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Technology Stocks : V-CHIP and Tri-Vision International NEWS ONLY -- Ignore unavailable to you. Want to Upgrade?

To: Graham Dellaire who wrote (69)	5/15/1998 11:55:00 PM
From: Graham Dellaire	Read Replies (1) \| Respond to of 91

For those of you who have been keeping score... REQUIRED READING FOR ALL INVESTORS The following is a very succinct description of what has happened to Tri-Vision International. Let this post stand in record that although many of us taken significant paper or real losses on TVL we believe we finally have figured out who was behind the recent stock declines. First as a primer... From the Yahoo thread, describing another well known play on the V-Chip, Acacia Research (ACRI-NAS) which faces the same threat. Incalink wrote: Second Reality Check: "... As I've explained, companies only do units deals when they're struggling to justify valuation. From a corporate finance standpoint, a warrant overhand (sic) at $18.50 scares away future investors. As a general rule of thumb, think of all the companies that have done warrants/units deals- if you could have shorted every one of them, you'd be a very rich person. Unfortunately, getting your hands on shares to short on most of those companies is virtually impossible. If the company would have been able to issue straight shares without warrants at $12 per share, don't you think they would have opted for that? Someone else argued that these warrants represented future cash to the company. That's what second-string underwriters would have companies believe. However, again, as I argued earlier, the anticipated future warrants dilution is priced into the stock and hurts the performance and makes it hard to raise money under the $18.50 exercise price unless its done with more warrants. In addition, if you think about the process of raising capital, it involves investors BUYING new shares directly from a company and HOLDING. However, if you think about warrants - the warrant-holder waits until the price climbs above $18.50, pays the company $18.50 per share, receives the share, then SELLS it in the market. A warrant-holder doesn't exercise his warrant until he's ready to sell! As opposed to creating buying pressure, it creates SELLING pressure which continuously hammers the price down." -----------------Please read Disclaimer at the bottom--------- So friends and neighbors... This describes equally well what has happened during Tri-Vision's recent financing and listing on the TSE. I will propose the following version of events, this scenario remains to be confirmed, please see the disclaimer below. Tri-Vision signed an underwriting deal with WOOD GUNDY (CIBC) MIDLAND WALWYN CAPITAL and YORKTON SECURITIES INC. which involved the issuing of 4,800,000 Units, each Unit consisting of one common share (a "Common Share") and one common share purchase warrant (a "Warrant"). Up to an additional 720,000 Units may be issued and sold by the Company under the Over-Allotment Option. The units were purchase for $2.50 each and the warrants are exercisable at $3.00 until 5:00pm (Toronto time) on September 29, 1998. Gross proceeds were ~12 million. CIBC Wood Gundy Securities Inc., Midland Walwyn Capital Inc. and Yorkton Securities Inc., also have exercised their over-allotment option in full and acquired an additional 720,000 units of the company for gross proceeds of $1.8 million. The details of the offering, all though not released to the general public, were most likely known by WOOD GUNDY and at least one other brokerage, Research Capital. Sometime in the end of December of 1997 and the beginning of January 1998 a large volume of shares were being sold short from two major brokerages ... namely WOOD GUNDY and Research Capital. Those that have access to trades have documented that WOOD GUNDY and Research Capital did not have the necessary inventories to be selling actual shares... They (WOOD GUNDY) were most likely short selling shares that did not exist but that would appear later as they were issued during the financing involving the 4.8 million Units. In effect "robbing Peter to pay Paul", WOOD GUNDY may have shorted the shares of Tri-Vision Int. until the stock was below 2.50 a share (which interestingly coincided with the completion of financing)around the 2nd of April, 1998, and then covered their short positions with newly issued shares of TVL. (Pleas see: chart.canada-stockwatch.com ) Profit was made shorting the stock and then they (WOOD GUNDY) were probably left with the warrants, which were basically FREE MONEY! Now we know that the overhang of warrants is still out there until 5 pm Eastern on Sept. 29th, 1998. As put so elegantly in the quote above... this will most likely scare away investors until after this period because they know that the warrants will be exercised every time the stock moves above the strike price of the warrant of 3 dollars. This will put heavy pressure on the stock as there are ~5.5 million warrants outstanding which is ~70 times the daily average volume (i.e. at current volume it would take more than 14 weeks to sell all stock from the exercising of all warrants). Fortunately for all of us, these warrants will expire, again, on the 29th of Sept. 1998. I wrote this to just put the record straight for anyone who might want to invest in this great little company, TRI-VISION INT., but are completely confused about the action in the stock and the hype on the threads on Silicon Investor and Yahoo. I have all the faith that the company will prevail, but they currently have an anchor of 5.5 million warrants around their ankles. Cheers and Caveat Emptor. Graham Dellaire Disclaimer: all views in this post are the soley those of the author and remain to be confirmed. The author wishes sincerely that those with the means should take up an investigation to determine if the propositions mentioned in this post may in fact require legal action by the Ontario Securities Commission towards the brokerages mentioned, should they prove to be true. P.S. this is something also to keep in mind when thinking how low the stock could go... From prospectus: Stock Options - CIBC Wood Gundy: In conjunction with the private placement referred to in note 9(a) above, the Company issued a non-assignable option to CIBC Wood Gundy Securities Inc. to purchase up to 325,100 common shares. The option is exercisable until October 30, 1998 at a price of $0.90 per common share.