You are missing the whole point friend. Let's examine your math shall we?
9 million shares that I will assume you bought all @ .0001
Your risked capital is $900 (plus commish) I will leave out the commish and fees on all this stuff so that we can measure apples to apples.
After the conversion :
9,000,000 / 175 = 51,429 shares (rounded up)
Your shares are now worth the closing price of today multiplied by your shares.
51,429 X $0.039 = $2,005.73 or a gain of 123%
Now let's look at the person with 9 million converted shares.
9,000,000 / 1000 = 9,000 shares
But each one of the preferred shares is worth $1! So now this person has $9000 at conversion time to purchase back the common shares. We also get the right to purchase these shares at a 20% discount. So if today was conversion back day for the preferred shareholder we see this:
$0.039 X .8 = $0.0312
$9000 / $0.0312 = 288,461 shares (rounded down)
Our real value is then calculated as such:
288,461 X $0.039 = $11,249.98 or a 1150% gain
The break even point everyone is figuring is this. As the PPS of the stock goes up, those waiting to convert their shares will get less and less shares. The person that did nothing is now locked in. At what PPS will both of these investor's have the same amount of money no matter what they did about the preferred share offer?
The magic # seems to be right around 22 cents.
Boca_Bobby
Mom said there would be days like this!
