Replies to post #63899 on Eagle Worldwide Inc.(fka ELWD)

[rdavis8325]

are you saying a company can't sell shares directly to an investor? i believe they can and did, in this case. the shares are restricted for 2 years, imo

[Distracted Scientist]

Actually, you should read up on the SEC rules. Please consult the following link: http://tinyurl.com/2hsg9w

"VI. Are There Legal Ways To Offer and Sell Securities Without Registering With the SEC?
Yes! Your company's securities offering may qualify for one of several exemptions from the registration requirements."

As far as I can tell, they would have qualified for the following exemptions:
B. Private Offering Exemption
C. Regulation A
D. Regulation D: Rule 504, Rule 505, Rule 506, and
E. Accredited Investor Exemption - Section 4(6).

In this case the shares were sold to the Foundation in a private placement for $2mm ($.001 PPS) during the second quarter of 2006. And, during the third quarter of 2006, the Foundation sold the shares to their beneficiaries for $80mm ($.04 PPS); giving the proceeds to PNMS (see: http://tinyurl.com/39ztv2 ). These shares were not sold on the secondary market; the Foundation functioned as a purchasing representative.

By the way, the Foundation (Pedro) currently owns ~2.9b shares. They appear to have purchased ~900mm on the open market and 2b through a private placement, all in the second quarter of 2006. MT could have sold the shares in the private placement for any PPS that he felt appropriate, as long as the buyer was willing to pay for them. And, an investor like Pedro would have had to pay a premium in order to gain more control of the company in such a way (unless the CEO is corrupt, or they are desperate for money).

You say that he could have purchased the shares cheaper from the float, but those shares were not available to the float. Thus the premium.