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Technology Stocks : IFLY - travel sales on the web pure play -- Ignore unavailable to you. Want to Upgrade?

To: M.R. Davis who wrote (3439)	1/3/1999 8:01:00 PM
From: Arcane Lore	Read Replies (1) \| Respond to of 4761

IFLY warrants can be called in when the bid price on the stock trades above $10 for 7 out of 10 days. End of business Wednesday will be ten days by my count (please correct me if I'm wrong) - providing they can keep the bid price above $10. Benefits for the company - 2.7 million warrants converted to shares over the 30 days after the call at $6.25 per share. That's $16 million in cash for company to fund future expansion with. The requirement which serves as a trigger to the potential call of the warrants is that the closing price be above $10 on at least seven out of ten consecutive trading days (see #reply-7067104 ). The closing price was above $10 on each of the four trading days Dec. 28 through Dec. 31 inclusive. Thus it needs to be above $10 on only three of the next six trading days for the requirement to be met. If it tanks below $10 prior to Wednesday's close and doesn't subsequently close above $10 on any later day up to and including Monday, Jan. 11, 1999, the requirement would not be met. In addition, as of Mar. 25, 1998 there were 3,785,000 shares that would potentially be added to the float if a forced redemption of the warrants occurs. If they all had an exercise price of $6.25, the company would receive about $23.66 million. Actually, most but not all of them have an exercise price of $6.25 and, of course, this computation doesn't take into account any warrant exercise subsequent to Mar. 25, 1998 or any warrants issued (with similar terms to the IPO warrants) after Mar. 25. So the $23.66 million and 3.785 million shares are just ballpark numbers. While the additional $23.66 million or so is a plus for the company, the substantial dilution is a major minus for current shareholders. At the time of the latest 10-Q there were 7,508,427 shares outstanding, so the 3,785,000 potential additional shares represent an increase of 50.4%. If one considers the free trading float (shares issued minus those subject to the insider's lockup agreement and restricted shares, if any) the percentage is substantially higher since most of the warrants are held by non-insiders and hence are not subject to the lock-up agreement.