e.Digital Corporation (fka EDIG)

[HotrodHans]

An agora reminder, they're dishonest IMO.

Cass gives a hell of an explanation. If you read agora, watch the ants squirming over there..dictating to posters what they can and cannot ask...why would anyone want to post at such a site.
I can now see this site is much better managed.(took a while..lol)

At least they don't pull posts that are related to business.

You decide


Subject: Looks like ORY opened up a can of worms
From hotrodhans
PostID 396682 On Saturday, April 16, 2005 (EST) at 5:26:50 PM

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although that rascal EL started it...

First of all some posters here have been suspect for quite some time. I feel somebody got caught with his pants down this AM.

FL Barrister, it would be interesting if you could elaborate a little more on your comment yesterday of ''The gauntlet has dropped''. I doubt ithas anything to do with anyone here, at least I sure hope not. ;o)

Now I have been a true long here for a long time (early 99) and have also lost a lot of money in this stock ( oh yeah, but only if I sell it, I forgot)..but I can handle it.

Some unfortunately investing here didn't fare so well and some really couldn't afford to lose any of it. You see a lot of names not around anymore.

Now about all that accumulation going on at .33....we still haven't found out why, have we. How'd we get to .19 if it was all accumulation?

Your and my friend Cass, (truthorfiction) (gasp)

has been square with us for a long, long time. We didn't want to hear what she had to say, me included....

and especially a few here.

Try to find out if she was wrong on her posts....I couldn't. Nobody felt worse about it than me.

Maybe that's why some here got so upset when posts from her were reposted here.

She's really a very intelligent person, unfortunately the OCD is true IMO...as you can tell, she's very thorough and just doesn't give up...and if she's wrong she admits it or corrects herself.....usually.
That can be very beneficial. I think I have a little of that in me too..lol.

Maybe she'll explain to you all one day why she has this ''attitude'' towards the company and a few posters here.

I used to be her worst enemy..that's changed.

You can think of me what you want, it really doesn't matter...I'll make do with or without you. Those here who are my friends I thank you sincerely. There are a great bunch out here.

It's too bad emit left and EL got booted.

Now, please read the post from Cass on the other boards regarding PIPES....she explains it very well and in my opinion she is spot on. A copy is below...and resqjuc posts with a follow up on it.

Is this bad..not necessarily..the company needs to survive to keep moving forward. It's just the way they do it, taking money from the bag holders..usually longs like us....is what's rotten.

Then you have a few posters here who frolic in our losses.

Now, I'm not bailing out of EDIG...I'm still pumped about IFE..they do have a plan and it ''seems'' things are going good..but nobody knows...except for a privileged few.
This silence is deafening and making a lot of us itchy.
It's only natural. GoSilver is sharp about this and he is concerned..so should we.

Use your own gut feeling here..do not take advice from anyone here, especially the hypsters..or so called bashers like me.

here's Casses post..if it's wrong...prove it...anybody is welcome. Yelling and screaming will be ignored.

This is a discussion board...we like too see all possibilities. Keep in mind...Nobody is bashing EDIG, not even Cass. She explains it very well.

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Posted by: Cassandra
In reply to: HotrodHans who wrote msg# 68919 Date:4/16/2005 3:36:26 PM
Post #of 68923

HrH/Ory: Setting the record straight regarding the Basso Entities and e.Digital.

Contrary to LL's contention on agora, Basso did not ''accumulate'' shares. They bought the lion's share of the Series EE convertible preferred shares in Novemember. The Series EE CP shares are the worst kind of PIPEs wherein the dollar amount per CP share is fixed and the number of common shares into which they are converted is dependent upon the share price in the preceeding 20 trading days (85% of the VWAP).

This is the format used in toxic or death spiral convertibles. The only thing that prevents this from being a classic death-spiral (such as the horrific Series C in 2000) is that the covenants state that conversion price shall not be lower that $0.19 unless the company offers any common shares or common share equivalents (debt, etc.) to any party below that price. If that happens they could become the worst of the worst.

The covenants also state that no party may convert shares that give them ownership of more than 4.99% of common shares outstanding (as that is reportable to the SEC). However, it appears that the SEC has taken the position that just having beneficial ownership of (i.e. the right to own) more than 4.99% requires reporting. Therefore, e.Digital belatedly filed Sch 13G to report the beneficial ownership of the Basso Entities, which are controlled by the same individuals.

Contrary to what LL says, Basso does not ''own'' any common shares, they have only ''beneficial ownership.''

