Rande - Sorry for the tardy response, I was out most of the day. It sounds to me that, absent a well-orchestrated stockholder effort (for which it is obviously too late) the additional shares are a fait accompli. The following excerpts are from the proxy statement for tomorrow's annual meeting:
"The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Restated Certificate of Incorporation to increase the
authorized capital stock of the Company by increasing the number of authorized
shares of Common Stock from 50,000,000 to 100,000,000 shares.
The Company is presently authorized to issue 50,000,000 shares of Common
Stock and 1,000,000 shares of preferred stock ("Preferred Stock"), each with par
value $.01 per share. As of October 23, 2000, there were 21,495,527 shares of
Common Stock outstanding and an additional 21,572,889 shares of Common Stock
reserved for issuance upon conversion of the preferred stock and upon exercise
of outstanding warrants and options granted pursuant to the Company's stock
options plans. The remainder of the 50,000,000 shares authorized have been
reserved for issuance under the equity line of credit. As of October 23, 2000,
there were a total of 1,343 shares of Series G and Series H convertible
preferred stock outstanding and an additional 984,730 shares of preferred stock
available for issuance.
The additional 50,000,000 shares of Common Stock to be authorized would be
available for issuance under our equity line of credit and would provide needed
flexibility for future financial and capital requirements so that proper
advantage could be taken of favorable market conditions and possible business
acquisitions..."
" ...Although the Company's Board of Directors does not consider the proposed
amendment to the Company's Restated Certificate of Incorporation to be an
antitakeover proposal, the ability to issue additional shares of Common Stock
could also be used to discourage hostile takeover attempts of the Company..."
" ...The Company has entered into an equity line of credit agreement for the
sale of $12,000,000 of our common stock with Triton West Group, Inc. Under the
terms of the agreement, the Company may sell shares of common stock over a
three-year period to Triton at a price equal to 85% of the lowest closing bid
price during the nine trading days commencing two trading days prior to the
delivery of a purchase notice to Triton..."
I also found this discussion interesting:
"CHANGE IN CONTROL
On December 14, 1999, the Company issued and sold to ILTAG International
Licensing Holding S.A.L. ("ILTAG"), Bernd Herrmann and Urs Wettstein an
aggregate of 2,922,396 shares of Common Stock and three-year warrants to
purchase an additional 11,700,000 shares of Common Stock pursuant to a Stock and
Warrant Purchase Agreement dated as of October 1, 1999. The purchase price for
the shares and warrants was $4 million. The exercise price of the warrants is
$1.02656 per share. The sale was approved by the Company's stockholders at a
special meeting on December 14, 1999. ILTAG purchased one-half of the shares and
warrants and Messrs. Herrmann and Wettstein each purchased one-quarter of the
shares and warrants. As of October 23, 2000 the purchasers owned 2,922,396
shares representing approximately 13.6% of the outstanding Common Stock, and
warrants to acquire an additional 5,000,000 shares.
ILTAG is a Lebanese company that invests in health care and information
technology companies. Bernd Herrmann is a German venture capitalist who was an
asset manager at Deutsche Bank A.G. and Commerzbank A.G. Urs Wettstein is a
Swiss tax and accounting consultant. As a condition of the sale, James C.
McGroddy, Paul A.H. Pankow, Gerald D. Knudson and Patrick G. Hays resigned from
the Company's Board of Directors immediately prior to the closing of the sale,
and were replaced by Messrs. Herrmann, Wettstein and Falah Al-Kadi, the Vice
Chairman of the Dogmoch Group of Companies ("Dogmoch"), an affiliate of ILTAG
that provides consulting and support services to over 20 German companies doing
business in countries throughout the Middle East. Dr. Ramesh C. Trivedi,
President and Chief Executive Officer of the Company, was appointed to fill the
remaining vacancy on the Board. Since, as a result of the sale, the purchasers
obtained control of the Board of Directors and effective voting control of the
Company, the sale resulted in a change in control.
Messrs. Wettstein and Herrmann resigned from the Board of Directors in June
2000. In addition, in June 2000 ILTAG, Bernd Herrmann and Urs Wettstein agreed
to surrender an aggregate of 5,700,000 warrants and to exercise an aggregate of
2,000,000 of the remaining 6,000,000 warrants as follows: 500,000 warrants by
each of September 5, October 5, November 5, and December 5, 2000, provided the
market price of the Common Stock was not less than $1.03, the exercise price of
the warrants. These 2,000,000 warrants will expire if they are not exercised by
those dates. The remaining 4,000,000 warrants are exercisable until December 14,
2002. Since the closing market price of the Common Stock has been less than
$1.03 since August 1, 2000, none of these warrants have been exercised and
500,000 of these warrants expired on each of September 5, 2000 and October 5,2000."
The entire proxy statement, including other BOD proposals, is available on Edgar.
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