Elite Pharmaceuticals Inc (ELTP)

[WeeZuhl]

Depends on your definition of "true dilution"

As of now the O/S have been reduced by the number of common shares Nasrat has given up. This would be reflected as such on the balance sheet. At the same time the float remains the same until shares out of treasury are put to Lincoln regardless of whether they hold them or flip them. True dilution from a market stand point only takes place when Lincoln receives shares which increases the float.

Do you agree?

From a long standpoint, "true dilution" in my mind would be any dilution that decreases my money upon buyout, regardless of when the market sees it. If I don't care about day-to-day price fluctuation, then why would I care about the timing of float increases? My main concern is the denominator of the buyout price, and anything that increases the denominator is "true dilution."


If you create 160M preferred shares and 80M warrants, then you've made 240M "virtual" shares. They don't show up in the float or O/S, but they sure as shit show up in the denominator of the buyout price. And that is "true dilution."


Now, let's not get mired in the argument about dilution. It was obvious from the second that SequestOx did not get approval that there was going to be more dilution. That's not my beef, nor is LPC III. My complaint is the way in which it was done, with senior preferred shares, 20% dividends, 2:1 warrants, and ratcheting conversion factors (so those 240M "virtual" shares magically become 300M, 400M or more.) IMO, at least 100M of Nasrat's 160M common shares are ill-begotten ($10M paid for <$3M worth of ANDA's). Now, solely as a result of his incompetence and lying about SequestOx, he gets to double or triple those stolen shares with shady financing tricks. In the end, that comes right out of my pocket, and that is "true dilution."


There are third-world strongman dictators who wouldn't have the audacity to so brazenly steal from the treasury. The commoners would riot and throw him out in a coup. Around here, we praise his brilliance. Shameful.