Patient Access Solutions Inc (PASO)

[Stock Farmer]

PASO Common and Preferred Convertible Shares

First, per the PR everyone holding common shares (Shareholders of Record) on September 18, 2020 receive a 5% Dividend in the form of one Series C Convertible Preferred Share for each 5000 shares of PASO he/she/it owns. This is Free money, a bonus, a gift for being a loyal shareholder on the aforementioned date.

Pat yourself on the back since you will join the roles typically filled by Venture Capitalists.



Now the second Item of business: As stated clearly in the PR every Shareholder of Record on September 18, 2020 will have Opportunity to convert their common PASO shares into Series C Convertible Preferred Shares at a Conversion Rate of one Preferred Series C share for each 250 Common Shares owned. This is voluntary, your choice. Your common shares will not disappear on September 18, 2020.

As part of rolling common shares to Preferred Shares, you will receive a 6% Annual Dividend . Preferred Shares get preferential treatment over Common Shares (like being the favorite kid in the family). Preferred dividends take precedence over common dividends, and preferred shares take priority over common shares if a company has to liquidate its assets (Highly unlikely event in PASO’s case).



Decent Primer on Convertible Preferred shares:

https://investinganswers.com/dictionary/c/convertible-preferred-stock

Several important things to know when deciding to convert common shares to preferred shares or vice versa

1. Conversion Rate - in essence, the exchange rate of common shares to preferred shares. In our case, the Conversion Rate is 1 Series C Convertible Preferred Share for each 250 Common Shares owned if we voluntarily make the choice to do the conversion on some or all of our shares. For example, 1000 common shares would become 4 Preferred Shares. I’m guessing the exchange rate would be the same converting preferreds to commons after the conversion date but that has not been stated yet.

2. Conversion Date - the date when the preferred shares can be converted to common shares. There may be a holding period of one year (or other timeframe they decide) before preferred shares can be converted back to common shares.

3. Preferred Share Price versus Common Share Price Which is better?. For simplicity, consider converting your freebie Series C Preferred Shares to Common Shares. Take the Preferred Price ($15 But likely to change) and divide by the Conversion Rate (250) to get the break even point of the Stock Price of the common stock = $0.06. If the common share price is greater than 6 cents after the conversion date , it makes sense to convert your preferred shares to common shares.

IMO it is likely the Preferred Share Price will be 250 times the Common Share price On or near the September 18, 2020 date. For example, if PASO is trading at 10 cents at open on September 18, 2020, the Preferred Share price is more likely to be 0.10 x 250 = $25.00.

If the Common Share price was at 25 cents on September 18, 2020 and you convert at the mentioned price of $15 dollars, you would be giving the company a discount, since $15 preferred shares = $0.06 common shares.

However, don’t forget to consider the 6% annual dividend with the Series C Preferred Shares. Also, the company my choose to buy back preferred shares at a handsomely favorable price to prevent dilution.