The need for additional capital is one aspect. Another is the potential massive dilution from the convertible debentures and warrants. Given the recent price history of the company, it is a safe bet (barring a price collapse in the next week or so) that half of the convertible debentures and their corresponding warrants (exercisable at 120% of the conversion price for the debenture) will be converted on Dec. 8, 1998 (the first day of possible conversion for the first half of the debentures). According to the S-1, if all debentures and warrants were converted as of Oct. 31, 1998, they would represent about two thirds of the IBUY public float. However, as noted, the earliest they can be converted is Dec. 8, 1998 - but half can be converted as of that date.
The conversion price is determined according to the following formula from the S-1/A:
Each holder of a Debenture may convert a portion of its Debenture into Common Stock at times specified until the maturity date at a conversion price equal to the lower of (x) the lowest average closing bid price on the over-the-counter bulletin board market for any three trading days from the thirty trading days ending on the trading day before the conversion or (y) $16.00. The Debentures are convertible over time. $2,500,000 of the Debentures will be convertible on December 8, 1998 and the balance become fully convertible between that date and April 20, 1999. Portions of this Registration Statement assume that all of the Debentures were fully convertible as of October 31, 1998 and that all accrued interest based on $5,000,000 of 8% Convertible Debentures outstanding for two years was satisfied with the issuance of Common Stock. Conversion requires written notice to the Company. Conversion occurs on the date of the notice if the Debenture is delivered to the Company's transfer agent within five business days of the notice.
Note that it iss based on the last 30 trading days, not the last 30 calendar days.
Listed below is some of the recent IBUY price history. Note that the 'close' here is not necessarily equal to the closing bid price (which in some cases undoubtedly is less). Thus these closing prices will provide only an approximation. On Dec. 8, 1998, the 30 trading days prior to that date will extend back to either Oct. 26 or Oct. 27 (depending on whether Dec. 8 counts as one of the 30 or not). Conversion prices for the debenture would be about 17% of Friday's close of 9 5/16. Exercise prices for the warrants would be about 20% of Friday's close.
Important caveat: The S-1 is a lengthy, complex document. While I don't believe I have misunderstood the S-1, anyone, including myself, can make a mistake. It is important that you (and others reading this post) read it for yourself. Never base an investment on anything you read on the Internet (including even my posts<g>).
SHOPPING.COM (OTC BB:IBUY)
Date Close High Low Open Volume
11/23/98 7.406 7.406 6.125 6.250 57,600
11/20/98 6.250 6.812 5.500 6.812 127,100
11/19/98 6.687 6.812 5.750 6.000 77,100
11/18/98 5.812 7.000 4.500 7.000 218,300
11/17/98 6.968 7.500 6.968 7.000 61,000
11/16/98 7.250 7.500 6.875 7.000 70,400
11/13/98 7.000 7.562 6.875 7.281 165,200
11/12/98 7.000 7.500 6.500 7.218 164,300
11/11/98 6.000 9.000 5.375 5.468 822,400
11/10/98 4.500 4.750 2.625 2.625 502,600
11/09/98 2.625 2.812 1.812 2.000 176,900
11/06/98 1.781 2.000 1.687 1.968 46,800
11/05/98 1.968 1.968 0.000 1.968 23,300
11/04/98 1.750 1.812 1.750 1.812 18,500
11/03/98 1.843 1.843 1.750 1.843 2,900
11/02/98 1.812 1.812 1.500 1.687 61,300
10/30/98 1.500 1.687 1.500 1.687 2,300
10/29/98 1.687 1.687 1.687 1.687 3,000
10/28/98 1.562 1.687 1.500 1.500 4,900
10/27/98 1.687 1.687 1.562 1.625 11,700
10/26/98 1.625 1.750 1.625 1.625 33,400
10/23/98 1.625 1.625 1.500 1.625 16,100
10/22/98 1.593 1.625 1.562 1.625 24,000
10/21/98 1.562 1.562 1.562 1.562 5,400
10/20/98 1.625 1.687 1.562 1.687 45,500
10/19/98 1.687 1.687 1.250 1.562 114,400
10/16/98 1.312 1.843 1.312 1.843 22,800
10/15/98 1.843 1.843 1.843 1.843 1,000
10/14/98 1.937 2.000 1.812 1.968 13,000
10/13/98 1.750 1.750 1.750 1.750 100
10/12/98 1.750 1.781 1.750 1.781 3,500
10/09/98 1.781 1.937 1.718 1.718 7,800
10/08/98 1.937 2.000 1.750 2.000 13,400
10/07/98 2.000 2.000 2.000 2.000 1,000
10/06/98 1.875 2.125 1.875 2.125 3,500
10/05/98 2.031 2.812 1.687 2.812 23,600
10/02/98 2.750 2.750 2.437 2.500 56,600
10/01/98 2.500 2.680 1.593 1.625 104,800
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