Update to PF confusion to be fair to mgmt:
Erickson clarified his position and my confusion in a followup. But that means I'm now confused on the share count. Which to me should be higher than reported if the *regular* warrants were exercised. I"m not so sure he understands that the PF warrants were exercised as the filing 3 days ago suggests to me.
So just to be fair, he does not have those negative feelings towards the CFO as I did, so I go with his opinion on this. For whatever it's worth to everyone here, I'm long and a little confused, but I feel good about it. I feel like those of us here at the bottom are in a good position.
I'll try to clear up some of your confusions. First, Gary Atkinson, the CEO, is the decision-maker in all of this. Don't blame the CFO. And I don't believe Gary is in any way venal or self-dealing. He truly believes that the costs he imposed on the shareholders were worth the benefits he sees from up-listing to NASDAQ and bringing in extra cash. Though wrong, he is sincere. I'll continue to believe that right up until I see a major downward reset of senior management stock option exercise prices, or some idiotic empire-building acquisition become the use of MICS' money now sitting in the bank getting eaten up by inflation.
There is no effect upon the pre-funded warrants. I don't believe the company has to refund any of the money from pre-funding on those warrants. And I believe the company will still receive another penny per warrant payment when those warrants get exercised five years from now. If I'm wrong about that, then of course that would be yet another disastrously dilutive consequence of this deal. Only the warrants that were not pre-funded receive the lowered exercise price. The $2.40 new exercise price (down from $9.00) comes from the provision in the warrant agreement that calls for the exercise price to drop down to the lowest trading price of the stock that occurs on the date of the funding. On the day this deal was announced, the stock briefly traded down to a low of $2.40 before substantially recovering to about $3.00. Care to guess who did the selling to cause that sharp and brief price drop? First suspect is the owner(s) of those non-pre-funded warrants.
Forget about a class-action lawsuit. Bad idea on every conceivable level.
BTW, if the company is profitable during either the March or June quarters, then the stock is a steal. MICS is normally never profitable in those quarters.
