SUNNYVALE, Calif.--(BUSINESS WIRE)--March 27, 2002--General Magic,
Inc. (Nasdaq:GMGC), a pioneer in voice infrastructure software, today
announced it has secured an over subscribed round of financing from a
group of private institutional investors in the amount of $7.0 million
in exchange for shares of the company's common stock. The transaction
was arranged by HPC Capital Management.
"We are pleased to have secured this financing, which will be used
to fund our current operations, including product development, sales
and professional services," said David Russian, chief financial
officer of the company. "Given the market conditions and our current
share price, the company elected to raise only $7 million at this
time. Our goal remains to raise additional funds to support our
continuing operations through the end of this year. We believe that it
is in the best interests of the company and its shareholders to delay
further fund raising at this time to give current market conditions a
chance to improve."
The company expects to issue these securities on March 27, 2002
under its "shelf" registration statement (SEC file no. 333-66126),
which was declared effective by the Securities and Exchange Commission
on Nov. 27, 2001.
"This round of financing was actually oversubscribed and it was
extremely gratifying to see this interest in both the company and its
products from the Institutional players. We are especially grateful
that such a prestigious Institution like the Special Situations Fund
would take a lead role in this financing and we particularly want to
thank them for their vision and support," said Andrew Reckles,
chairman of HPC Capital Management.
The price and the number of shares are based on a five-day average
market price of General Magic's common stock prior to March 25, 2002.
In addition the investors will receive a 20 percent discount per
common share to this average price with no warrant coverage.
The company intends to seek the additional funding necessary to
complete its funding objectives within the coming months, with the
expectation that market conditions may be more favorable at that time.
As a direct result of this decision, the company expects to receive a
report from its auditors, KPMG, on the company's financial statements
for the year-ended Dec. 31, 2001 that includes an explanatory
paragraph describing the uncertainty about the company's ability to
continue as a going concern. This paragraph would be included because
the company is not expected to have sufficient committed cash at the
time the audit report is issued to meet its cash requirements through
the end of its fiscal year based upon its current cash-burn rate.
General Magic's management team remains committed to seeking the
funding necessary to support the roll-out and adoption of its products
and services at the most opportune times.
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