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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Robert Graham who wrote (10945)	5/22/1998 6:17:00 PM
From: Mark Finger	Respond to of 14631

Robert, Without going back through a lot of news stories from last year, I cannot be sure, but I believe that the new auditor was the 2nd company involved in the restatement effort last fall. As for the recent goof, I think it is a new category and they may have had little or no sales of this type before. In particular, my memory of most of the IFMX VAR's was that they were related to software. IFMX did not have too many hardware VAR's because they did not have a "small footprint" version (I believe that there was consideration of trying for a smaller footprint version, but that was not deemed to be an important market). Right now, it would seem that Sybase with SQL-Anywhere would be better suited. It seems that something about newer versions of IFMX may be catching to some larger equipment dealers, and it seems that they have gotten at least two significant customers in this area. This would be different from the traditional computer dealers, where IFMX has usually been an add-on option or part of a possible turn-key bundle. In these two cases, it would seem that the engine is an integral part of the equipment being sold and not an option (or only an option to the extent that someone like SAP offers an option on engines). Mark

To: Robert Graham who wrote (10945)	5/22/1998 7:30:00 PM
From: Marq Spencer	Respond to of 14631

Bob, Regarding Mike Stonebraker selling 30K shares, he owned (as of the start of this quarter) 638,000 shares, plus options of over 200,000 (not yet exercisable). Check out the 10K for details, if interested. - Brian.

To: Robert Graham who wrote (10945)	5/22/1998 8:05:00 PM
From: Marq Spencer	Read Replies (2) \| Respond to of 14631

Bob, I do not know if anyone commented on your posts about the convertible preferred stock. Let me take a stab at how the Series A-1 and Series B were set up. Fletcher paid IFMX $55MM for 220,000 preferred A-1 shares (each worth $250). Think of this as prepaid currency for Fletcher to covert to IFMX stock whenever they want. The conversion price is based on a predetermined formula, which in this case was that Fletcher could get IFMX common stock based on the average price over the period of a week, seven weeks before the conversion. So, Fletcher converted in mid Feb., based on the price at the end of Dec. So, Fletcher turned in 220,000 preferred shares to IFMX, and received 12.8 M shares of common stock (their average price around $4.25) As of the filings by IFMX last week, Fletcher still owned these shares. The Preferred B series has a face value of $1000 each and 50,000 have been issued. They can be exercised based on the lesser of the average price of IFMX over the preceding month (month before the conversion) or the month before it became convertible. The average price during the month before it became convertible is around $8 (mid April to mid May). However, if the price were to drop to $6 for a month, they holders can get the shares based on $6. If the holders of the preferred B series converted last week, they would've received around 6.25M shares ($50MM/$8). However, we do not know whether this happened. If it did, it is unlikely that they would be selling at this point (for a loss) However, it is possible that Fletcher has been selling over the past week, given that they own the shares at about $4.25 (for an investment made in Aug 97) and the returns over the past 9 months have been quite acceptable. They have 12.8MM shares which would take a week, or so, to go through. Fletcher also has the option to do this again with an additional $20MM (80,000 preferred A-1 warrants). Now my question to everyone is, why didn't IFMX do a secondary offering to the public last August? Maybe they didn't think they could raise $40MM. Maybe they thought that the stock would be above 10, so they would have to issue only 4MM shares (there is a clause in the Preferred A-1 that limits the price that Fletcher would've paid to $12, implying that the parties may have thought that price would move up quickly). Second question - in Nov. when it was clear that the troubles were what they were, could IFMX have done a secondary offering to the public then? If so, at what price? Instead of creating Preferred B for $50MM. Anyway, enough for now. - Brian.