This looks grim...
DIGITAL SOUND CORPORATION ANNOUNCES GRANTOF EXEMPTION BY NASD
CARPINTERIA, CA, December 9, 1997 -- Digital Sound=E2 Corporation
(NASDAQ:DGSD) announced today that it has received approval from the
National Association of Securities Dealers, Inc. to proceed with the
Company's previously announced proposed sale of up to $20 million of a
new series of convertible preferred stock and convertible debt at a
price of $0.75 per share of common stock on an as-converted basis
without obtaining prior shareholder approval. Under the applicable
rules of the Nasdaq Stock Market, the company ordinarily would have been
required to seek shareholder approval for the sale of the securities
because the securities would be convertible at discount to the current
market price into more than 20% of the number of shares of the Company's
common stock currently outstanding, and also because, due to the size of
the transaction, the sale of the securities could be deemed to
constitute a change of control of the Company. Due to the Company's
financial situation, however, the delay associated with seeking
shareholder approval would have seriously jeopardized the Company's
financial viability. As a result, the Company requested and has been
granted an exception by the NASD to proceed without shareholder approval
in this instance. A special committee of the Company's board of
directors expressly approved the issuance of the additional shares
without shareholder approval. Concurrently with the proposed sale, the
Company also expects to exchange the 2,631,579 shares of the Company's
Series A Convertible Preferred Stock held by affiliates of Oak
Investment Partners for shares of the new series of convertible
preferred stock valued at $5 million based on the same price of $0.75
per share of common stock on an as-converted basis. The exchange with
affiliates of Oak was also covered by the exception granted by the NASD.
This public announcement of the Company's plans to proceed with the
proposed transactions without obtaining shareholder approval is required
by the rules of the Nasdaq Stock Market. The Company currently plans to
close the transactions on or shortly after December 18, 1997. The
consummation of the proposed transactions remains dependent on the
Company's ability to reach definitive agreements with the potential
investors. As a result, there can be no assurance that any such
transactions will be consummated.
About Digital Sound
A leading supplier of network-based, communication-management solutions,
Digital Sound gives people the freedom to manage voice, fax and e-mail
messages anytime, anywhere, using a telephone, personal computer, fax,
pager or web browser. Digital Sound's product line integrates messaging
and speech technologies on an open-systems platform, giving its
customers - public network service providers -- a strategic advantage in
a highly competitive marketplace.
###
Maria Martinez |
