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Technology Stocks : Sigma Designs- Up 50% per Month- Why? -- Ignore unavailable to you. Want to Upgrade?

To: Dennis R. Duke who wrote (618)	1/27/1999 11:37:00 AM
From: Dennis R. Duke	Read Replies (1) \| Respond to of 849

What is going on here? The Company filed a withdrawal of its S-3A Post Effective Registration Statement. I assume in conjuction with the announcement yesterday regarding the Preferred B's: sec.gov The cancelled Registration Statement is: sec.gov Text taken from that document related to the Preferred B's: Potential for Dilution from Conversion of Series B Preferred Stock Series B Preferred Stock. As of December 7, 1998, 2,250 shares of our Series B Convertible Preferred Stock were issued and outstanding. The shares of Series B Preferred Stock are convertible at the option of the holders into that number of shares of Common Stock as is generally determined by the following formula: o Multiply the stated value ($1,000) by the number of outstanding shares of Series B Preferred Stock (under certain circumstances, this value may be increased by a premium based on the number of days the Series B Preferred Stock is held), and divide the product by the then current Conversion Price (set forth below). o The Conversion Price is based on the average of the lowest six trading prices of our Common Stock in the twenty trading days ending one day prior to the date of conversion of the Series B Preferred Stock. Thus, if the Series B Preferred Stock was converted on December 7, 1998, the Conversion Price would have been $2.06. Based on this formula, if the remaining outstanding Series B Preferred Stock was converted on December 7, 1998, it would have been convertible into approximately 1,092,233 shares of Common Stock. This number can prove to be significantly greater in the event of a decrease in the trading price of our Common Stock. Purchasers of our Common Stock will experience substantial dilution of their investment upon conversion of the Series B Preferred Stock. However, in the event the price of our Common Stock falls below $3.26, subject to applicable laws restricting our repurchase of stock, we have the option to elect to pay cash (at a premium to the then current market price of our Common Stock) to the holders of Series B Preferred Stock in lieu of converting the shares of Series B Preferred Stock. In the event we elect to pay cash, purchasers of our Common Stock will suffer less dilution. Our election to pay cash, however, will come at the expense of diverting our available cash funds from other potential uses. The shares of Series B Preferred Stock are not registered and may be sold only if registered under the Securities Act or sold in accordance with an applicable exemption from registration, such as Rule 144. As of December 7, 1998, warrants to purchase 50,000 shares of Common Stock issued to the purchasers of the Series B Preferred Stock and exercisable for a period of three years following May 1, 1998 at a price of $5.16 (as may be adjusted from time to time under certain antidilution provisions) were outstanding. As of December 7, 1998, 5,854,398 shares of Common Stock were reserved for issuance upon exercise of our outstanding warrants and options (excluding the warrants issued to the purchasers of the Series B Preferred Stock) and an additional 4,300,000 shares of Common Stock were reserved for issuance upon conversion of the preferred stock and exercise of the warrants issued to the purchasers of the Series B Preferred Stock. At October 31, 1998, there were 13,514,735 shares of Common Stock outstanding. Of these outstanding shares, 13,492,952 were freely tradable without restriction under the Securities Act unless held by affiliates who are subject to certain limitations under Rule 144 of the Securities Act of 1933, as amended. So what does this tell us? And what were the terms of the Preferred C's? (-8 Dennis 8-)