Gifa Inc (GIFX)

[Dragon Lady]

are we sure its not 10K of preferred?

I considered that- but even so, it's still only 10K shares. "Preferred" can carry additional voting rights and other "powers", but they're still priced at the same price as common shares as far as I've ever seen?

It's "possible" the preferred might have an exchange ratio of more common shares per preferred share- but that can't happen usually for a considerable amount of time...especially after a R/M...usually years on the legend restrictions....

If it's the preferred, it would mean they must of somehow "valued" the preferred at $26.70 per share then? It was done as a "tax free exchange" so Aul and/or the accounting firm would have to prove to the tax man...that the valuation of the "extinguished debt" has to equal whatever Shetty received in exchange.

It would thus still be damned impressive to me - that they're "valuing" their preferred shares at $26.70 ea...right now...at this point in time and were able to prove it to a tax authority who thus accepted the "tax free exchange" valuation ?

Remember in the SEC AUDITED 10-K that Aul filed, he stated something to the effect, "The accounting details of these shares issued and exchanged is still being determined for accounting purposes" (something like that, paraphrasing, but pretty darn close to what Aul stated).

So even if it's preferred shares- it would still to me, appear they're placing an extremely high price/value on them?

For example, even if preferred were good for an exchange deal of 10 to 1 common or something:

10 X 10,000 = 100,000 common

267,000 / 100,000 common = $2.67 per share common and the tax man would have to have "bought in" to the math "penciling out" exactly as like-for-like valuations...

Any exchange of preferred to common is almost always dependent on the company achieving certain milestones like profitability or certain price targets, etc.

So, Shetty must "see" enough value that he's willing to wait to get his $267,000 back, and from what it appears, he expecting to get a hell of a lot more than that back?