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Thursday, March 19, 2020 4:07:08 PM
Right now, we're seeing pretty high dilution from convertible note conversion, but OZSC also has other notes on its books.
If I'm going to buy $100K of OZSC's debt to become an equity partner, the shares that I buy will probably be restricted, and I won't be able to sell them for six months to a year. That means I'm going to want to buy them at a significant discount to the current trading price.
I'd probably want the shares at a 50% discount, but let's say that I settle for only a 25% discount. At today's price of about $0.04, that means I'm getting the shares for $0.03.
For my $100K, I'll be getting 3.33M restricted shares.
Now, let's assume there are a total of 4 investors at $100K each with the same terms. That's 13.3M new restricted shares, which puts the OS at approximately 15M shares, assuming about 1.7M shares at the end of March.
Now, suppose the deal with PCTI goes through. Ms.Chis's preferred shares give her 3 times the then-current OS, so that put's the post-reverse-merger fully-diluted OS at 60M shares.
This example only covers a $400K debt reduction at a 25% discount. More equity positions taken at a greater discount will drive the fully-diluted OS much higher.
I'm not seeing any evidence yet that this is a good stock for a retail investor until the reverse merger is complete and we see PCTI's financials.
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