Ditch, you're back! And with your sunshiny disposition!
You contradict Henry's statement that convertible debentures usually have ceilings. I do not know about that. You say you have looked at a lot of floorless convertibles, so I will defer to your opinion on that subject.
You say, "This type of financing is last effort financing, usually placed by companies who's [sic] backs are to the wall." Don't expect me to argue with that point. TSIG has no assets to pledge as collateral. They have a 10K that would frighten the pinstripes off any banker. You have described in gory detail the death spiral that may be associated with floorless convertibles if the lenders short the stock. Evidence so far is that TSIG's lenders are not shorting the stock. So it appears that the holders of these debentures are exactly what management has portrayed them to be—investors who have accepted the terms and who want to see the company succeed.
Mr. Henry said that some people are upset about the dilution. But, he said, if you look at the total amount of money the company has raised and the number of shares outstanding, and compare that with the share price today, the company has done an admirable job of raising capital. To be frank, this calculation is a little fuzzy to me, so if anyone else wants to give it a try, be my guest.
You say, "I look for further dilutive financing." I suspect you are correct about that. But the questions are "How much money?" and "On what terms?" TSIG will bring in greater revenue with each month that passes. Thus the negative cash flow will shrink as we approach fall. So we are not talking about a huge amount of principle. Perhaps we will see some dilution, but it will not be horrible or debilitating.
You say, "I still look for a reverse split down the road." Now, Ditch, I'm sorry to bring you shocking news, but you are not well liked on this thread. I personally give you credit for being right about the floorless part of the convertible debentures. I give you credit for bringing our attention to some unpleasant parts of the 10K. But for you to throw out an unsubstantiated, inflammatory statement about a reverse split borders on the irresponsible. You are well aware that "reverse split" is a hot-button term for any potential investor reading this thread. You are also very well aware that there is NOTHING about TSIG's capital structure (currently or in the intermediate term) that makes a reverse split inevitable or even mildly desirable. You are well aware that management has been asked dozens of times about whether the company would consider a reverse split and the answer repeatedly has been NO! Your credibility is in a death spiral.
Regards, Suzanne
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