Good morning, board-colleagues,
I keep on getting back to the debt covenant about how the lender can't convert into so many shares that their ownership of the company would get up to even 10%. But I'm not being successful in figuring out what happens when debt principal is not being repaid at a time when the company doesn't have the funds and there is impermissibility to convert into enough shares. I submit for the group's consideration that perhaps the concept of toxic debt is not in play when there is a hard limit on conversions.
...which leads me to resurrecting an idea that has appeared on this board some months back and which I've seen brought up on other boards, namely for a shareholder to call the transfer agent to see how many ISSUED shares there are at that particular moment.
Here's an excerpt from the most recent 10-K and one of you who happens to be a shareholder (I'm not) can give them a call if you'd like:
As of September 25, 2015, an aggregate of 72,455,606 shares of our common stock were issued and outstanding and were owned by 6 stockholders of record. Island Stock Transfer Inc., Roosevelt Office Center, 15500 Roosevelt Boulevard, Suite 301, Clearwater, Florida 33760 (Telephone: 727.289.0010) is the registrar and transfer agent for our common shares.
If I'm remembering correctly, the issued number of shares went up to something like 81 million during one conversion in this fiscal year, and reference was made in the SEC document that via this conversion the debtor had reached its 9.99% limit of ownership.
May we all live and be well until the release of the 10-K, presumably in October if there is no delay, and you all may see a significant buying opportunity between mid-November and mid-December when tax-loss sales are taking place. ...though it's always possible that new financing, success on the legal front in regard to FDA, or a strong report on overall sales (not just a fragment having to do with some new product) could happen at any moment. Finally, the first item I'll look at when the 10-K appears is executive salaries (if the three top folks have increased beyond 150K each from the last 10-K, then I'd reach a higher level of suspicion).
