Serious Issues and NegligenceComments on Convertible Debt:
1) Margin for the ESL business is not big, and a competitive business with hundreds of ESL schools around the country. I would imagine that the margin for ESL business is single digit. Ripping 7.5% to pay interest is bad business. Bank loan is only at 3 - 4%. Why pay double?
2) If things go well, the CD has a convertible feature that would put another 10 million shares onto the market in addiiton to the 140M shares "already" out there. And, if things really do well, there are another 70M shares of Warrants outstanding, totalling 260 million shares!! I am wondering whether shareholders want their shares to do well or do bad. A lot of these baggages were dug some deep it is impossible to reverse the course.
3) Reading back those posting from 6 weeks ago, someone has the source to know in advance of a Convertible Debt raise. At that time, such rumor said a $10M raise. The end result was $5M. Simply said, the investment community is becoming dis-interested in the stock, and unwilling to support it.
Short Term Looming Debt:
According to LOY news releases, they owed $2M to MTI, and $4M to KGIC, both due in March 2014 and June 2014. Early rumor of their $10M raise has validity because they need the money to cover the $6M debt with breathng room. Now that only $5M is available (if indeed successful), LOY is still $1M in the hole. If street rumor is correct that LOY is really tight in cash flow now, taking another $1M away (net of all the new money arriving) will put the nails into the coffin.
Stock Options:
Must be a fight at the Board level. I have not seen a CEO issues a news release to decline the stock option unless he feels that the Stock Options granted price is unrealistic at $0.50 (according to news release). He is smart to decline the Option so that he re-grant at lower prices today or going forward to even lower level exercise price. If he keeps his Options at $0.50, shareholders would know for a fact that the CEO has the incentive to get the share price above $0.50 to make the Option meaningful and beneficial to him.
Assuming that the stock is at $1 today, would he cancel his Stock Option priced at $0.50, and give away $0.5M dollar of profit? He has the benefit of hindsight. I
f exercise price is priced too high, decline to accept. If priced low, he keeps. This is a serious breach of public trust and negligence. I am surprised that this is acceptable by the Scam Exchange and the Securities Commission!!
You folks should expect the rest of the Board Members all decided to "Decline" their Stock Options, and then re-price it at lower price, then Accept the new option grant.
This is so unfair to ALL shareholders.