A more timely discussion might surround the accrual of dividends relating to the Series D stock. Specifically the additional dilution pertaining to the 12% annual dividend feature of the Series D stock (assuming e.Digital satisfies the dividend with common stock, a near certainty given that the company is broke).
At an average share price of $0.15, the quarterly dilution pertaining to the dividend feature of the Series D is approximately 400,000 shares per quarter.
As the inevitable occurs and the share price moves significantly lower, the dilutive nature of the stock-satisfied-dividend becomes increasingly more destructive as more shares are required to cover the fixed rate.
3. DIVIDENDS. The holders of Series D Preferred Stock shall be
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entitled to receive, out of any funds legally available therefor and the
Corporation shall pay, dividends at the fixed rate of twelve percent (12%) per
annum, payable in quarterly installments on the 1st day of September, December,
March and June of each year. Such dividends shall accrue from the date of
issuance of the shares of Series D Preferred Stock and shall be deemed to accrue
from day to day whether or not earned and declared. Such dividends shall be
payable before any dividends shall be paid, declared or set apart for any other
class of stock, and shall be cumulative so that if for any dividend period such
dividends are not paid or declared and set apart therefor, the deficiency shall
be paid, in whole or in part (without interest), on the next succeeding dividend
payment date on which the Corporation has any funds legally available therefor.
Until any delinquency has been fully paid or declared and set apart for payment,
no distribution, by dividend or otherwise, shall be paid on, declared or set
apart for any other class of stock of the Corporation and no shares of any other
class of stock shall be acquired, directly or indirectly, by redemption or
otherwise, except for the repurchase by the Corporation of shares of Common
Stock for an amount not in excess of the original sale price thereof pursuant to
employee stock purchase agreements. Notwithstanding the foregoing, the
Corporation, in its sole and absolute discretion, may pay such dividends through
the issuance of (i) fully paid and non-assessable shares of Common Stock
determined by dividing the accrued but unpaid dividend by the average closing
bid price for the Common Stock for the 10 trading days immediately preceding the
applicable dividend payment date or (ii) if available, fully paid and
non-assessable shares of Series D Preferred Stock determined by dividing the
accrued but unpaid dividend by.
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"I disagree with everything you say. But I will defend to the death your right to say it." --Voltaire
