I got respects for you from another deal we were on couple years ago. I understand what you're saying abt the legacy shareholders & Series B conversions. That comes out to about 40m shares. But there are some other points I'd like your input on that I have been wrestling with.
1) There are 1,000,000 Series C shares. These are the only shares Joseph Sinkule owns. In this deal do they just go away, or do they convert somehow? If they go away, how does Sinkule capitalize?
2) The BCA states that no splits are allowed [Sec. 5.1(b)(iii), pg 45]. Is there another rider in the BCA that allows this R/S?
3) Initially, I agreed with you that retail would get R/S'ed down to about ? of 1% of value. My main hang-up with that is how the Series C convert. There is no stated mechanism to do so, and their nature is left very vague, as the quarterly states...
"The company is authorized to issue 1,000,000 Class “C” preferred stock at any time issue in one or more series, each series to consist of such number of shares before their issuance, be determined by resolution of the board of directors. The directors of the Corporation may by ordinary resolution, state the designation, rights, privileges, restrictions and conditions attaching to the Class “C” preferred of any series including dividends, redemption or purchase price, voting rights, conversion rights or any other provision."
Here were some numbers I ran, assuming the Series C shares convert to commons ... I would welcome your insights.
This deal is to buy the fully diluted commons. "Fully diluted" means all shares, warrents, options, etc. MUST be converted to common shares. While no warrents or options, there are Series B & C shares, which MUST be converted before the sale.
There are currently 1,044,861,360 retail common shares.
There are 405,250 Series B shares. They convert at 1 "B" share to 100 common shares, (stated in 1Q/23 filing). That's another 40,525,000 commons. Running total, 1,085,386,360 commons.
Series C shares are less clear but logically determinable. Founder & CEO Joseph Sinkule owns 1,000,000 C shares. They are valued at slightly more than all the retail commons combined, giving him controlling interest. Series C value ÷ commons share price yields Sinkule 1,057,851,239 common shares. Running total, 2,143,237,599 commons.
Retail commons ÷ fully diluted commons = 48.75%
.4875 × $60m = $29.25m
29.25m ÷ 1,044,861,360 = .028/sh
There are several ways to figure the value of the CEO's Series C shares, as the conversions are not clearly stated that I could find. But however one figures them (in any reasonable way), the overall precentage of retail common shares comes out somewhere in the 41.3% to 48.75% range. This would yield a per share price of between $0.0237 and $0.028 per fully diluted share.
Still a nice payday from the current $0.0044 (539% to 636% return), but nowhere near the $0.057 (1,295%) being touted by some. That number is based on just counting retail common shares & completely ignoring the "fully diluted value" aspect of the deal & the Series B & C shares conversion.
If in doubt, ask yourself - do you think the founder & CEO is just going to sell his company & give over the whole $60m to retail?
