But Uncle F, it isn't a question of whether they choose to convert or not. The terms of the Preferred A shares provide them or any other holders the RIGHT to do so.
The holders of the Preferred A shares (TJM and some unknown entities who go by the name of BMG LLC) are constrained from selling any common shares that they convert the Preferred into (which they can do AT ANY TIME) for 36 months from the date they do a conversion.
SINCE the conversion of the Preferred can occur AT ANY TIME the company is required to have an adequate number of common shares authorized to provide for their ISSUANCE. The fact that they can't be SOLD for 3 years after issuance has nothing at all to do with when they can be issued and an adequate number of common shares for their issuance must exist in the form of Authorized shares.
I believe that the corporate action that reduced the number of Authorized common shares to below the point where the outstanding Preferred A shares was an illegal act because it prevents legally authorized Preferred shares from being converted.
ps. re: "they do not plan to convert their preferred shares" We don't know that. In the case of BMG LLC we don't even know who "they" are!
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