It's in finance-ese. I'll do as best as I can. A bit of background: Infinium is a very thinly traded company on the over-the-counter market. As of early January, shares were worth around $1/share. Currently they are worth about $5/share. They raised $15MM in late Jan, by selling 2,000,000 shares at $7.50/share.
As of January 2004, Infinium needed to come up with some cash, probably to pay their legal bills.
They found someone to borrow money from, and issued a promissory ("I promise to give you money") note. Those lenders are unnamed, but may be original investors, VC types, executives, a bank, or the lawyers themselves. The loan pays no interest.
There are 2 triggering events for the note to be paid. If they win their litigation, and the recieve more that $150K, the note must be paid. If they are enter a merger agreement within 8 months, the note must be paid. The merger does not have to be completed. I'm not sure if the note has to be paid if neither of these events occur, there's not enough information to determine that.
The note can be paid in two ways (cash or stock), and we don't know who gets to pick. The outcome for cash is obvious (Infinium gives lender $100K). Under the "stock outcome" the lender will probably get shares of Infinium at or close to the January Share price (~100K shares at $1/share). Those can then be sold on the open market.
Speculation: The note was issued by the lawyers, partially in exchange for services rendered. The holder of the note "gets to pick: stock or cash." Infinium Labs was awfully short of cash. Like, probably stretching to make payroll. Without that 2nd round of financing, they were probably going to have to close their doors. At $5/share, with 20+M shares out, this company is worth $100M. To me that seems like a heck of alot for a company with no product, brutal cash flow, and higher expenses on litigation than practically anything else.
Hope this helped.
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This the best idea! Once I figured out how to read the text before class and then go to class with a highlighter, textbook, and pen, my grade point average went up by about 0.5 points.
The oddest thing was that I never saw anyone else doing this in my 4 years at college.
No, it is not obvious to me why this doesn't contribute anything to the economy. It would seem to me that if "government profits" rose faster than "government expenses", then this could continue indefinitely. Please enlighten me.
The details are important.
The Government can borrow money much less expensively than you can (look at your credit card, and the interest rate on a treasury bill,note, or bond). In order to increase spending, the government borrows money (from us), and spends it, creating jobs. Hopefully, this increases GDP at a high rate, thereby increasing tax revenues. While it eventually is paid back by our taxes, if this stimulus was applied correctly (economy expanded) then the government should be able to raise more money at the same tax rate.
You are right in that the government has no money of it's own, but it does have the ability to borrow relatively inexpensively.
For an example, please refer to FDR's New Deal and the increased productivity of the US Economy right after the Great Depression.
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It's in finance-ese. I'll do as best as I can. A bit of background: Infinium is a very thinly traded company on the over-the-counter market. As of early January, shares were worth around $1/share. Currently they are worth about $5/share. They raised $15MM in late Jan, by selling 2,000,000 shares at $7.50/share.
As of January 2004, Infinium needed to come up with some cash, probably to pay their legal bills.
They found someone to borrow money from, and issued a promissory ("I promise to give you money") note. Those lenders are unnamed, but may be original investors, VC types, executives, a bank, or the lawyers themselves. The loan pays no interest.
There are 2 triggering events for the note to be paid. If they win their litigation, and the recieve more that $150K, the note must be paid. If they are enter a merger agreement within 8 months, the note must be paid. The merger does not have to be completed. I'm not sure if the note has to be paid if neither of these events occur, there's not enough information to determine that.
The note can be paid in two ways (cash or stock), and we don't know who gets to pick. The outcome for cash is obvious (Infinium gives lender $100K). Under the "stock outcome" the lender will probably get shares of Infinium at or close to the January Share price (~100K shares at $1/share). Those can then be sold on the open market.
Speculation:
The note was issued by the lawyers, partially in exchange for services rendered.
The holder of the note "gets to pick: stock or cash."
Infinium Labs was awfully short of cash. Like, probably stretching to make payroll. Without that 2nd round of financing, they were probably going to have to close their doors.
At $5/share, with 20+M shares out, this company is worth $100M. To me that seems like a heck of alot for a company with no product, brutal cash flow, and higher expenses on litigation than practically anything else.
Hope this helped.
I am scared of other operating systems.
Hello pot, it's the kettle calling.
This the best idea! Once I figured out how to read the text before class and then go to class with a highlighter, textbook, and pen, my grade point average went up by about 0.5 points.
The oddest thing was that I never saw anyone else doing this in my 4 years at college.
we took the same economics classes, didn't we?
No, it is not obvious to me why this doesn't contribute anything to the economy. It would seem to me that if "government profits" rose faster than "government expenses", then this could continue indefinitely. Please enlighten me.
and what happened during WWII to get us out of the Depression? Increased Government spending.
The details are important. The Government can borrow money much less expensively than you can (look at your credit card, and the interest rate on a treasury bill,note, or bond). In order to increase spending, the government borrows money (from us), and spends it, creating jobs. Hopefully, this increases GDP at a high rate, thereby increasing tax revenues. While it eventually is paid back by our taxes, if this stimulus was applied correctly (economy expanded) then the government should be able to raise more money at the same tax rate. You are right in that the government has no money of it's own, but it does have the ability to borrow relatively inexpensively. For an example, please refer to FDR's New Deal and the increased productivity of the US Economy right after the Great Depression.
Usually, i read really good comments on slashdot from readers. This one was completely asinine.