Koil Energy Solutions Inc. (KLNG)

[wweeaazz]

Who cares about the exercise price? What price does the stock have to be for PSEC to profit? I'll paste this post from yesterday for you to review.

Posted by: darwindows
In reply to: None Date:8/8/2007 10:06:13 AM
Post #of 17758

Hey all!

Been lurking a while and thought I would add my 2 cents for what it's worth.

I know some people have commented on the terms of the loan being a bit on the high side in terms of interest rate. But, from the way I read the release it seems that DPDW has been given a 6 million dollar loan for 5 years (they don't start paying back until next year) and are required to pay back a cash total of $75,000/quarter for 4 years or 1.2 million dollars. The rest is based on a much higher stock price.

PSEC is basically a mezzanine type lender, meaning they look for more than just money back..they want a piece of the action. So thats a huge vote of confidence.

DPDW has agreed to borrow 6 million at 15.5 % interest over 4 years. That's a total of $10,677,736 at $75,000/qtr starting in September 2008. Obviously that's only $1,200,000 in payments, leaving $9,477,736 in balance. So in addition they arranged to get a warrant for 4,960,585 shares of common stock at an exercise price of $0.507 per share exercisable in September of 2009. At that price, they would receive a total of $2,515,016 worth of stock (assuming market value of .507 cents). That brings the grand total to $3,715,016 out of the total $10,677,736 owed. So they still need to collect at least $6,962,720 just to make ther stated 15.5%. So, I would assume that PSEC is banking on the idea that those 4,960,585 shares are going to be worth more than $1.90/share in 4 years (basically I added (2,515,016*$.507) + (6,962,720/4,960,585=$1.40) = $1.90/share).

Please, tear it apart if I am missing something. But to me, this deal is basically a HUGE vote of confidence that the share price in two years will be significant. Afterall, in order to get that loan, PSEC had to be allowed to go over every number with a fine toothed comb.

Let me know what you all think and good luck to all.