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Is this Pref share structure egregious or normal?


Mark Jr.
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I'm doing some work on a microcap I found on the CSE (BYRN, also lists on OTCBB). I've opened a position, I really like the product, they're growing fast and having a hard time keeping up with demand. I think this could be somewhat akin to the next Taser. (It' a non-lethal gun that fires a chemical irritant, see byrna.com - I do plan on posting to the Investment Ideas section)

 

There are about 124M shares out, but when I was researching insiders, I found that Pierre F Lapeyre Jr., who owns 10% of the commons, also owns 338 Pref A's.

 

Looking at the 10Q is appears as though when "certain conditions are met", the prefs can convert into commons at the rate of 0.15*5000

 

There are 1,391 prefs issued, which by my math would fully convert out to another 46M shares, or 37% of the equity.

 

This is an obscure microcap, but Lapeyre seems to be a heavy hitter - is this a par for the course scenario, where if this works out I just have to factor in and anticipate forthcoming dilution?

 

Or would you consider this over the top?

 

 

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