If any of you have profits..take them now please...major dilution coming and raise in AS IMO
They told you in the 10K they need 8 Million Dollars to get this going and at the end I will show you how they will dilute to try
If we do not begin to quickly ramp up our
revenues, we will need to complete a debt or equity financing and are seeking to raise up to $5,000,000 in convertible debt through a brokerdealer.
Because we do not have a Term Sheet with a broker-dealer, we cannot assure you that we will raise any or all of this capital. Any equity
equivalent financing will be very dilutive to our existing shareholders
Also in order to market the product:
In order to effectively market PhoneGuard and gain meaningful market share, we need to raise substantial working capital. If we are able to raise these funds, we will be able to promote PhoneGuard through a combination of television, Internet and other media. To reach these
markets, we expect that we will need to raise approximately $3,000,000 in additional financing. If we are unable to raise the working capital, it
is not likely that we will be able to effectively market DriveSafe.
Please read my notes at the end RE: conversions
From the 10k filing:
Capital Structure
In order to finance our business and to close the PG- Cellular acquisition, we have issued various series of convertible preferred stock. The
following are summaries of pertinent provisions:
Series C Preferred Stock
In April 2010, the Company entered into an employment agreement with Mr. Anthony Sasso, which was amended in August 2010. Pursuant to
Mr. Sasso’s employment agreement, as amended, the Company issued Mr. Sasso 675 shares of Series C Preferred Stock (the “Series C”). In May
2011, the Series C was amended to provide that one-half vested upon entering into the Bieber Agreement and the remaining vesting in equal
quarterly increments over a two-year period. The Series C shares vote on an as-converted basis with the shares of common stock. The Series C is
convertible into the Company’s common stock at the election of Mr.Sasso. The conversion formula to common stock is as follows: every one
share of Series C is convertible into 129,629 shares of common stock. Thus, the 675 shares of Series C are convertible into 87,499,575 shares of
common stock. The Series C preferred stock has the same liquidation rights as the common stock. The Series C stock was is subject to
conversion and voting limitations ranging from 4.9% to 9.9%. In April 2011, these limitations were eliminated.
Series D Preferred Stock
In April 2010, the Company issued 2,850,000 shares of Series D Preferred Stock (the “Series D”) to the shareholders of Cellular as consideration
for the acquisition of the Software. As of May 16, 2011, a total of 1,667,898 shares of Series D have been converted. The Series D shares vote on
an as-converted basis with the shares of common stock. The Series D is convertible into the Company’s common stock at the election of the
holders of the Series D. The conversion formula to common stock is as follows: every one share of Series D is convertible into 23.529411 shares
of common stock. Thus, the 2,850,000 shares of Series D are convertible into 67,058,821 shares of common stock. The Series D stock has a
liquidation preference equal to $1.00 per share (for a total of $2,850,000).
Series E Preferred Stock
In August 2010, the Company entered into a letter agreement with Mr. Scott Frohman, its Chief Executive Officer. Pursuant to the letter
agreement, the Company issued Mr. Frohman 675 shares of Series E Preferred Stock (the “Series E”). In May 2011, the Series E was amended
to provide that one-half vested upon entering into the Bieber Agreement and the remaining vesting in equal quarterly increments over a two-year
period. The Series E shares vote on an as-converted basis with the shares of common stock. The Series E is convertible into the company’s
common stock at the election of Mr. Frohman. The conversion formula to common stock is as follows: every one share of Series E stock is
convertible into 129,629 shares of common stock. Thus, the 675 shares of Series E stock are convertible into 87,499,575 shares of common
stock. The Series E has the same liquidation rights as the common stock.
Series F Preferred Stock
In May 2011, the Board designated 68,035.936 shares of Series F Preferred Stock, par value $0.001 per share (“Series F”). Each share of Series
F is convertible into 1,000 shares of common stock when the Company receives shareholder approval to increase its authorized capital to enable
the Series F shareholders to convert. The Series F holders may vote on an as-converted basis. The Series F stock has a liquidation preference
equal to par value.
Series G Preferred Stock
In May 2011, the Company authorized the issuance of 21,000 shares of Series G Preferred Stock (“Series G”). Each share of Series G is
automatically convertible into common stock at 10,000 shares of common stock when the Company receives shareholder approval to increase its
authorized capital to enable the Series G shareholders to convert. The Series G has a liquidation preference equal to the amount paid by the
shareholder for the Series G. As of the date of this report, 1,000 shares of Series G have been sold.
Competition
While there are several other products on the market today that prevent texting while driving using a similar approach, DriveSafe Software
significantly leapfrogs these products through an additional advanced set of features. We expect that this competition will continue to intensify in
the future as a result of industry consolidation, the maturation of the industry and low barriers to entry. We compete with a diverse and large
pool of companies
_________________________________________________________________
Here are my notes:
Conversion rates------------------------fully diluted commons
Preferred:Common
Series C preferred shares (675)
1:129,629-----------------------------675:87,499,575
Series D preferred (2,850,000)
1:23.529411---------------------2,850,000:67,058,821
series E preferred (675)
1:129,629-----------------------------675:87,499,575
Series F preferred (68,035.936)--(just over 68K)
1:1000---------------------------68,035.936:68,035,936
Series G preferred (21,000)
1:10,000---------------------------21,000: 210,000,000
total conversions of preferred stock to common: 520,093,907
If that wasn't enough to convince you, take note of the dates of issuance...Assuming the following shares had a 6 month restriction, they are eligible to be sold now!!!
Special note: December issues eligible to be sold during June
Recent Sales of Unregistered Securities:
In addition to those unregistered securities previously disclosed in reports filed with the Securities and Exchange Commission, or the
SEC, we have sold securities without registration under the Securities Act of 1933, as described below.
Name of Class Date of Sale No. of Securities Reason for Issuance
Investors (1) October 5, 2010
October 8, 2010
November 29, 2010
December 29, 2010
20,806,843 shares of common
stock
Anti-dilution Shares
Investors (1) October 5, 2010
October 8, 2010
October 28, 2010
November 3, 2010
November 29, 2010
35,509,524 shares of common
stock
Investment
Chief Executive Officer of the
Company (1)
September 30, 2010 675 shares of Series E Preferred
Stock
Employment Agreement
Series D Holders (2) November 12, 2010
December 1, 2010
December 3, 2010
December 6, 2010
December 9, 2010
December 14, 2010
December 21, 2010
December 22, 2010
25,008,326 shares of common
stock
Conversion of Series D Preferred
Stock
(1) The securities were issued in reliance upon the exemption provided by Section 4(2) and Rule 506 under the Securities Act.
(2) The securities were issued to the Series D Holder in reliance upon the exemption provided by Section 3(a)(9) under the Securities Act.
From the 10k:
We incurred net losses of approximately $9.9 million and used cash in operating activities of appoximately $2 million in 2010. We
anticipate these losses and cash deficits will continue for the foreseeable future. We have not reached a profitable level of operations and have
negative working capital, all of which raise substantial doubt about our ability to continue as a growing concern. Our continued existence is
dependent upon generating working capital. Because of our continuing losses, we have working capital to permit us to remain in business only
through June 30, 2011
Coincidently timed with lawsuit beginning June 27th, 2011
ITEM 3. LEGAL PROCEEDINGS.
We previously disclosed a breach of contract suit against us pending in Los Angeles, California. That case is set for trial on June 27, 2011
All IMO of course,
Jimstr
