Frequency Holdings Inc (FRQN)

[trader59]

Thanks, but I think you missed the larger point. The statement in the filings suggests that the owners of the business that merged in will essentially own the public company in percentages of 87.5, 10, and 2.5. The only way they do that is to own those percentages of the O/S after conversion. Here's the direct statement from the filing:

Share Exchange Agreement with ReachOut Technology Corp.

On November 7, 2023, Yuengling’s Ice Cream Corporation (the “Company” or “YCRM”) entered into an Share Exchange Agreement (the “Share Exchange Agreement”) with ReachOut Technology Corp., Delaware corporation, (“ReachOut”), pursuant to which the shareholders of ReachOut (the “Shareholders”) agreed to sell 100% of the issued and outstanding shares of ReachOut to the Company in exchange for the issuance of such number of shares of newly created Series C Preferred Stock, par value $0.0001 per share of Company (the “Series C Preferred Stock”) which, collectively, shall be convertible into that number of shares of common stock of the Company which shall equal Eighty-Seven Point Five Percent (87.5%) of the total issued and outstanding shares of common stock of the Company as determined at the consummation of the Acquisition (on a fully diluted basis for a period of twenty-four (24) months) as set forth in the certificate of designation to be filed at Closing for Series C Preferred Stock.

At the Closing, Trillium Partners, LP (or its affiliates ) shall receive 1,000,000 shares of newly created Series D Preferred Stock, which, collectively, shall be convertible into that number of shares of common stock of the Company which shall equal ten percent (10%) of the total issued and outstanding shares of common stock of the Company as determined at the consummation of the Acquisition (on a fully diluted basis for a period of 24 months) and carry rachet and anti-dilution rights, as set forth on the certificate of designation to be filed at Closing for Series D Preferred Stock.

At the Closing, Everett Dickson (or his designee) shall receive 250,000 shares of the Series D Preferred Stock, which, collectively, shall be convertible into that number of shares of common stock of the Company which shall equal two and one-half percent (2.5%) of the total issued and outstanding shares of common stock of the Company as determined at the consummation of the Acquisition (on a fully diluted basis for a period of 24 months) and carry rachet and anti-dilution rights, as set forth on the certificate of designation to be filed at Closing for Series D Preferred Stock.

So, my question is how do the former owners of the company merged in wind up with 87.5% of the total O/S after conversion? Show me that math, especially if there isn't a RS to substantially reduce the legacy common stock issued by the previous enterprises that inhabited this shell.

Understand that I would expect the owners of a company merging in to substantially own the company equity after the merger. The mechanics of that would be a large RS, then the conversion of the preferred stock into something those owners could liquidate if they so desired.