I'm not saying the sky is falling today, but there is a large likelihood it will. This stock has revealed itself to be a hot potato in a grand game of musical chairs. The scary thing is that the common shareholder chair is the smallest and will keep getting removed first.
I will explain. On a fully diluted basis, there are about 9.5 billion shares. The company issued 1 million Series A and B preferred shares upon going public. Ray owned 827k (and has already converted 49,200). Briones owns 20k. Great Eagle owns 153k. Each Series A and B share is convertible to 6,546 common shares. Ray has already converted 322 million shares to dilute us common folks. But he's only part of the problem.
Trillium and 3a Capital are the bigger problem. Based on the December Exchange Agreement and their Series C and D preferred shares, each of them is now the beneficial owner of 12.5% of the fully diluted shares. That's 25% ownership for 2 toxic lenders. And they will continue to convert and dilute. Nothing stops them.
Using Trillium as an example, they already converted 108 million shares and sold at least 50 million. But they now have 191 Series C preferred shares. Just one of those shares converts to 0.064% of the fully diluted share amount. Remember, fully diluted is now about 9.5 billion shares. That means each C share is worth about 6 million common shares. 191 are worth about 1.15 BILLION shares. Every time they convert, just like before, they add millions of shares to the OS and dilute the rest of us. The share price will go down every single time, just like all summer.
So, this stock is a ticking time bomb. Just waiting for Trillium, 3a Capital, Ray, Briones, Great Eagle to convert their ownership into common shares to dilute public shareholders. I used to believe they would not do it, but I see it now.
Ray already owns 50% of the OS. He hasn't sold any, but he owns it. Trillium owns about 8%, as does 3a Capital. We own the rest. But make no mistake about it. Trillium and 3a Capital will be converting, diluting us, selling back to us or anyone foolish enough to buy, then will rinse and repeat with the 10% ownership cap. And each time they convert to raise the OS, the higher 10% rises for the next conversion while they sell away. Those companies are not in the business of converting and holding. The more they sell after each conversion, the more they can convert again...up to a billion shares each.
And Ray let this happen. Their lawyers let this happen. I feel like an idiot for not seeing the whole picture sooner. A lot of folks here had bits and pieces (even 3flight) and I hope this full picture is clear now. This share structure is a mess and designed to enrich the executives and 2 toxic lenders. $1.8 million in loans will get them 10 times that amount. I won't be around to see this diluted to oblivion though. There will still be spikes on news and quarterly filings. Then drops. All part of the game. SMH
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