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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: Tom Duxbury who wrote (18471)	10/10/1998 2:34:00 PM
From: KJ. Moy	Read Replies (3) \| Respond to of 29386

If I were one of the Reg D guys, what would I do? If I were Ancor, what would I do? Reg D: I want to own the maximum number of shares without jeoparding the company. I already own 700,000 shares, 5% of 14M shares outstanding. I would not sell or short at current price because I just converted at $1 and change. If price goes below $1, I'm losing money and 'jeoparding the company' and myself. On the other hand, if Ancor makes a run to $2 again, I may sell some to pocket a $1 profit per share. At the same time, I may be able to convert a little more than I sold because the total outstanding shares may be higher because RegD guys #2 just converted some, not much though. I have to weigh the consequences of 'not jeopardizing the company'. It is debatable if I want to sell at $2 or not if I think Ancor has a good chance to hit $10 or $20 next year. I probably sell some in an inconspicuous way, could be hard. I'll wait and see. Ancor: I would continue to execute the business plan, hire competent workers, work hard to bring in OEM deals. I would consider 'redeem' these regD perfered shares some time next year when I have more deals and money in the bank. I would even consider 'redeem' even if I have to borrow against my 'account recievable'. The RegD guys are depressing my company. I would release good news any chance I've got. All IMHO. Let me know what you would do if you were one of the RegD guys.

To: Tom Duxbury who wrote (18471)	10/10/1998 7:44:00 PM
From: Neil S	Read Replies (1) \| Respond to of 29386

Tom, you wrote: << In my opinion they have done an excellent job (i.e. INRANGE deal). That was an incredible deal and will save us from future dilution.>> One of the most insidious aspects of the floorless convertible appears to be the "Future Offering Lock Up" in which the subscribers include language that requires their approval , and or gives them the right of first refusal, to future offerings thereby continuing the cycle. The most disturbing item in the S-3 (Sept 4, 98) is the following which implies the "Death Spiral" could possibly continue beyond Series C: <<In addition, certain holders of outstanding securities of the Company have rights to approve and/or participate in certain types of future equity financing by theCompany.The availability to the Company of additional equity financing, and the terms of any such financing, may be adversely affected by the foregoing.>> However, the 8K (Feb 23, 98) Section 5.6 Capital Raising Limitations; Rights of First Refusal- sets the approval period for subsequent debt or equity offerings as Two Hundred and Forty (240) days after the Last Closing Date [or about Oct 98]. It sets the Right of First Offer to one year following the Last Closing Date [Feb 99]. The Last Closing date is defined as the date of the sale of the Series C [Feb 19, 98].The importance of the INRANGE agreement cannot be overstated in terms of breaking this cycle and minimizing future dilution. Ken & Co. did do a great job. Regarding your long term investors: Believe your eyes. Regards, Neil