for resale by the investors all shares of Common Stock issued or issuable in connection with the equity line by filing one or more registration statements in connection with each tranche. Each registration statement is required to remain in effect for three years."
That seems to me to say that they were planning on filing for sale all along, and will do so for the other tranches... so this filing doesn't necessarily indicate an immediate sell.
This is also interesting:
"3.16 LIMITATIONS ON SHORT SALES. Each Purchaser agrees that it will not enter into any Short Sales (as hereinafter defined) from the period commencing on the First Tranche 1 Closing Date and ending on the last applicable Adjustment Date. For purposes of this Section 3.16, a "SHORT SALE" by a Purchaser shall mean a sale of Common Stock by such Purchaser that is marked as a short sale and that is made at a time when there is no equivalent offsetting long position in Common Stock held by the Purchaser. For purposes of determining whether there is an equivalent offsetting long position in Common Stock held by a Purchaser, Adjustment Shares that have not yet been issued in connection with the immediately preceding Closing Date shall be deemed to be held long by the Purchaser, and the number of Adjustment Shares then held by a Purchaser on any particular date of computation shall be equal to the number of Adjustment Shares issuable pursuant to Section 3.15 on the next Adjustment Date calculated as if such computation date were such Adjustment Date (e.g. using the lowest ten (10) Per Share Market Values during the twenty-five (25) days immediately preceding such computation date). "
Especially this part: "that is made at a time when there is no equivalent offsetting long position in Common Stock held by the Purchaser." This seems to me, again I'm no lawyer, to say that they actually can sell stock short so long as they still hold shares. So they can box their position from the moment they get it so as to not suffer any downside losses no matter what the price does; then they get a bunch of shares for free at the reset which represent pure profit!!!! They cover the short and sell the original long for a net difference of zero, then sell the free shares at whatever the market price is!!!
Also, I did not find any lock-up period during which they couldn't sell their shares. Not to say it isn't in there, but I didn't find it (and I looked).
Does it seem like I'm reading this correctly???
-- Pete |
