You have to believe Mr. Caldwell's ultimate goal is to exit this investment one day, being a private equity investor. The question is when and how much is the company sold for. The preferred stocks liquidation is around $35 Million. Series A liquidation is the highest with a liquidation of $0.50 and Series C with a liquidation at $0.25 based on shares outstanding if converted...
Series A liquidation: $12,767,500 / 25,534,600(o/s if converted) = $0.50
Series B liquidation: $15,921,636 / 106,144,240 = $0.15
Series C liquidation: $6,270,875 / 25,083,500 = $0.25
So the Series A and C owners will not convert unless the sale price is higher than about $125 Million and $63 Million, respectively, even though they are able to convert much lower.
I believe this company can be sold anywhere from $70 to $100+ million based on historical sales and market multiples of a couple competitors.
The second issue is with the additional shares authorized will the common be diluted to worth zero, but by doing that the Series B (48% owner Independence Blue Cross) somewhat gets screwed, but do they even care at this point.
Lets say the company is sold for $55 Million. Back out the Series A and C liquidation and that leaves us with $35,961,265 on about 242,000,000 o/s adding in the warrants and equity plan. Common is worth $0.15 and if its sold in 3 years that's a 32% compound return from current price of $0.065. Not bad. Some math might be wrong don't hold me to this.
