RE: Reverse Split, Looks like their authorized number of shares
would remain the same. Could they reissue more shares to
get past the net tangible assets requirement ? This seems incredible
that this type of shareholder dilution is allowed to happen.
Regards
Reseller
From a 14-a SEC filing by SYQT this afternoon:
Special Meeting of Stockholders of SYQUEST TECHNOLOGY, INC. (the "Company"), a Delaware corporation, will be
held on October 7, 1998, at 10:00 a.m.
1. To approve an amendment to the Company's Restated Certificate of Incorporation to effect a reverse stock split of one
share of Common Stock of the Company for every five to ten shares of Common Stock that are issued and outstanding, with
the precise number of shares to be converted to be determined by the Company's Board of Directors at a later time.
The Company is currently authorized to issue 240,000,000 shares of Common Stock, of which 135,527,455 were outstanding
on September 8, 1998. If the Reverse Split Amendment is effected, the number of authorized shares of Common Stock would
remain the same, but the number of shares outstanding would be decreased to a range of approximately 27,105,491 to
13,552,745 (depending on the Split Factor selected by the Board of Directors).
The Company's shares of Common stock have continuously traded below $1.00 since August 4, 1998, and may be delisted
from the NASDAQ National Market unless such shares achieve a minimum bid price of $1.00 or more. The Board of
Directors believes that such a delisting could adversely affect the ability of the Company to attract new investors, may result in
decreased liquidity of the outstanding shares of Common Stock and, consequently, could reduce the price at which such shares
trade and the transaction costs inherent to trading such shares. The Company believes that, if the Reverse Split Amendment is
approved, there is a greater likelihood that the minimum bid price of the Common Stock will be maintained at a level over
$1.00 per share.
The Company also seeks authorization for the Reverse Split Amendment in connection with an agreement in principal by certain
holders of the Company's 5% Cumulative Convertible Preferred Stock, Series 7 ("Series 7 Preferred Stock") to guaranty
$8,000,000 of additional credit from the Company's current lenders, Greyrock Business Credit and Silicon Valley Bank. Four
million dollars of the guaranty is to become available on the date that the Reverse Split Amendment becomes effective. The
availability of the other $4,000,000 of the guaranty is to be conditioned on the registration for resale of the Common Stock
underlying the Series 7 Preferred Stock, the Common Stock underlying the warrants issued in connection therewith, and other
shares of Common Stock issued to those investors in connection with previous financing transactions. The details of the
registration for resale of such Common Stock are to be disclosed in the Company's Amended Registration Statement onForm
S-3, registration statement no. 333-56597. The Company anticipates that such registration statement will be declared effective
prior to the October 7, 1998, special meeting, though there can be no assurance that it will be.
The guaranty sought from those investors is critical to the Company given its current cash resources and ability to borrow from
other sources. The Company has disclosed in its report on Form 10-Q for the quarter ended June 30, 1998, that it does not
have sufficient cash resources to fund operations through the end of its fiscal year ending September 30, 1998. The Company
believes that the funds being made available pursuant to the guaranty are necessary to sustain the Company through the end of
Fiscal 1998 and into the first quarter of fiscal 1999. However, there can be no assurance that the funds to be made available
pursuant to the guaranty will be sufficient to sustain the Company as expected, or that the Company will otherwise have
sufficient funds to sustain itself through the end of fiscal 1998 and into the first quarter of fiscal 1999.
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