Dionics, Inc. (DION)

[Potse]

$hellKing...DION's interesting anti-dilution clause......

Most of the time when the initial RM 8K comes out the RS is already equated that Ive seen but if they do do a RS I hope they dont do any RS larger than 1 for 10. Chinese cos have a bad reputation for doing large RSs off the bat.

The size of any reverse split on DION is not something that really concerns me, because the minimum ownership percentage for the shell investors has already been established. Granted, there may be a negative psychological response from investors to a higher split ratio, but the fact is a reverse split (regardless of the size) will not fundamentally change what I own.

The fundamental picture (undervaluation, overvaluation) of the business operations should have a greater impact on this investment.

Hopefully the CEO worked out a deal for shareholders not to get shafted.

There is a quite interesting anti-dilution clause in this RM agreement, which will probably go mostly unnoticed by investors. Basically, for a one-year period following the closing of this RM, the DION shell owners (that is us, the holders of the 28.05M shares prior to the RM closing) are guaranteed to maintain a 5% ownership of the new company. Any issuance of new shares (in the form of common, options, warrants, etc.) during this one-year period will result in the shell owners receiving additional shares.

Off the top of my head, I can not recall seeing this type of anti-dilution protection for the lowly retail shell shareholders in any shell/RM I have been invested in or monitored fairly closely.......

Section 8.15 Anti-Dilution. For purposes hereof, the owners of the shares of Dionics outstanding after giving effect to the transaction contemplated by this Agreement other than the Shareholders are referred to as the “Residual Holders”. In the event Dionics shall sell or issue any shares of common stock of Dionics, or issue any options, warrants, convertible securities or other rights to acquire Dionics common stock, to any party following the Closing Date and during such period ending one year from the date thereof (the “Anti-Dilution Period”), Dionics will, and the Company shall cause Dionics to, issue additional shares of common stock to the Residual Holders. The number of additional shares of common stock to be issued to the Residual Holders shall be equal to the number of shares of common stock which are issued during the Anti-Dilution Period and the number of shares of common stock to be acquired upon exercise or conversion of any options, warrants, convertible securities or other rights issued during the Anti-Dilution Period (collectively, the “Additional Securities”), multiplied by a fraction the numerator of which shall be the number of Additional Securities issued during the Anti-Dilution Period and the denominator of which is the number of shares outstanding on the Closing Date (assuming the conversion of the Dionics preferred stock).

http://knobias.10kwizard.com/filing.php?param=&ipage=8033360&DSEQ=2&SEQ=&SQDESC=SECTION_EXHIBIT&exp=