Out of my pay grade, but I think the numbers outlined are a bit off. Unfortunately the $5 mil loan is much worse as things unfold.
As of today, outstanding shares are ~ 156 million. Also as of today the company has authorized shares up to 500 million so to answer that question - no the company does not need shareholder approval to release more common outstanding shares. They can go up to 500 million.
This said, the loan is much worse than anticipated because the initial projection was ~ 47 million conversion for the $5 million loan. However as we just learned after converting just 35 preferred shares they were issued ~7.5 million share which works out to ~ 200K common shares per preferred share. That means the lender still has another 465 preferred shares to convert @ ~ 200K per share = ~ 104 million shares to convert It gets worse as the share price sinks.
Far cry from the initial projected conversion of ~ 47 million.
They didn't give away 25% of the company more like they gave away 55% of the company. (35 million conversion for 35 preferred shares + 104 million (based on today's price) for the remaining 465 preferred shares). That sucks - OWCP management misjudged and now they're in a world of hurt meaning we're in it too.
In theory Discovery could hold on to all the shares and assume majority control based on the numbers above but it doesn't appear they are doing that. Rather they are dumping on the market as quick as they can to get their money back - they don't want to own this company. Question I have though who is buying? The volume can't be supported by retail so who is behind the buying while all the shares are being dumped?
Now switching gears to the Reverse Split request. I don't know what protections are built into the loan agreement to protect Discovery from the negative impact of a reverse split but here's the crux why a reverse split could be bad for both Discovery and existing shareholders.
Nowhere did I read the the AS of 500 million was being reduced after the RS. So even if they do a 100 to 1, 200 to 1, etc split. Bottom line if the AS remains the same @ 500 million they have tons of room for further dilution which will crush existing shareholders.
I don't know what the end game is but I know I'm gripping because a large reverse split could destroy me without little hope of ever recovering. I hate to say it but I really hope Milo is able to effectively communicate with them the severity of the situation.
Bottom line they really screwed up - the would have been better off when the stock was trading in the $0.30 - $0.40 range to do straight up dilution than get in bed with Discovery who is screwing them over royally.
As of today, outstanding shares are ~ 156 million. Also as of today the company has authorized shares up to 500 million so to answer that question - no the company does not need shareholder approval to release more common outstanding shares. They can go up to 500 million.
This said, the loan is much worse than anticipated because the initial projection was ~ 47 million conversion for the $5 million loan. However as we just learned after converting just 35 preferred shares they were issued ~7.5 million share which works out to ~ 200K common shares per preferred share. That means the lender still has another 465 preferred shares to convert @ ~ 200K per share = ~ 104 million shares to convert It gets worse as the share price sinks.
Far cry from the initial projected conversion of ~ 47 million.
They didn't give away 25% of the company more like they gave away 55% of the company. (35 million conversion for 35 preferred shares + 104 million (based on today's price) for the remaining 465 preferred shares). That sucks - OWCP management misjudged and now they're in a world of hurt meaning we're in it too.
In theory Discovery could hold on to all the shares and assume majority control based on the numbers above but it doesn't appear they are doing that. Rather they are dumping on the market as quick as they can to get their money back - they don't want to own this company. Question I have though who is buying? The volume can't be supported by retail so who is behind the buying while all the shares are being dumped?
Now switching gears to the Reverse Split request. I don't know what protections are built into the loan agreement to protect Discovery from the negative impact of a reverse split but here's the crux why a reverse split could be bad for both Discovery and existing shareholders.
Nowhere did I read the the AS of 500 million was being reduced after the RS. So even if they do a 100 to 1, 200 to 1, etc split. Bottom line if the AS remains the same @ 500 million they have tons of room for further dilution which will crush existing shareholders.
I don't know what the end game is but I know I'm gripping because a large reverse split could destroy me without little hope of ever recovering. I hate to say it but I really hope Milo is able to effectively communicate with them the severity of the situation.
Bottom line they really screwed up - the would have been better off when the stock was trading in the $0.30 - $0.40 range to do straight up dilution than get in bed with Discovery who is screwing them over royally.
