It had a fine day. News forgot to mention the 1:30 Reverse Split coming. See the 8k filed just before the close.
As a condition of the Acquisition, Winning Edge will complete a 1 for 30 reverse split of its issued and outstanding shares of common stock reducing the issued and outstanding shares of common stock from 124,849,845 to 4,161,662. Upon closing of the merger, Winning Edge will issue an aggregate of 34,129,823 post reverse split shares of common stock to the shareholders of ProGames Network, Inc. After the merger, shareholders of ProGames Network, Inc. will own more than 85% of the issued and outstanding common stock of Winning Edge.
The Acquisition is subject to closing conditions including restructuring Winning Edge’s current debt, issuance of Series B Preferred Stock to Winning Edge Shareholders, and the completion of $2,200,000 in financing. The majority shareholders of both Winning Edge and ProGames have approved the merger agreement and subject to the closing conditions set forth in the Agreement, consented to the transaction. If the parties are unable to close the Agreement by May 18, 2006, either party may terminate the Agreement. The Agreement may also be terminated by consent of either party with a $250,000 liquidating damage payment to the non-terminating party.
Series B Preferred Stock
Under the terms of the Acquisition Agreement, Winning Edge will issue 1,000,000 shares of Series B Preferred Stock with a stated value of $10 per share to its existing shareholders pro rata as a stock dividend prior to the acquisition of ProGames. Each shareholder will receive approximately one (1) preferred share with a stated value of $10.00 per share for every five (5) shares of Winning Edge common shares (post reverse split) held. Each share of Series B Preferred Stock will be convertible, after March 31, 2009, based on a conversion ratio. The conversion ratio essentially provides for each preferred share to be converted into 20 common shares. The conversion ratio provides for a six percent increase, which will result in additional shares of common stock being issued on conversion of the Series B Preferred Stock.
Dividends are payable on the Series B Preferred Stock if and when declared by the Board. There is no set dividend and the Board is not required to declare a dividend. The Series B Preferred Stock has no voting rights except as provided under Delaware Law.
The Series B Preferred Stock contains a liquidation preference over common stock and future issuance of Preferred Stock at the rate of the declared value of $10 million in total. Accordingly, upon liquidation, after all other debts of the Company have been paid and prior to the payment of any sums to other equity holders, the Series B
Preferred Stock would receive a $10 per share (the stated value) liquidation preference or an aggregate of $10 million preferred preference prior to the payment of any sums to other equity holders. The preference is only payable after all other debts are paid and in most liquidation events, equity holders, including preferred shares, receive nothing or a fraction of the par or stated value.
After April 1, 2014, the Series B Preferred Stock contains a “put” provision which allows holders of the shares to request Winning Edge purchase their shares of Series B Preferred Stock at the stated value of $10 per share. Winning Edge has the right to delay the purchase of the Series B Preferred Stock for up to two additional years if Winning Edge does not have sufficient cash to make such a redemption and, after such delay, if the Board determines Winning Edge does not have the available cash to pay for the Series B Preferred Stock, the board of directors may issue shares of common stock valued at the greater of the then current fair market value or $0.10 per share.
The Series B Preferred Stock is also callable by Winning Edge on 20 days notice. The call price is the stated value of $10 per share. Upon notice of a call by Winning Edge, the shareholder is required to sell the shares back to Winning Edge at the $10 price.
If the Acquisition is not closed, no shares of Series B Preferred Stock will be issued.
