PROP

1) Series F Preferred Structure (Contractual) Issuance and Terms (March 24–26, 2025): • PROP issued 148,250 shares of Series F Convertible Preferred Stock with a stated value of $1,000 per share (≈ $148.3 M total).  Dividend rights: • Cumulative dividend at 12% per year on stated value plus unpaid dividends.  • Company may pay dividends in common stock if it chooses to do so (not uncommon).  Conversion rights: • Holder can convert at any time into common stock at a standard rate of 202.0202 common shares per preferred share (initial base).  • Conversion price floor: minimum of $1.15 per common share even if the market price is lower.  • Alternative conversion terms also exist that may allow conversion at different rates.  Warrants: • On the one-year anniversary of closing (around March 26, 2026), if any Series F remains outstanding and the common stock price in the preceding 20-day window was less than 115% of the conversion price, the holder gets warrants for additional common shares.  Redemption: • The company has the right to redeem all (but not less than all) Series F for cash at terms defined in the Certificate of Designation.  ⸻ 2) Relevant Timelines and Practical Deadlines March 26, 2026 — Warrants issuance test: If any Series F remains outstanding by this date and the stock price triggers the condition (<115% of conversion price during test period), the holder automatically receives additional warrants. This increases the ultimate potential share count if exercised.  But crucially: • There is still no automatic forced conversion date in the contract. • There is no maturity or set deadline where the preferred must convert or expire. • The holder always retains the choice to convert or hold. So the only contractually significant milestone in the near term is the first anniversary (≈ Mar 26, 2026) warrant test, but the underlying Series F itself remains outstanding beyond that until the holder chooses to convert or the company redeems it. ⸻ 3) Current Activity and Company Position Dividend Payments / Partial Conversions Already Occurred According to one translated filing: • Dividends for June and September 2025 were paid in common shares rather than cash. • A modest number of Series F shares have already been converted into common (16,000 & 19,250 shares yielding millions of common shares).  This is important because: • Paying dividends in common stock increases share count (dilution). • Any conversion (even partial) reduces the preferred outstanding but increases common shares outstanding. Equity Issuance Tools • PROP also has an At-the-Market (ATM) program up to $75 M that could be used — among other things — to help redeem Series F shares.  This is not a guaranteed redemption source, but it gives the company flexibility if it needs to raise equity capital efficiently. ⸻ 4) What the Contract Actually Means for Dilution Conversion Mechanics • Standard conversion: ~202 common shares per preferred share. • If all 148,250 were converted at that rate: ≈ 30 million common shares would be issued.  Common share outstanding (per Reddit-derived info, consistent with filings) is ~50.3 M as of late 2025 — meaning potential dilution could increase share count by ~60%.  Conversion does not depend on a stock price threshold — the holder can convert anytime even at a low price (subject to the $1.15 floor).  ⸻ 5) Most Likely Outcomes Based on Current Filings and Conditions Here are the investment-relevant scenarios, ordered by likelihood given current data: A) Continued Slow Conversion (Partial) • Holder may convert incrementally rather than all at once. • Already seen some conversions — suggesting the holder is not inert.  • This mitigates total preferred outstanding but also gradually increases common share count. Implication: Moderate dilution as needed; little market shock. ⸻ B) Warrants Issued March 2026 + Subsequent Exercise • If Series F remains outstanding by March 2026 and the stock is below the 115% threshold (likely if price remains depressed), the holder gets warrants.  • These warrants add to dilution if exercised. Implication: Higher total dilution (preferred + warrants). ⸻ C) Holder Converts All Series F Before Redemption (Depending on Preference) • Holder may choose full conversion if they assess that redemption in cash is unlikely or equity upside is preferable. • Conversion generates common shares regardless of price above $1.15 — sometimes even at depressed prices. Implication: This is a very plausible outcome and could be the dominant dilution pathway if PROP cannot or does not redeem. ⸻ D) Company Raises Cash to Redeem Series F • This would require a significant cash inflow (debt refinancing, asset sale, equity raise). • ATM program exists, but the company has not issued under it yet.  Implication: Least likely absent a definitive financing event. TLDR; I have 90% of my portfolio in this