Weather they are entitled to $1.2 mill cash or not. They can not convert more then 4.9% of the O/S. They can't own more then 4.9% of the company, with their conversion, from this deal. They have to hold the unconverted debit!
Kind of a poison pill which saves company from takeover, by a VC. They can continue to buy open market or offer another round of funding, if they want to own more of the company. But this 8K deal is binding.
Now you have me thinking. Each funding deal is seperate. No reason they had to sell all the first 4.9%, before they convert the second. What was I thinking?
Actually because of the 2 deals, they could own 9.8% of the O/S at anyone time, based on 2 seperate deals. Unless the first or second conversion rights stated 4.9% TOTAL at any one time.
But the first Dec. 8K closed the debit. No more shares coming from that deal. The second Feb. 8k, and all series "B" shares, could be converted at any time, per the preferred series "B" Q filing info.
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