I'm obviously (& gratefully) not a lawyer, so my o
Post# of 22467
(Total Views: 461)
Posted On: 03/04/2018 5:06:42 PM
I'm obviously (& gratefully) not a lawyer, so my opinion means zero, but for my part, I gained some further understanding into why QMC is fighting so hard against these VC vultures instead of just caving-in & being done with it....as can be seen in these excerpts:
"Dr. Lehrer explained that a transfer of stock by Empire would likely force Quantum into a “death spiral” which could cause Quantum’s intellectual property to be sold at vulture prices:
The generally accepted literature has come to be known as a death spiral. The more shares you get, the more you can sell; the more you can control at a lower price; create more defaults; get more shares. And eventually shares have been known to trade at one thousandths of a cent in other cases --not this one. And the literature has nicknamed that the death spiral.
And if all these shares are issued and the price falls and the death spiral comes into being, then Quantum will suffer irreparable damages for something that might not be [warranted].
Transcript, p. 28.
In other words, unlike quantifiable damages, Empire’s conduct jeopardize the going-concern value of Quantum’s entire business.
Mr. Squires explained how Empire’s transfer would force a dilution of existing shareholders by operation of a nesting reset pricing effect on Quantum’s other debentures:
SQUIRES: The other debentures that he referred to do have the -- they have the option to ratchet it down. So, if we raise funds at a lower price, then their conversion rate lowers as well.
Q. And does that mean you're not going to be able to sustain any lending at all and no one would lend you money?
SQUIRES: It would probably be a massive dilution, yes.
The evidence established that the 997,500 shares at issue had a present value of about $ 10,000,000. The expected infusion of $150 million by investors, and the planned placement of the stock in a charitable trust, could significantly alter the value of the stock."
***So that's my personal takeaway from this. And aside from the arguments made by Squires in this, I did find a few other things odd or of possible interest....
#1--"established that the 997,500 shares at issue had a present value of about $10,000,000." ?? (at present +/- .06 pps, the current value should be in the $60K range, no ?)
#2--"The expected infusion of $150 million by investors" ?? ($150M ? Hmmm, I wonder; does this amount to some anticipated good news on the horizon ? They seem to be "expecting" it
"Dr. Lehrer explained that a transfer of stock by Empire would likely force Quantum into a “death spiral” which could cause Quantum’s intellectual property to be sold at vulture prices:
The generally accepted literature has come to be known as a death spiral. The more shares you get, the more you can sell; the more you can control at a lower price; create more defaults; get more shares. And eventually shares have been known to trade at one thousandths of a cent in other cases --not this one. And the literature has nicknamed that the death spiral.
And if all these shares are issued and the price falls and the death spiral comes into being, then Quantum will suffer irreparable damages for something that might not be [warranted].
Transcript, p. 28.
In other words, unlike quantifiable damages, Empire’s conduct jeopardize the going-concern value of Quantum’s entire business.
Mr. Squires explained how Empire’s transfer would force a dilution of existing shareholders by operation of a nesting reset pricing effect on Quantum’s other debentures:
SQUIRES: The other debentures that he referred to do have the -- they have the option to ratchet it down. So, if we raise funds at a lower price, then their conversion rate lowers as well.
Q. And does that mean you're not going to be able to sustain any lending at all and no one would lend you money?
SQUIRES: It would probably be a massive dilution, yes.
The evidence established that the 997,500 shares at issue had a present value of about $ 10,000,000. The expected infusion of $150 million by investors, and the planned placement of the stock in a charitable trust, could significantly alter the value of the stock."
***So that's my personal takeaway from this. And aside from the arguments made by Squires in this, I did find a few other things odd or of possible interest....
#1--"established that the 997,500 shares at issue had a present value of about $10,000,000." ?? (at present +/- .06 pps, the current value should be in the $60K range, no ?)
#2--"The expected infusion of $150 million by investors" ?? ($150M ? Hmmm, I wonder; does this amount to some anticipated good news on the horizon ? They seem to be "expecting" it
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