Replies to post #13644 on Citadel EFT Inc (fka CDFT)

[Croireavenir]

It's perfectly doable. But only after CDFT files with the SEC to raise the Outstanding Shares so after 12 months (unless CDFT registers the shares before 6 months) Preferred C or D could be converted to Commons and sold.

But according to SEC Rules:

1) If the conversion is over 5% the beneficiary has to file a Form 4 with the SEC. http://www.sec.gov/divisions/corpfin/guidance/reg13d-interp.htm

Question 105.03

Question: If a security holder owns convertible preferred securities that are convertible into greater than five percent of a class of equity securities registered under Section 12 of the Exchange Act, is the security holder obligated to file a beneficial ownership report even though the conversion terms of the preferred securities expressly provide that the security holder may not convert the preferred securities if doing so would cause it to own more than five percent of the issuer's outstanding underlying equity securities?

Answer: Depending on the conversion terms, it is possible that the security holder would not be obligated to file a beneficial ownership report. Rule 13d-3(d)(1)(i) states that a security holder is deemed to beneficially own any underlying securities that the security holder has the right to acquire within sixty days, including the right to acquire through conversion. Conversion provisions that limit the ownership of a class of securities must be binding and valid (e.g., provisions that are non-waivable, enforceable, established in the issuer's governing instruments, applicable to affiliates and assigns, etc.) to effectively eliminate the right of the holder of the convertible securities to acquire the underlying shares and, thereby, relieve the holder of a beneficial ownership report filing obligation. [For a further discussion of the factors that may indicate that a conversion cap is binding and valid, see Brief of the Securities and Exchange Commission, Amicus Curiae in Levy v. Southbrook International Investments, Ltd.] [Sep. 14, 2009]

2) Since the O/S is 233,824,960 shares and the conversion rate for Series C and D Preferred Shares is convertible into the number of shares of common stock equal to the price of the Series C stock divided by the par value of the common stock. So $1.00/.0001 = 10,000 Common per Preferred. They would need to file with the SEC to raise the O/S at all. Not to mention the CEO has stated he will retire 70% of his ~168 million common shares he owns.

3) Dividend income is taxed at a Capital Gains rate. Converting to Common Shares would also result in regular tax rates being applied to the sales (unless they were to hold for a year after converting).