The latest news is very good and I see no problem with the transfer of debt to cash. The shares are unregistered therefore cannot be traded without special requirements being met. These shares do not constitute dilution by any stretch, though the share price will fluctuate with the float. Whoever bought the shares must have a high degree of confidence in MDFIs prospects and is likely anticipating an appreciation in the value of the stock. I believe the shares represent an open ended promissory note without interest or a fixed duration.
Interest expense was nearly $13,000 in the 2009 10K. So that is all the effect this wipe out of debt will have. This cannot be construed as BIG news. Sorry, I am long and want the co. to take off as much as anyone here but this is nothing.
As anyone has read from the latest financials, the co. is strapped for cash and is being choked by compensation expense. Of course, the only way to really finance themselves is to issue more stock and/or debt. Looks like they are going the stock route which will dilute us further. At least the stocks are restricted meaning that certain conditions must be met by the awardee so this is a good way of obtaining services by consultants/vendors without having to have the cash on hand to pay them. We'll see where this goes. As of the latest K and Q, MDFI has 1,463,021,410 shares o/s with 8,175,000 warrants vested and exercisable with the majority being 7,800,000 at 60 cents but they all expire in a year. Add on top another 5,640,000 vested options @ 80 cents due to expire in 1 year.
So given our current price it doesn't seem that the warrants nor the options prove to be a significant dilution threat. All in all, it brings us to square one which is somehow increasing the number of memberships because we are pumping nearly $2M in advertising and it's not doing much. Hopefully, the contracts agreed to in Jan and Feb will add to the bottom line. But it looks to be a long road ahead. Be ecstatic if this hits near 2 cents but 5 cents is a long way off IMO. Buy at these prices but stay on the side lines when/if this hits a penny.