Dale,
I was reading through the S-3/A that was filed today. It wasn't very pretty.
For anyone who thought the preferred share holders were "holding" their shares, look at this:
Outstanding Preferred as of July 30th
Series 3 - 46 shares unconverted ($100 each)
Series 4 - 57,657 shares unconverted ($100 each)
Series 5 - 21,182 shares unconverted ($1000 each)
Series 7 - 30,000 shares unconverted ($1000 each)
Total $56,952,300 remaining to convert
Outstanding Preferred as of Oct. 7th
Series 3 - 46 shares unconverted ($100 each)
Series 4 - 4,903 shares unconverted ($100 each)
Series 5 - 0 shares unconverted ($1000 each)
Series 7 - 31,090 shares unconverted ($1000 each)
Total $31,584,900 remaining to convert
Some interesting statements from Oct 7th S-3/A (Bolding added for emphasis.)
"On August 26, 1998, the Company suspended the resale of Common Stock," pursuant to previous registration statements.
"At September 30, 1998, the Company did not have sufficient shares of common Stock authorized to satisfy all of its contractual commitments."
"April 1, 1998, the Company entered into an agreement with Fletcher International Limited ("Fletcher") whereby Fletcher exercised a warrant to purchase 5,000,000 shares of Common Stock at an exercise price of $2.34375 per share for a total of $11,718,750. As an incentive for exercising the warrant, Fletcher was issued 1,696,429 shares of Common Stock (Incentive Shares) at par value. The written contract provides that significant penalties ... may be imposed on the Company if the Incentive Shares are not registered by October 10, 1998.... The Company does not believe, however, that it will be able to register the shares of Common Stock by October 10, 1998. The Company may have legal grounds to dispute the imposition of such penalties, but if the Company did not prevail, the size of the penalty would be sufficient to cause the Company to fail to comply with the minimum $4,000,000 net tangible asset listing requirement of the Nasdaq National Market. "
"The Company has been asked to provide current financial documentation demonstrating compliance with the net tangible asset requirement by the close of business on November 15..."
The stock has been "below $1.00 since August 4, 1998, and will be delisted from the NNM unless the Common Stock achieves a minimum bid price of $1.00 or more for ten consecutive trading days between September 16, 1998 and December 14, 1998."
"The Company's existing capital resources are insufficient to fund operations for the foreseeable future. The Company has satisfied its most recent financing requirements through a series of short term overdrafts to its existing credit line... The Company is in discussions with its lenders and certain of its investors to increase the Company's level of borrowing by $13,000,000 above its existing credit line.... If an agreement is not reached... it would not have access to the increased credit facility. Without such additional funding, the Company will not be able to continue funding operations during its first fiscal quarter commencing October 1998."
"As a condition to obtaining a $13,000,000 loan over and above its available credit limit from its lenders (the "Overdraft Facility"), the lenders are requiring that $8,000,000 of the Overdraft Facility be guaranteed. ...As compensation... the Investors are to be issued, pro rata based on the number of shares of Series 7 Preferred Stock held by each, an aggregate of 2,000,000 shares of Common Stock." |
