Scangraphics Announces 'Restructure' of $5.2 Million Equity Placement; Investor Group Agrees to a Six-Month Hold On Conversions
LIMERICK, Pa.--(BUSINESS WIRE)--Aug. 7, 1998--Scangraphics(R) Inc. (NASDAQ: SCNG) announced today that it has "restructured" the $5.2 million private placement of equity securities, which consisted of Series E Preferred Stock and warrants, that was completed in April 1998 through a New York-based investment group.
Under the new terms of the equity placement, the investors have agreed to no conversions of Series E Preferred from Aug. 1, 1998 through Jan. 31, 1999. Thereafter up to 25% of the remaining Series E Preferred may be converted per month on a cumulative basis per holder.
This restriction is lifted at conversion prices at or above $3.00 per share, which would require the average closing bid price to exceed $3.53 per share for the prior 5 trading days. Prior to this restructure of the agreement, the investors were allowed, starting in July 1998, to convert up to 10% of their Series E Preferred to common stock per month and to sell the common stock into the market.
The Company believes that this agreement will permit its stock to achieve market prices more reflective of its performance and the opportunity represented by SpatialVision(tm), the desktop, laptop and net-based software suite of products recently introduced by its Sedona GeoServices business unit.
As a part of the restructured agreement, the Company has agreed to adjust the exercise price of 1,500,200 warrants issued to the investors (28,850 warrants per $100,000 invested) from $3.00 per share to $2.25 per share, under the condition that prior to Feb. 1, 1999, these warrants cannot be exercised if the common stock is below $4.00 per share.
In addition, the Company has agreed to issue up to 1,500,200 new warrants to the investors (28,850 warrants per $100,000 invested) to purchase stock at an exercise price of $4.00 per share. These new warrants will not vest (become exerciseable) until Feb. 1, 1999. An investor will receive 28,850 warrants for each $100,000, or pro rata portion thereof, of Series E Preferred held on Feb. 1, 1999.
Larry Osterwise, the president and CEO, has indicated that, "Scangraphics has made what I believe are a number of terrific announcements over the last few months and there are more to come. It is now time for Scangraphics to demonstrate that it can achieve quarter-to-quarter improvements in revenues and earnings for the rest of 1998 and beyond."
Osterwise added that, "This newly restructured investor agreement provides time for Sedona's new SpatialVision suite of software products to be introduced into the market and to achieve recognition as the breakthrough software that we believe it is."
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