ADSI's Preferred A Share deal is a good one with 1 Caveat
Reading through this confusing Preferred A Share situation that was recently negotiated I come to some conclusions and thoughts.
ADSI or American Defense Systems Inc. is a defense stock that specializes in Crew Protection Kits, Bullet Proof Windows and armored doors, among other products and training programs.
The company has been involved in a sticky situation with West Coast Partners related to converting the preferred shares for Cash along with the payment of dividends.
The Dividends for 2009 per the negotiated agreement have been paid off....
50% of the Shares is to be converted by Dec. 31st, this year.
The interesting thing is that the dividends were paid by giving common stock to the preferred share holders at an exercise price of 60 cents (a bargain price given it's 72 cent price today).
What happens if the entity or entities want to convert their common stock to cash?
I guess that's the bad news for all shareholders... But it's just a short term OMG! factor in a long term story. The massive shares would get dumped for cash in a steady stream of sell offs and could lower the share price dramatically in the short term.
But... once you get past the sell-off.... assuming they decide to sell the stock for cash...then everything goes back to normal.
Except there's still a 375,000 common stock bag given in converting the 3.75 million $$ worth of Warrants to Common Stock at .01.
So... if that gets sold off for cash at or near the same time the Dividend to Common Stock gets sold then you have an even bigger dilluge of sell-off taking an even longer time to finish.
3-6 months? 6-12 months? 1 investor sold off thousands upon thousands of (GENC) common stock and it took dang near 6-8 months to complete.... resulting in one massively undervalued share price for GENC for a really long time.
Of course all this is pure specualtion and guess making by someone who has already said they know NOTHING about how this confusing stuff works... But just B-Sing around about it on here does help me prepare myself if the share price plummets off huge volume and there's no press release justifying it.