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Technology Stocks : Verified Perscriptions System ETCR -- Ignore unavailable to you. Want to Upgrade?

To: uthabros who wrote (66)	4/11/2002 5:28:05 AM
From: DaiTN	Read Replies (1) \| Respond to of 397

Utha, Sorry it took a little long to reply, got tons of things to do after a mini vacation last week. :)) Here is my take about the dividend and the shares conversion: Company announced dividend last year with recorded date of July 16th 2001. You got 1 preferred share with face value of $500.00 for every 500 shares of common stock you own. Company has 99M shares authorized on the book, and approximately 27M shares outstanding (float) at the time. Managements were not participated in the dividend; but for simplicity, let's assume that managements hold no shares. Here is my calculation: A) 27,000,000 os / 500 = 54,000 preferred shares issued as part of the dividend last year. B) Each preferred share has face value of $500.00, so the total value of the dividend has a potential of being $27,000,000 dollars (54,000 ps X $500 per share). C) Keep in mind that most people who get the preferred shares certificate, must own the same number of common shares or more by July 16th 2002 this year in order to participate in the conversion. Again, let's assume that 50% of shareholders hold shares since last year (or buying them back before July 16th), then the dividend total value will be: (54,000 ps X 50%) X $500 = $13,500,000 dollars D) Here come July 16th 2002, and you will excercise your preferred shares into common shares. Shareholders can begin to covert starting July 16th until August 16th, 2002. The conversion price is the 20 trading days average closing price of the bid and ask immediately preceding the specific date the preferred shareholder gives notice to convert.(this is an accounting nightmare, it means the stock transfer agent has to do a calculation for each shareholder to determine the conversion price). Another catch is the shareholders will get a 10% discount; the real price for conversion is only 90% of the calculated 20 days average closing bid and ask. Since we don't know the 20 trading days average bid and ask, let's assume that the average range will be 10 cents to 30 cents; and for simplicity, 20 cents is the average price we use. Now let's do some more calculation. 20 cents X 90% = 18 cents $13,500,000 / 18 cents = 75,000,000 new common shares issue from the dividend. (something is seriously wrong here if the float right now is only 35M shares. This is acting like a 3 for 1 split without calling it as such. But I am not sure why management would do this while they do not participate in the action. this is a major dilution to their holdings. Anyone with opinion, feel free to jump in). Pay special attention here if you are a trader; because the date that they use to calculate the conversion will begin starting on June 19th (20 trading days preceeding July 16th), and will continue until August 16th, 2002. The managements want the PPS to be as high as possible so they can issue less shares, and there will be buying pressure from shareholders who received preferred shares but no longer own the common shares (they need to own the common shares to qualify for the conversion). One major draw back is, the insiders may use this period to unload their holdings. For sure there will be wild trading range for this stock during this 50 days period as the MMs will take full advantage to line up their pockets. And you don't want to hold any of this stock by the end of July, because of the dilution factor I outline from the calculation above. Got to get some ZZZZZZ! To be continue..........!

To: uthabros who wrote (66)	4/11/2002 5:34:21 AM
From: DaiTN	Respond to of 397

Utha, My calculations would be more accurate if I knew how many shares insiders were holding from the 27M float as of July 2001. I would be very helpful if you have that info somewhere. TIA I know currently, ETCR has 35M shares outstanding (float) and another 35M issued but are restricted from trading (no details about when these shares will become unrestricted).

To: uthabros who wrote (66)	4/11/2002 7:22:45 AM
From: DaiTN	Read Replies (1) \| Respond to of 397

Utha, To continue my take on the share conversion,........... You mentioned that you have 37 preferred shares certificate. It means that you owned 18,500 shares of common stocks as of record date July 16th 2001 for you to qualify for the preferred shares. Your 37 preferred share certificate now has a value of $500 per share for a total of $18,500 to be converted into common stocks by July 16th 2002. Using my imagine 20 cents conversion price (20 trading days average closing price of bid and ask) I mentioned on my previous post, my calculation is as follow: a) 37 ps X $500 = $18,500 dollars b) 20 cents X 90%= 18 cents (average price using for conversion) c) $18,500 / .18 = 102,777 shares of common stocks you will get when you exercise the conversion (this is only a guestimate figure using a high average price, your shares will be more if the average price I use for conversion is much less than what I guestimate). Talking about dilution, there will be hundreds if not thousands of Utha (shareholders) like you out there, this can add 75M-100M shares into the trading market. The dilution here is astronomical. And with the current authorized share at 99M, there will not be enough shares to support this dividend on the company book. (I am still trying to figure out the management intention here, as it does not make any sense at all). Now, let's talk about the process of doing the conversion. My understanding is: 1) You will send the certificate to your broker together with a copy of the dividend PRs from last July 2001 (so he can understand what you are talking about). The broker will then contact the Stock Transfer Agent of ETCR on your behalf. 2) The Stock Transfer Agent will verify the shares that you currently holding with Ameritrade and qualify you for the conversion. They will then determine the average price using the 20 days preceeding the day you give notice to covert. After the shares being calculated, they will notify ETCR management about your qualification and the number of shares, the shares will then deposited into your account automatically via wire notification. On a rare occasion, you may get a common stock certificate by mail from the stock transfer agent. You will then send the certificate to your broker, deposit it into your account to become free trading shares (this method is rarely done now these day). The shares from the dividend are new shares issued by ETCR via their stock transfer agents. These new shares come from ETCR coffer, not from open market, and the MMs has nothing to do with this except that they will be notify that there will be millions of new shares hitting the market. Their job is to buy and sell these shares and conduct an orderly market for ETCR stocks. (did I forget to mention that their job is to also manipulate the market to line their pockets with profit also...lol). I suggest that you call ETCR stock transfer agent for more details. Here is their address and phone number: Signature Stock Transfer, Inc. 14675 Midway Road, suite 221 Addison, Texas 75001 Phone: (972) 788-4193 When calling the Stock transfer Agent, it would be wise to ask them the current O/S shares of ETCR, how many are float? how many are restricted? How many shares are insiders are holding (don't think they will give you this info)?. How many preferred shares issued from last July? Process of doing the conversion, etc.... It would be interesting for me to know also so I can plan my trading strategy accordingly. Keep in mind that the stock transfer agent is an independent company who represent many public companies, they work as a liason for ETCR, shareholders, and the stock market. Hope this help....! Remember that this is my opinion only, and you must verify the info to plan your move. I am not responsible for your trades nor giving you advice. :) Good luck! Dai