Unless the 200 million authorized were actually issued, no one could buy more than 51% of the full authorized, only the issued stock is available for purchase and then it is only the shares in the float (above the amount issued to the industry funder) as the rest are restricted or not yet issued. 23 million shares bought in a block could effectively tie up 23 percent of the outstanding (if it was still 100 million) and the party looking to buy up enough stock to take over the company would have to turn to the street to get the rest or make an offering that is high enough to tempt the shareholders who hold up to 37 million shares in the float. If they could convince the shareholders to tender their shares, they would be able to get enough shares to take over the company. If the company held unissued shares in a large enough quantity they could thwart that type of takeover and even issue more than 23 million without emptying their coffers or giving up too much of the company to do it.
With 64-64 million shares outstanding fully diluted and 12 million shares held pending the outcome of the Harvest Court Litigation, there is really only about 23 million shares available for funding and issuing all of them would not be feasible without authorizing more shares.
I posted the actual breakdown of the numbers of shares available on both i2i and Agora so I will post them here as well:
As of February 1, 2002 there were 55,737,398 shares of common stock outstanding, then you have to take into consideration certain events including the fact that NanoPierce had to issue 3,125,000 shares issued to pay for litigation support in the Harvest Court law suit which is what took the shares from the 52 million range to the 55 million range. The difference in the fully diluted and the outstanding is 9,642,661 shares that are stock options, warrants and convertible preferred stock that is not yet part of the outstanding but could be at a future date. That would bring the total outstanding fully diluted to 64-65 million shares. I made a rough estimate when I put out the newsletter. Here are the actual numbers from SEC filings:
From the latest 10Q:
As of February 1, 2002 there were 55,737,398 shares of common stock outstanding.
Stock options, warrants, and convertible preferred stock are not considered in the calculation, as the impact of the potential common shares (9,642,661 shares at December 31, 2001 and 15,578,426 shares at December 31, 2000) would be to decrease loss per share. Therefore, diluted loss per share is equivalent to basic loss per share.
3. Common Stock, Convertible Debentures, Stock Options and Warrants:
During the six months ended December 31, 2001, the Company issued 36,000 shares of common stock to third parties in exchange for services valued at $27,360 based on the quoted market price of the Company's common stock on the date the services were performed. During the six months ended December 31, 2000, the Company issued 1,194,616 shares of common stock in exchange for $1,431,633 of convertible debentures and $48,296 of accrued interest on the convertible debentures. The remaining $1,850,000 of convertible debentures (having a carrying value of $1,829,239, net of unamortized discount) and accrued interest of $59,878 were redeemed, at a 25% premium, for cash of $2,372,378, and in exchange for an additional warrant to purchase up to 50,000 shares of the Company's common stock at an exercise price of $2.17 per share (the market value of the Company's common stock at the date of grant). The warrant was valued at $68,550 using the Black-Scholes pricing model. The value of the warrant and premium on redemption of the convertible debentures resulted in a loss on extinguishment of debt of $551,811 (accounted for as an extraordinary loss in accordance with SFAS No. 4). The Company also issued 36,000 shares of common stock to third parties during the six months ended December 31, 2000 in exchange for services valued at $82,116 based on the quoted market price of the Company's common stock on the date the services were performed.
During the six months ended December 31, 2001, the Company granted stock options to purchase 540,000 shares of common stock at exercise prices of $0.66 to $0.70 per share to employees and a director of the Company. During the six months ended December 31, 2000, the Company granted stock options to purchase 1,905,000 shares of common stock at exercise prices of $1.625 to $2.375 per share to employees and directors of the Company. The exercise prices of the options granted in 2001 and 2000 were based upon the quoted market prices of the Company's common stock on the dates of grant. The stock options expire in the years 2010 and 2011.
In September 2000, the Company issued a stock option to purchase 50,000 shares of common stock at $3.00 per share for services received from a third party. The stock option expires on December 31, 2002. The option was valued at $56,650 using the Black-Scholes pricing model, and that expense was charged to general and administrative expense.
During the six months ended December 31, 2001, warrants to purchase 50,000 shares of common stock expired.
From an 8K filing in May 2001:
ITEM 5 OTHER EVENTS
On April 27, 2001 NanoPierce Technologies, Inc. (the "Registrant") filed an action in the United States District Court in and for the District of Colorado, against Harvest Court, LLC, Southridge Capital Investments, LLC, Daniel Pickett, Patricia Singer and Thompson Kernaghan, of Toronto (Canada) (collectively, the "Defendants").
The suit alleges among other things, that the Defendants have violated Sections 10 and 20 of the Securities and Exchange Act of 1934 (the "Act"), violations of anti-fraud and controlling persons sections of the Colorado Securities Act, aiding and abetting violations of the Colorado Securities Act, common law fraud, civil conspiracy and Declaratory Judgment against the Defendants.
The Registrant is seeking various forms of relief from the Defendants, including an accounting, a declaratory judgment, actual damages of at least One Hundred Ninety Million Dollars ($190,000,000) due to the decline in the market value of the Registrant's common stock ("Common Stock") caused by the actions of the Defendants and exemplary and treble damages.
The Registrant has engaged the firms of O'Quinn & Laminack and Christian & Smith each of Houston, Texas and Holme, Roberts & Owen LLP of Denver, Colorado to represent it in the suit.
On April 9, 2001, the Registrant executed a Litigation Support Services Agreement (the "Agreement") with It/Is, Inc., a Texas corporation. Pursuant to the Agreement, the Registrant paid a Fifteen Thousand Dollar ($15,000.00) retainer and will issue free trading shares of its Common Stock equal in value to One Million Dollars ($1,000,000.00) against the expenses incurred and to be incurred on the Registrant's behalf. The Registrant, using the closing bid price of its Common Stock on April 9, 2001 will issue Three Million, One Hundred Twenty-Five Thousand (3,125,000) free trading shares of its Common Stock. The Registrant intends to register such shares in the future.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 30, 2001 NANOPIERCE TECHNOLOGIES, INC.
/s/ Paul H. Metzinger
--------------------------------
Paul H. Metzinger, President &
Chief Executive Officer
As far as what good I believe we would be able to derive from the authorization of more stock to 200 million shares, we have the explaination from the 8K filing today, which says:
Registrant increased its authorized capital for among other reasons:
(i) to have sufficient authorized capital available for anticipated strategic investment opportunities; and
(ii) as part of a strategic plan incorporating defensive measures to reduce the likelihood of a hostile takeover.
Since NanoPierce is looking to do more expansion and has been receiving offers of Industry funding for that purpose they need to have enough authorized stock to be able to take a block of stock and use it for a funding. If they did not have enough stock authorized and had to give up a significant portion of the remaining shares it would leave the company either unable to accept a funding that required more than the available authorized shares and if they have more authorized they would be able to take a funding without giving the company away. Just because they have increased the authorized it does not mean they will issue all of those shares. Remember that if we get an industry funding it will increase the value of the stock by taking a significant portion of stock out of the outstanding shares and putting it into a partner's hands. This would have the effect of stabilizing the stock and the investment would validate NanoPierce's technology and show its value to the market. This is my opinion and understanding based upon what I have heard in the meetings in Las Vegas and through conversations with various parties related to the company.
Kathy
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