between june 30, 2010 and september 30, 2010, there has been no change in the O/S (which stands at 69m). Mr. Bonar can only sell his 45m restricted shares if he files an SEC form prior to selling.
we all know that the canadian accredited investors have converted their debt to shares and the volume around july 20, 2010 came from them and they already pocketed close to $10m out of debt conversion of $300k during july when the price is at $0.44 per share (P/E of 10x which i believe is the normal valuation for this company given its earnings).
the purposes of the conversion of debt may be as follows:
- for mr bonar to gain control of the company (as the debt belongs to a former director / i think they are Mr Perry's nominees)
- to create liquidity of the shares
- to reduce debt (become debt free)
Bottomline, Mr Bonar acquired the company in unfamiliar/genius way by bringing his PEO (outsourcing) business to the company (some sort of reverse merger) in exchange for those debt conversion (at a price of $10m) and now returning the old business lines (less profitable) to its co-founder Mr Perry in exchange for the cancellation of the debt owed to Mr Perry. (a genius maneuver, i should say and one for the record books).
I guess going forward, unless the company issue more shares to public to generate working capital or acquire new businesses, which I doubt as the company is generating positive cash flows from operations and billings on contracts are periodically being made, we should see the PPS stabilize and return to normal valuation.
GLTA!
