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Sunday, July 12, 2009 3:45:51 PM
From the Series C transaction documents:
"The Company shall, on or before July 1, 2006, effectuate an increase its authorized capital stock to a sufficient number of shares of Common Stock to satisfy the reservation requirements of this Agreement."
Obviously, Fritz, Copus and Dodge wanted to make sure the AS was increased by a large enough number to be able to cover the Series C and the warrants under all foreseeable circumstances. That way they would not have to call another shareholder meeting for another increase. So I think that they believed they overshot what would really be needed when they went for 5 billion shares. Turns out, with the PPS down where it is (and most of the decline can be attributed to what they did in 2006), they missed their guess.
Any legal analysis I post is not a formal legal opinion and may not be relied on by anyone for any purpose. If you want legal advice you can rely on, hire a lawyer.
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