Wednesday, April 27, 2016 9:55:39 AM
A lot more than 1.883 billion shares could be issued
The latest 8K shown the $2.75 million in toxic death spiral convertible financing has a floor on the conversion at $0.02/share and also has a 35% discount to the share prove for the convertibles.
But the fine print indicates that, if the share price is below that level of $0.02, the company has to come up with even more shares to make up for the share price being under $0.02.
Example:
If there is a $500K installment when the price per share is 0.02 ----- {$500,000/($0.02 *0.65)} = 38,461,538 shares
But, if the share price falls to $0.003 ----- {$500,000/($0.003 *0.65)} = 256,410,256 shares
If the share price drops to $0.0005 ------ {$500,000/($0.0005 *0.65)} = 1,538,461,538 (over 1.5 billion) shares
And that's just for $500K of toxic finacing
11. True-Up . On the date that is twenty (20) Trading Days (a “ True-Up Date ”) from each date that the Installment Conversion Shares delivered by Borrower to Lender become Free Trading, there shall be a true-up where Borrower shall deliver to Lender additional Installment Conversion Shares (“ True-Up Shares ”) if the Market Price as of the True-Up Date is less than the Market Price used in the applicable Installment Notice. In such event, Borrower shall deliver to Lender within three (3) Trading Days of the True-Up Date (the “ True-Up Share Delivery Date ”) a number of True-Up Shares equal to the difference between the number of Installment Conversion Shares that would have been delivered to Lender on the True-Up Date based on the Market Price as of the True-Up Date and the number of Installment Conversion Shares originally delivered to Lender pursuant to the applicable Installment Notice.
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