Dennis, I think the statement that they own 1.7 million shares does not mean they have converted. I think what it means is that the preferred shares they own is designated to mean they have ownership of 4.9% of the common stock (for voting purposes), not that they hold 4.9% of the common stock.
They key, I think is the statement in the paragraph below the share count, that says, "Absent such limitations, the number of shares of our common stock issuable upon conversion of the preferred stock and exercise of the warrants held by CC Investments, as of February 10, 1999, would have been 3,434,608 shares, which would constitute approximately 11.4% of the outstanding shares of our common stock."
Therefore, I think their beneficial ownership in the common stock as a result of holding the preferred shares is simply designated to be 4.9% of the outstanding shares. This gives them the right to vote 4.9% of the stock while avoiding any filing requirements. I assume this also means that when they do convert, they will have to sell shares if they convert enough shares to exceed the 4.9% limitation. |
