EDIT the preponderance of the direction of MY post may well be in error, RWK indicates the stike is fixed at .44 which give no *INCENTIVE* for price errosion.
With respect, the 8%
states that it is in cash or stock at the company’s discretion.
If share price falls that means more stock, which means more dilution, which means further price erosion.
I still think the behavior is indicitive of the anticipation of a signfiicant "event" by Wave financing, but otherwise RWK has seemed to indicate that it is a better defended prefP than I had guessed from my brief reading.
It is not a full blown death spiral, but it is pretty darn close.
*IF* Wave cannot cover some ground on the revenue front (to be able to pay the 8% in cash) *THEN* the holders of those preferreds have an *INCENTIVE* to drive share price down in order to get more shares for their 8%.
All in all it is a comparatively crafty deal. IT does not give the full blown and durable short against the box of the nasty death spirals, but it does state clearly ... should you fail to pay us our 8% in cash, we will grab a seriously huge hunk of your company.
8% 0f $800k at a nickel a share is some 2.6 million shares which over a two year interval of unexpected delays is a pretty big hunk of the company for a 800k outlay unless you think the company is worth no more than something like 25million.
Again, all-in-all it is not a hugely bad deal from what I can see (which is almost nothing, I suspect the deal has a few more words than I have read) ... but, it is again, a miserly small amount of money.
These guys really are holding out for the big deal that they "see" or posturing for a forced migration to private or some such t.o.
For a company to fund itself one or two weeks at a time speaks of a very near term "event" And that, obviously (and considering the ethical record), could go either way
The above content is my opinion.
AI
