Bioelectronics Corp (BIEL)

[Det_Robert_Thorne]

Share payout not assumption. It's specified in Notes

You keep forgetting that the company owes cash and not shares. This assumption of how many shares is a fictional assumption at best. IT IS AN ASSUMPTION that does not exist. The AS and OS of BIEL is a public record. If a company buyout takes place it will be based on the OS and nothing else. The other parties will simply get their money in cash, otherwise all their money will be a wash due to legal challenge.

No, it's not an assumption, because a 2010 SEC filing provides the proof that in the event BIEL is acquired, IBEX will be paid in shares.

I don't know why I didn't think of this earlier, but since BIEL used to be an SEC-registered stock, and since SEC filings often contain exhibits showing contract and note agreements, I checked BIEL's old SEC filings on EDGAR.

On Nov 16, 2010, BIEL filed its 10-Q covering 3Q/10, which included as an exhibit the contract for a convertible note issued to IBEX on July 15, 2010. Section 2.4 of that contract shows what will happen in the event that the company is acquired, which is the payout of stock, not cash. Here's a screen grab of that section:



There it is, in black and white (and a little blue,) and it is highly likely that every note issued to IBEX and Related Parties since this one has included a similar provision.

Note the last sentence in the lower part of the image (which followed a page break in the document,) that essentially says that the company has to sure that those shares are available, which means that in the event of a buyout, the AS will be raised accordingly.

BIEL's company charter specifies that that the Board of Directors has the power to increase or decrease the number of authorized shares at will, which is why whenever BIEL has filed to increase the AS, it is stated that the increase was approved by the directors, not a vote of the shareholders. Maryland, where BIEL is incorporated allows this, whereas many other states require a shareholder vote.

Therefore, if there comes a time when the BOD contemplates the sale of the company, it legally can and will raise the OS to a number that covers the OS at the time PLUS any shares that could be paid out to cover the notes, and those shares will be paid to the noteholders, not cash.

Finally, any buyout will be based on the perceived value of the business, not the number of outstanding shares.

And then then the price per share will be the amount paid for the company divided by the shares held by retail, plus IBEX, plus RP.