10Q Comments & Shares Outstanding
This report should have not come to anyone's surprise as it is not much different than the previous quarter's. The warts associated with this stock are the reason it has a $10 million market cap instead of a $100 million. Having little to no revenue and expenses to pay for operations paints a very ugly picture. Now we have coal revenues coming in, it will go along way in decreasing liabilities and increase the chance Gwenco gets out of bankruptcy.
As Pedro has stated over and over on a daily basis, the share count has increased by 550 million. 500 million were from Preferred A shares being exercised. I believe that the two very large price spikes in QMNM were sold down by the Preferred A's being exercised and dumped on the market. One big spike was in June and the other in July. The increase from the end of June of 745 million to 922 million were in large part likely Preferred A's being converted and sold. There's a stipulation with the A's that the holders can't hold more than 5% of all shares outstanding, so there is a strong incentive to exercise, dump, then repeat.
I disagree with Pedro's assertion that 500 million more are coming to support his pet issue of dilution. The terms on the A's are each share has a strike of $3.00 and are convertible to the greater divisor of $0.0001/share or 40% of what the share price closed. Using $3.00 * 194,000 / (0.40 *0.01), I get for a share price of 1 cent ($0.01) the number of shares that can come from the preferred holders is 146 million. The only way I can see that another 500 million would come out of the A preferred holders is if the share price at the time of conversion was $0.0029. Eugene would have to completely screw up to get the stock price down that far.
As I said before, the price spike in mid-July probably had many of the remaining 194,000 A preferred shares converted and sold. Interestingly enough, the difference between now and the end of June for the shares outstanding is 177 million. All of the A preferred's could have been exercised and sold.