The Company is not able to predict the outcome of any future claims which might be asserted relating to the unissued shares. If such claims were asserted, and were fully successful, that could result in the Company�s being required to issue up to an additional 4,115,532 shares of common stock for no additional payment, which would result in substantial dilution of the ownership interests of the other stockholders, and in the Company�s earnings per share, which could adversely affect the market price of the common stock.
In October 2004, the Company announced a program under which it will make cash payments to persons who establish that they were former stockholders of Travelzoo.com Corporation, and who failed to submit requests for shares in Travelzoo Inc. within the required time period referred to above. In the three months ended September 30, 2004, the Company recorded a liability of $220,135 related to this program. The total future liability under this program is not reliably estimable because it will depend on the ultimate number of valid requests received and future levels of the Company�s common stock price. The Company�s common stock price affects the amount of this liability because the amount of cash payments under the program is based in part on the recent level of the stock price at the date valid requests are received.
From their website and description of this program:
"The Board of Directors of the Company has now approved a program to grant to the former shareholders of Travelzoo Bahamas who failed to submit requests for shares in the Company within the required time period the opportunity to receive a cash payment equal to the market value of the shares of the Company they would have received if they had submitted their requests within the required time period. The cash payment will be based on the average closing price of the Company�s common stock for the ten trading days prior to receipt by the Company of proof of eligibility by a former shareholder.
No expiration date has been set for this program."
So, no SEC ruling necessary... anyone else think that this will be a major expense for this qtr? According to the above, they've committed to paying cash, not just issue diluting shares.
I can't decide if I think that whoever is pushing the price around will continue unabated until the PIPE shares hit, and/or if the PIPE funds are chomping at the bit to get the go-ahead to sell asap.