PowerLinx Inc (PWNX)

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Dillution is the topic of the day?

Here is a relevant post from Yesitstrue on RB:

http://ragingbull.lycos.com/mboard/boards.cgi?board=SEVU&read=29866

*** SEVU LONGS - FEELING DILUTED? ***

Here is a list of the significant dilution that has taken place during the first nine months of 2000 according to the Company's filings with the SEC (links provided for the readers' convenience):

From 1999 Form 10-K:

At December 31, 1999 Common stock = $9,380

Since the par value is $0.001, that means that there were 9,380,000 shares outstanding.

Here's the link:

http://www.freeedgar.com/search/ViewFilings.asp?CIK=894536&Directory=1016843&Year=00&SEC...

At March 31, 2000 Common stock = $9,654

Since the par value is $0.001, that means that there were 9,654,000 shares outstanding. An increase of 274,000 shares. What was it for? Here's what the 10-Q said:

STOCK ISSUANCE

On January 26, 2000 the company filed a registration statement with the Securities and Exchange Commission for the issuance of 100,000 shares of its common stock for the purpose of compensating consultants for services rendered. Compensation expense of $1,000 was recorded for the
month period ended March 31, 2000, based on the fair value of the services rendered.

During the first quarter 2000, the Company issued 174,000 shares of restricted common stock to employees under an employee bonus arrangement. Bonus expense of $1,740 was recognized in connection with the issuance.

Here's the link:

http://www.freeedgar.com/search/ViewFilings.asp?CIK=894536&Directory=1016843&Year=00&SEC...

At June 30, 2000 Common stock = $12,071.

Since the par value is $0.001, that means that there were 12,071,000 shares outstanding. An increase of 2,417,000 shares from March. What was it for? Here's what the 10-Q said:

CONVERTIBLE DEBENTURES

In the first quarter of 2000, the Company issued 8% convertible debentures for proceeds of $2,735,237. The debentures are non-interest bearing for the first thirty days, after which, interest is payable quarterly. The debentures are for a term of twelve months. The debentures are convertible by the option of the holders into shares of the Company's restricted common stock on the basis of $.50 to $8.00 per share. Proceeds from the issuance were used to fund operations of the Company.

During the second quarter of 2000, the company exchanged the $2,735,237 of convertible debentures for 2,217,449 shares of Company common stock.

Furthermore, the 10-Q says the following:

STOCK WARRANTS

During the second quarter of 2000, a warrant option was exercised for 200,000 shares of Company common stock at $1.00 per share from a previous resolution dating from the reverse merger into Gopher, Inc. The proceeds were used to fund operations.

Here's the link:

http://www.freeedgar.com/search/ViewFilings.asp?CIK=894536&Directory=1016843&Year=00&SEC...

At September 30, 2000 Common stock = $12,521.

Since the par value is $0.001, that means that there were 12,521,000 shares outstanding. An increase of 450,000 shares from June. What was it for? Here's what the 10-Q said:

STOCK WARRANTS

During the second and third quarters of 2000, warrant options were exercised for 200,000 and 300,000 shares, respectively, of Company common stock at $1.00 per share from a previous resolution dating from the reverse
merger into Gopher, Inc. The proceeds were used to fund operations.

That leaves 150,000 shares issued in the third quarter which went for the Springs investment.

Here's the link:

http://www.freeedgar.com/search/ViewFilings.asp?CIK=894536&Directory=1021408&Year=00&SEC...

So that's how we go from December 1999 to Sept. 2000.

The figure I used for the September 1, 2000 shares outstanding of 15,452,285 came directly from the cover page of the 10-Q. Here's the link:

http://www.freeedgar.com/search/ViewFilings.asp?CIK=894536&Directory=1021408&Year=00&SEC...

I will wait for you to dispute any of this. Since by doing so you are in essence saying the company filed incorrect financial statements with the SEC. A charge, they don't take lightly.


Good post from RB! YIT is a regular SEVU bear. He has good stuff!

Happy Posting!