Mike: Here are three interesting things about JKP.
One, not only do you not see Jill Kelly’s name in the material you cited, go to their press releases, and you don’t see Jill Kelly’s name when they describe the company, it’s business strategy, or even it’s stable of performers. She’s in the name of the company, but that’s it.
Two, I can’t find SEC filings on the company. I know they have to be out there somewhere, like the X files, but where, who knows. The company is very thinly traded — about 3000 shares a day. Today, 300 shares traded.
Three, a convertible equity deal usually works like this: I borrow money — debt — from you. In this case, $3 million. I agree to pay you back principal and interest at an agreed upon rate. Let’s say 8%, or $240,000 per year in interest.
However, I give you the option of converting that debt into equity (stock in my company) at an agreed upon price at a later date.
Let’s say the stock is trading for $2.50 a share, which is was today. I could agree to let you convert the debt into equity a year from now at $3 a share.
A year from now, the stock is trading at $3.50, and all I’ve done is pay interest, so I still owe you $3 million. You say, ah, what the heck, I’ll convert the debt into 1 million shares of equity at the agreed upon price of $3 per share. I’ve now made $500 thousand — 50 cents per share profit on 1 million shares, plus the $240,000 in interest you paid me over the last year.
Of course. JKP may be slippery as all get out. You would know that far better than me. And the OTC is the wild, wild west of the investment world.
But something else occurred to me as I was lying in bed last night after sending you the e-mail.
Is it possible that what you’re seeing is the rationalization of the porn world, or at least the starts of it? Here’s what I’m getting at.
During the dot.com boom, and even before, one of the things you saw was the consolidation of previously fragmented industries, that is, those industries where start up costs are low; barriers to entry are few; and while their may be regional or local market leaders, there’s no industry leader.
Classic example in the retail industry that predates the dot.com boom is Staples and Home Depot. Prior to them you had tons of mom and pop office supply/printing companies that served local or regional markets. Now, those mom and pops are mostly gone or reduced to niche players.
Classic example in the service industry is the carpenter/contractor/home builder. Any laid off mill worker with a hammer can call himself a contractor and go into business. Meanwhile, a few large national homebuilders are little by little gobbling up the industry.
Apply that to porn. Any low life with a girlfriend and a camcorder can shoot porn. But, especially at the higher end of gentleman’s clubs, pay per view, at-home couples, inroom hotel porn, and the intersection of pop culture and porn, are we seeing attempts to rationalize and bring business discipline to that industry. It strikes me that Vivid is certainly trying to do that; certainly Hustler has been trying to do that for years. Could JKP be trying to do that?
Don’t know. You know these operators better than me. But I can see where it would make sense.
That’s an interesting thought actually. Porn is quite the anomoly in that people will lose money in it yet continue to stay, theres a long overdue shakeout coming….Maybe JKP wants to be bought by Hustler.
