Re: >>>Today, SyQuest has about 80 million shares (actually more than double that when you consider the potential dilution from preferred and warrants).<<<
According to Syquest's recent S-3/A filing, it appears that share dilution is happening very quickly this month. Here's a brief status update:
(common shares rounded to millions)
___________12/10/97 & 02/05/98____02/20/98
Issued & Outstanding:___72 Mil.____98 Mil.
Options & Warrants:_____80 Mil.____69 Mil.
Total Accounted for:___153 Mil.____167 Mil.
Total Authorized:______240 Mil.___240 Mil.
Total Available:________87 Mil.____73 Mil.
I calculated the current 98 million shares issued and outstanding number from the following statements in their SEC filing:
"As of February 20, 1998, the Company had outstanding options and warrants to purchase approximately 68.6 million shares of Common Stock, at a weighted average exercise price of approximately $2.80 per share." and "On February 20, 1998, assuming the conversion of all remaining Preferred Stock, the exercise of all warrants and other stock commitments, the Company would have had approximately 166.5 million shares of Common Stock issued and outstanding."
If we take into account the recent (2/18/98) financing of $28 million which added 8.3 million common share equivalents and 4.2 million warrants, along with the reported overall reduction of warrants and options by 11 million, we can assume that there were recent conversions to the tune of about 24 million shares.
I would venture to guess that in order to make this happen, the EdHeads may have followed through with their plan as stated in their recent SEC filing:
"Management may have to entice existing warrant holders to exercise their warrants by offering discounts to the contractual exercise price and/or issuing exchange warrants at market or negotiated discount exercise prices."
If this is what has happened, I would expect that Syquest would have to show some sort of corresponding loss in their next earnings report.
Increasing the issued and outstanding shares by such a huge amount could account for some of the recent share activity. The spike in volume and share price could be the result of major players setting things up to unload the new shares and lock in a profit.
JMHO - Regards - Dale |
