SCRA shares closed the market yesterday at $0.10 again without a change from the previous day close. Only the 15.03 million share volume, the highest for this year, seems unexplainable for now. The more optimistic investors could think that the shares have finally found their fair value and will remain stable at that level, but others may also wish to take into account the recent events around the company for which no press releases were issued
At the beginning of this month, SecureAlert filed a registration statement with the SEC for 47.1 million new shares of common stock that have been issued or are issuable upon conversion of preferred stock. It looks like certain investors in SCRA are willing to exit their investment. The registration should allow the resale by the selling shareholders of the shares received from the conversion of 7,850 shares of the company’s Series D Convertible Preferred Stock that were issued previously for cash in a private placement.
Still, the fact that SCRA total number of outstanding shares has increased from 238.7 million at the end of June 2010 to 294.3 million as of November 22, 2010 should not be really a surprise. At the end of this year’s second quarter SecureAlert had a total of 37,851 shares of Series D Convertible Preferred Stock outstanding, part of which resulted from the conversion of an unsecured note into preferred stock.
Thus, dilution looks likely to continue with the additional outstanding debts that the company does not have the resources to repay and with the sales that show no growth in the four previous quarters.
