Each one in plain English, with the numbers worked through for a shareholder.
29 Dec 2004capital raising announcement● NeutralMajor
The company closed the first sale of Series B Preferred units to accredited investors on December 23, 2004: 60 units at $13,000 for $780,000 gross ($683,070 net of placement agent costs). Each unit carries 12% preferred stock convertible at $0.65 per share and a three-year $1.50 warrant, so it adds cash but also a preferred dividend claim and potential dilution for common holders.
This finalises the terms left open in the McKey loan: her warrants (both the older Series A set and the new 75,000-share set) are now priced at $1.50 for three years, and the Series A Preferred conversion price drops from $2.68 to $0.65 per share. The company also created a new Series B 12% Cumulative Convertible Preferred (up to 36,036 shares, convertible at $0.65), ranked equally with Series A, and issued 60,000 common shares to two directors to cancel $45,000 of compensation accrued in the year ended February 28, 2003. Lower conversion and exercise prices mean more potential dilution for common holders.
The company borrowed $250,000 from Candace McKey (a 10%+ owner it disclosed in July) on August 30, 2004, at 18% interest, due on the earlier of receiving $2,000,000 in equity financing or August 31, 2005. The loan is secured by its subsidiary Skyline Resources' interest in the Robidoux oil and gas lease in Moffat County, Colorado, and McKey's warrants rise from 6,250 to 75,000 shares with terms still to be set; this is more dilution for shareholders.