FLOORLESS CASE STUDY - Enamelon Inc. (NASDAQ:ENML)
What to look for in the filings:
Enamelon S-3 1/19/99
sec.gov
DILUTIVE EFFECT OF CONVERSION OF SERIES B PREFERRED STOCK. If the holders of the series B convertible preferred stock had converted their shares on January 13, 1999, the conversion rate would have been 177 shares of common stock per share of series B convertible preferred stock. The conversion would have resulted in the issuance of 888,884 shares of common stock, or approximately 8.68% of the outstanding shares before conversion. Furthermore, if the market price of our common stock were to decline, we would be required to issue
additional shares on conversion of the series B convertible preferred stock. In
that event, the selling securityholders could sell publicly up to an additional
888,884 shares of common stock under this prospectus. Accordingly, the
conversion of our series B convertible preferred stock and its immediate sale
under this prospectus could have an immediate and significant adverse effect on
the market price of our common stock and would result in substantial dilution to
other stockholders.
[edit]
SELLING SECURITYHOLDERS
The following table sets forth the names of the selling securityholders, the
number of shares of common stock that each selling securityholder owned
beneficially as of January 13, 1999, the number of shares that each selling
securityholder may offer, and the number of shares of common stock that each
selling securityholder will own beneficially upon completion of the offering,
assuming all of the shares offered are sold.
The number of shares of common stock that each selling securityholder can
acquire on conversion of its series B convertible preferred stock will vary with
changes in the market price of our common stock. On conversion, we will issue
the number of shares of common stock equal to the quotient of (i) the product of
(w) the number of shares to be converted and (x) the sum of $1,000 plus
(N/365)(.06)($1,000)and (ii) the lower (y) the average of the five lowest
closing sale prices of the Common Stock on the Nasdaq National Market in the 40
trading days immediately preceding the date of conversion or (z) 120% of the
average of the closing sale prices in the last five trading days of February
1999. For purposes of the calculation, N equals the number of days elapsed from
December 18, 1998, the purchase date of the series B convertible preferred
stock, to the date of conversion. If the date of conversion had been January
13, 1999, the conversion price would have been $5.65, and we would have issued
approximately 177 shares of common stock for each share of series B preferred
stock. Under our agreement with the selling securityholders, we are required to
file a registration statement with the SEC covering not less than 200% of the
number of shares issuable on conversion. Therefore, each selling securityholder
may sell under this prospectus up to approximately 354 shares of common stock
for each share of series B convertible preferred stock that it owns.
In general, the series B convertible preferred stock is not convertible prior to
March 1, 1999 or for any number of shares of common stock in excess of that
number that would render a selling securityholder the beneficial owner of 5% or
more of the then issued and outstanding shares of common stock. In addition, we
are not required to issue shares of common stock on conversion of the series B
convertible preferred stock if, after the issuance, the total number of shares
of common stock issued on conversion would equal or exceed 2,047,596 shares,
which is 20% of our issued and outstanding shares on December 18, 1998.
Name// Shares owned// Shares offered
HFTP Investments LLC// 444,442 4.16%// 888,884
Fisher Capital Ltd.// 222,221 2.08%// 444,442
Wingate Capital Ltd// 222,221 2.08%// 444,442)
From Enamelon S-3 on 6/11/99:
sec.gov
Name// Shares owned// Shares offered
HFTP Investments LLC (/1/)// 1,138,053// 1,138,053
Fisher Capital Ltd. (/2/)// 742,011// 742,011
Wingate Capital Ltd. (/2/)// 396,042// 396,042
(1) Promethean Investment Group L.L.C. is the investment manager of HFTP
Investments LLC ("HFTP")
(2) Citadel Limited Partnership is the trading manager of each of Fisher
Capital Ltd. and Wingate Capital Ltd. (collectively, the "Citadel
Entities")
What's interesting to note, is that the number of outstanding shares has not materially increased from various filings, so it would appear that all of the arsenal is still available for continued pressure on the stock:
5/4/98 10,159,146 Shares outstanding
1/13/99 10,239,780
6/10/99 10,291,495
Finally, the stock price:
beta.iqc.com
Alex
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