SUNy said: As for the 1 Million Preferred shares they are to be issued prior to the new "Articles of Incorporation that are to be filed in Delaware. ....Just how are they distributed and Who gets them? Certainly not us common shareholders
1. The Preferred Shares cannot be issued (or even authorized) prior to the Certificate of Incorporation being filed in DE, since the company would still be under QMC's Nevada Articles of Incorporation, which does not allow QMC to authorize any Preferred stock shares for issuance.
2. The Preferred shares will only be authorized for future issuance when the company has filed the new Certificate of Incorporation in Delaware and it becomes effective on the Date of Reincorporation.
3. On the Date of Reincorporation, QMC will become a Delaware Corporation and QMC will then be authorized to issue up to 1,000,000 shares of preferred stock. At that point in time, none of the Preferred shares could have been issued and therefore, “no shares of preferred stock will be outstanding as of the date of the reincorporation” as stated in the 14A. Authorized yes, but none outstanding.
....Just how are they distributed and Who gets them?
4. They are not “distributed”, the newly authorized and un-issued Preferred Shares will remain in the company “treasury” until the Board of Directors decides that there is a need to issue all or a portion of the authorized preferred shares. This is just like authorized and un-issued Common Stock shares remain in the “treasury” until the company needs to issues the shares. Could the BOD decide that there is a need to issue the preferred shares before the date of reincorporation? Yes, but they cannot issue any of the shares until the shares are authorized on the date of reincorporation.
5. The BOD will define the rights, preferences and privileges of the preferred stock prior to issuance and will determine how many shares will be issued. The company will determine the price and terms at which the shares will be sold. The preferred shares may be sold in a private placement. Individual or institutional investors will buy the preferred shares.
Certainly not us common shareholders
6. If you have enough cash to invest, then you can buy preferred shares. But under the circumstances that QMC may need to sell the preferred share, they will probably be looking for a few investors with tens or hundreds of thousands of dollars, or more to spend. So no, probably not us. But if you are interested in buy any of the preferred shares if they are going to be issued, then just notify the company of your interest.
I’m no expert on preferred shares, but I have seen OTC companies issue preferred shares to insiders and screw the common shareholders. So there are risks.
But on the flip side, preferred shares can be used to protect a company from a hostile buyout. Would you rather the company gets bought out by Samsung next spring at $0.20 per share and you have zero shares? Or would you prefer that the company protects itself by selling preferred shares that end up cutting your ownership percentage in half, but you keep your shares and the company maintains control and huge revenues in the fall start to drive the share price to $10 in 2018?
Everyone should do some of their own research to better understand what preferred shares are and how they can be used or misused.
Just to get you started:
Definition
Preferred Stock is a special equity security that has properties of both equity and debt. It is generally considered a hybrid instrument. Preferred stock is senior to common stock, but is subordinate to bonds in terms of claim or rights to their share of the assets of the company.
Preferred stock has priority over common stock in the payment of dividends and any payments received when a company liquidates.
Preferred stock comes in many forms. It can be:
*? Convertible or Non-Convertible
*? Cumulative or Non-Cumulative
*? Voting or Non-Voting
*? Callable or Non-Callable
*? Maturity Date or No Maturity Date
A preferred stock without a maturity date is called a perpetual preferred stock. These are relatively rare. A good example of perpetual preferred stock is the many series of Public Storage (PSA) preferred shares that trade on the New York Stock Exchange.
Before investing in preferred stock, it is important to know which of the above groups the stock belongs to. Is it convertible or non-convertible? Are dividends cumulative or non-cumulative?
It is also critical that an investor knows what bonds the company has in front of the preferred stock. Bondholders get paid first. So the decision to buy a preferred stock can be similar to the decision to buy a bond. But, remember, the preferred stock of a company with bonds is junior to those bonds.
Unless a preferred stock is convertible, the upside in a preferred stock investment is more limited than in a common stock investment. If a company doubles its earnings, it is usually under no more obligation to double the dividends paid to preferred shareholders than it is to double the interest paid to its bankers and bondholders. So preferred stock is very different from common stock.
