True, but if the number of shares they convert exceeds 4.9% of the total outstanding shares of PNTV, roughly 20 million shares ($50,000 at $.0025/share pps), their warrants become worthless. They can't recoup their investment unless the company generates enough revenue to repay the debt or the pps increases significantly. They would need to convert and be able to sell 50 million shares at $.05/share to realize $2.5 million. It's more likely they're looking at this as a long term investment/partnership than a quick way to profit from toxic debt.
The use of the proceeds is outlined in Exhibit D of the Definitive Funding Agreement (page 9 of the 8-K). Only $150,000 is slated for debt reduction. $1.7 million is allocated for Green Leaf Farms.
It's only 20% and has some exceptions. From the 8-K...
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