Thursday, May 25, 2017 8:19:25 PM
"During the quarter ended September 30, 2016, we issued 1,725 shares of preferred series “C” shares for cash of $550,000 pursuant to the terms of our preferred series “C” offering memorandum."
The shares were issued to LICGO Partners, have a value of $1,000/share, and are convertible into common at $.20/share.
During the quarter ended September 30, 2016 the common closing prices ranged from $.11 to $.21 with a strong bias to the low side. Using $.14 for this example the 1,725 preferred shares, converted into common at the $.20 conversion rate would have been worth $1,207,500. (1,725 x $1,000 = $1,725,000...$1,725,000/$.20 = 8,625,000shares...8,625,000 x $.14 = $1,207,500).
So LICGO would have found the deal attractive. They bought preferred for $550K that was worth $1.2M in common when they bought it. Of course they couldn't convert it and sell the common right away, but that's another story.
The reason for asking "How will this be dealt with?" has to do with the fact that the common share price has dropped significantly since the deal was struck and the current conversion value reflects a loss position for LICGO (their converted shares would now fetch just $500K).
The Preferred doesn't pay a dividend. Does LICGO have to just sit back and hope for a turnaround in the common?
I was given that information....I don't know.
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