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Technology Stocks : e.Digital Corporation(EDIG) - Embedded Digital Technology -- Ignore unavailable to you. Want to Upgrade?

To: bob who wrote (7263)	8/15/1999 2:57:00 AM
From: Savant	Read Replies (1) \| Respond to of 18366

Excerpts... The Company has also entered into a development agreement with Intel Corporation ("Intel") and is designing and developing a digital voice recorder referencedesign and prototypes. Under the agreement, Intel is paying non-recurringengineering fees for design and development of prototypes.The Company is also supplying digital music player prototypes to Lucent and performing other work to port Lucent's EPAC compression technology to a newTexas Instrument DSP. The Company is actively developing licensing, privatelabel, and OEM opportunities seeking to penetrate the digital recording andplayback market. Management is currently in discussions with OEM's interested in using the Company's Internet music player reference designs. The Company intends to support various emerging Digital Rights Management Systems ("DRMS") that supportthe Secure Digital Music Initiative ("SDMI"). The Company has signed a non-exclusive license agreement to support Liquid Audio's SP3 DRMS and intends to support other emerging DRMS developers. Management is currently in discussions with several popular DRMS providers. There can be no assurance thatthe Company will support additional DRMS or that OEM's will use the Company's Internet music player reference designs. ============================================= At June 30, 1999 the Company had cash on hand of approximately $3.5 million. Other than cash on hand and accounts receivable, the Company has no material unused sources of liquidity at this time. Based on the Company's cash position assuming (i) continuation of existing OEM development arrangements, (ii) currently planned expenditures and level of operation, (iii) product sales against existing orders; the Company believes it has sufficient capitalresources for the next twelve months.. ==================== The following is a description of equity securities sold by the Company during the first fiscal quarter ended June 30, 1999 that were not registered under the Securities Act: On June 25, 1999, the Company issued 300 shares of Series B stock for cash at $10,000 per share to one institutional investor for gross proceeds of $3,000,000. Dividends of 7% per annum are payable, with certain exceptions, either in cash or in shares of Common Stock, at the election of the Company. The stated dollar amount of Series B stock is convertible into fully paid and nonassessable shares of Common Stock of the Company at a conversion price which is the lower of (i) $2.00 per share or (ii) a per share amount computed on each of two adjustment dates (30 and 60 days after registration of the underlying shares), but not less than $1.50 per share except as may be subsequently modified as a consequence of certain possible penalties and other adjustments related to the Company's failure to file a registration statement on a timely basis or have the registration statement declared effective within 180 days. The conversion price on the two adjustment dates is computed at a premium to the average of the three lowest of the ten day closing bid market prices prior to and including each adjustment date. The Series B stock shall be subject to automatic conversion on June 24, 2002, subject to certain conditions. The Series B stock is redeemable in certain instances at the Company's option and at the holder's election upon the occurrence of certain triggering events including, without limitations, a lapse of a registration statement for ten non-consecutive trading days and certain other events. The redemption price upon such election following a triggering event shall be the greater of (a) 110% of the stated value or (b) the product of the number of preferred shares multiplied by the closing market price, multiplied by the stated value per share, divided by the then conversion price per share. In addition, certain shares of Common Stock, which are converted within 30 trading days of an event triggering a redemption are subject to repurchase. The Company also issued to the purchaser of Series B stock warrants to purchase 195,000 shares of Common Stock at $2.40 per share until June 24, 2004. In connection with the financing, the Company incurred placement agent fees and legal and related costs of approximately $250,000 and issued a warrant to purchase 137,615 shares of Common Stock at $3.27 per share until June 24, 2004 as a placement agent fee to Jesup & Lamont Securities Corporation in connection with the offering. The Company intends to use the net proceeds of approximately $2,750,000 for general corporate purposes. The securities were offered and sold without registration under the Act in reliance upon the exemption provided by Regulation D thereunder and an appropriate legend was placed on the Series B stock and the warrants and will be placed on the shares issuable upon conversion or exercise unless registered under the Act prior to issuance. The Company has filed a registration statement on the stock obtained upon conversion of the Series B stock or exercise of the warrants and also granted other registration rights to the holder.