Looking at the numbers:
Outstanding shares:80mn
Evil 8 cent notes: principal+interest=$5.2mn which is equal to 65mn shares
Two series of converts w average 1.13-1.14 conversions= $24mn principal+ $16mn interest= $40mn which is equal to 35mn shares if converted
Straight debt:
BAM: $22mn
DMRJ:$17-18mn
This all corresponds to 180mn shares and 40mn debt. June 30 deadline puts a cap on the continuous dilution and makes the number of shares a stable number which every buyer needed to put a valuation tag.
I am not sure how many stock options and Change of Control options are out there but all in all, assuming 200mn shares in total (w the conversion of the 1.13 converts) is a fair assumption in my view. This puts 20mn extra shares which is a conservative assumption and does not give any credit to the stock option exercise prices.
Let's look at two scenarios:
Acquisition Price per share of 80 cents: then you will have 165mn shares and 80mn in debt this will be an EV of 165*0.8+80mn=$212mn
Acquisition price of 1.20 per share: then you will have 200mn shares (DMRJ converts) and $40mn debt and an EV of $286mn
Currently the price is 36 cents and EV is 165*.36+80mn= 140mn
Again, by assuming 20mn free shares to the management, I might be overestimating the current mcap but for a company which has all this intellectual property, $200mn or so accumulated losses, a new handheld coming in, huge contracts with TSA and all leading governments and making $50mn revenues this year; I don't think that $1-$1.5 range per share is a crazy number to achieve. I believe the current share price has a lot of potential to go up with a sale to a strategic even with these diluted share counts. Good luck to all.
