Asberry 22 Holdings Inc (ASHI)

[bernardsamuel]

I've gone back and read the 8K again, and I'd like to offer one more comment in regard to dilution. The $750K principal is convertible into common shares, under certain conditions which would be reflective of problems, at 85% of the market price of the stock (slight oversimplification).

So if the market price were 3 cents (which is roughly where we are now), 85% of that would be 2.55 cents. Dividing that into $750K comes out to around 29.4 million shares. As of the end of the fiscal year, per the 10K the company had around 72.5 million shares outstanding. Adding the 3.8 million shares issued to pay the "advisory fee" to the new lender, that takes us to about 76.3 million shares outstanding. Accordingly, another 29.4 million shares would be just less than a 40% increase in outstanding common shares.

Is that a lot of potential dilution - and the fact that conversion would be spurred by distress, there'd probably be even more dilution occurring due to the lower stock price at the time? I would believe that if the company were debt-free and running a positive cash flow, then it would be valued a lot more than the roughly $2.3 million that it's valued now (though that valuation would be spread over more outstanding shares).

In the end, it all comes down to whether the company - with the help of the additional financing - can grow itself into profitability. My initial belief is that it can, especially given the dialogue on this board a few days ago which showed that the company is ahead of the curve on the diacetyl issue.

Valid points can be made on either side of the argument as to whether the company will endure, and I'll be interested in (and I'll respect) anyone's comments. Thanks!