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

To: Savant who wrote (15660)	10/29/2000 5:28:33 PM
From: JimC1997	Read Replies (1) \| Respond to of 18366

I agree completely with you. I spoke to Robert Putnam about the equity financing within the last two weeks and he confirmed that the deal was similar in structure to that done last year. There is a floor conversion price on the preferred stock and the pricing period was chosen with a view towards anticipated news that would lift the share price. I also know from my own contacts in the investment banking world that quite a few development-stage companies have suffered from the actions of over-eager shareholders. Often these investors contact equity analysts, listing agencies, institutional investors and retail stockbrokers pushing the merits of their favored stock. Usually this has the reverse of the intended effect. I conducted my own analysis of the effect of NASDAQ listings on (former OTC) stock price behavior for all companies that had made the jump from bulletin board status to NASDAQ National Market status over the past two years. It suggests that the initial price jump is about 50% of the prior trading level, but that price increase gradually dissipates over the next one or two weeks of trading, leaving the share price at a level about 10% to 15% above the starting point. There are obviously other advantages to a NASDAQ listing. Access to new equity investors (both for shareholders and private placements) is greater, analyst coverage is more likely, market maker activity is more restricted and more institutional investors will consider the stock. I am sure that e.Digital will re-apply to NASDAQ to obtain these advantages when the share price permits it. But the bottom line is still the same. The investor must decide whether the perceived growth prospects of the company are sufficient to justify placing capital at risk on that future. For me the answer is unchanged by the NASDAQ action. I feel that e.Digital is a superb investment for those with a high tolerance for the risk inherent in any development-stage company. I see no reason to consider selling any shares at the current price and some compelling reasons to consider additional purchases if market conditions bring even more advantageous prices. JimC