Here's how I see it:
It looks like the $2.5 mill note and the Preferred Shares issued will convert to common shares 6 months after the deal closes. Combined they will convert to 84.9% of the issued and outstanding shares at that time--not authorized shares--. Not sure if Aviator has the right to convert the $2.5 mill note or if Pro Star does. But somebody will.
Once the market gets a look at the financials of Pro Star and properly values HPTG, then we should all see why Pro Star did this deal. If there are no bad surprises in the financials, HPTG should trade at approximately 1X sales (the industry norm). That's a $27 mill market cap. And it's a fair price for Pro Star to sell at. Pro Star would own either 80% or 84.9% of the outstanding shares.(depending on who gets to convert the $2.5 mill note--Aviator or Pro Star)
This is all in my opinion. Would welcome anyone's comments.
From 8k:
(c)
Promissory Note. Buyer will deliver one or more senior secured promissory notes to Seller in the aggregate principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000), each substantially in the form attached as Exhibit A hereto (the “Promissory Notes”). The Promissory Notes, in the aggregate, will be convertible into 4.9% of the issued and outstanding capital stock of Buyer on a fully-diluted basis, will be convertible into shares of Common Stock beginning on the six month anniversary of the date of its issuance, and will be a senior secured obligation of the Buyer.
(d)
Equity. Buyer will issue a unit of its Series A Convertible Preferred Stock of Buyer (“Preferred Stock”). The unit of Preferred Stock (“Unit One”) will be issued to the Seller, and be convertible into 80% of the issued and outstanding common stock of Buyer on a fully-diluted basis, and will be convertible into shares of common stock, par value $0.0001 per share, of the Buyer (the “Common Stock”), beginning on the six month anniversary of the date of its issuance. In addition, Seller shall receive a goldenshare warrant (“Goldenshare”), which will be exercisable for that number of shares of Common Stock required to insure that Unit One and the Promissory Notes shall always be convertible into an aggregate of 84.9% of the then fully-diluted issued and outstanding capital stock of Buyer. Unit One and the Goldenshare shall bear such restrictive legends as are required under applicable Law.
AI