I explained the difference in beneficial ownership of unregistered derivative securities and ownership of common shares in this post: http://www.ragingbull.lycos.com/mboard/boards.cgi?board=EDIG&read=1219808

The covenants of the Series EE CP shares required e.Digital to file a registration statement (S-3) within 30 days or face liquidated damages. Furthermore, the company also faces liquidated damages if the registration statement was not declared effective within 90 days. Those 90 days were up on March 2, so they are now 44 days into liquidated damages.

e.Digital has ammended and resubmitted the S-3 multiple times (on forms S-2A and 424B3), most likely in an attempt to satisfy the SEC that it has all of the information required. The company has also filed ammendments to the last 10K and 10Q (just a statement about accounting controls) as well as the Schedule 13G declaring the over 4.99% beneficial ownership of the Basso entities.

This delay is reminisent of the delay in the S-3 a couple of years ago which allowed I Kant to profit.

Sorry that this is so long, but I'd really like to help shareholders understand the repeated financings e.Digital uses.

When one invests in underfunded OTC stocks, it's critical to understand the implications of toxic PIPEs and loans structured such as was the I Kant loan (which was as bad or worse than a toxic PIPE).

Those who want to pump the stock always downplay how damaging these finanicings are to the share price and call those who shine the light on the details ''bashers'' who should be ignored. If I were a basher in cahoots with the financiers, would I let people know how these work (legal and illegal shorting), the dilution they cause and the effect on the share price? The financiers need pumpers more than so-called ''bashers'' as they can tank the stock on their own with short sales.

If you really want to know what's going on, NEVER trust those who assure you that these financings are good or even just that they aren't bad. They all involve more shares that the financiers need to sell with someone else buying the newly minted shares.

Financiers pay promoters to push the stock, often posting on message boards and sounding like longs. It helps the financiers to profit if the shareholders feel okay witht he financing and continue to add shares. That's why relying on boards like agoracom is very hazzardous. FL Barrister is probably on the right track and I think LL is the #1 suspect.

All OTC investors should pay attention to the SEC filings and learn to read them without relying on the interpretations of others.

http://www.pinksheets.com/quote/filings.jsp?symbol=EDIG

Again, sorry for the length. Please feel free to ask questions for clarification or if you want to see excerpts from the filings that back-up what I say. I'm always happy to provide the sources to as back-up.


and a follow up by resqjuc......

Posted by: resqjuc
In reply to: None Date:4/16/2005 4:09:26 PM
Post #of 68923

How PIPES generally work. One or more investors - often including offshore companies - agree to buy unregistered shares of a public company, at a substantial discount from their market price. The investors may also receive warrants entitling them to purchase additional shares at a fixed below-market price.


The shares are issued at a discount because, in theory at least, the PIPE financiers will have their funds at risk until their stock has been registered. Those risks appear to be particularly acute when the PIPE is made available to a smaller public company, as is often the case. In fact, so-called emerging growth companies traded on the OTC Bulletin Board, and that would include many up and coming biotech firms, have proven to be particularly receptive to the calling of the PIPES. They need cash, whether for working capital or research and development, and are willing to part with shares - lots of them - to become more liquid. And, unlike more established companies with institutional shareholders, they are less uneasy with the concept of dilution, and therefore far more likely to continue printing shares to feed those PIPES.


PIPE investors recognize that these undercapitalized companies are hungry for capital, and consequently prepared to issue even more shares, at a greater discount. Even then, the investors find ways to reduce their potential risk. In some cases, they insist that the public company file a Registration Statement for their shares before any of the funding is delivered. In that scenario of equity-based financing, the company notifies the investor that it wishes to draw down funds from a financing, and files a registration statement for the corresponding shares that it is obligated to deliver. Once the Registration Statement is declared effective, the investor exchanges the funds for the registered shares.


The investor's risk is limited because he can immediately sell the stock- at a profit since it was issued at a discount to the market. Particularly shrewd investors can hedge their bets even further by shorting the company's shares before the funds are delivered, then using the money received from selling short to fulfill the financing commitment, delivering the newly registered stock to cover the short position, and pocketing any difference.


Even more dangerous are PIPES that involve ''death spiral'' financing. In this scenario the number of shares issued to the investor is keyed to the market price of shares, and increases as the market price descends. Unfortunately, that means the PIPE investor stands to profit from lower stock prices. Consequently, the investor has an incentive to short shares, thereby depressing prices, and guaranteeing the receipt of more shares.


Consider a PIPE investor who provides $1 million in financing in exchange for a debenture that is convertible into $1 million worth of stock. The number of shares to be issued is based upon the price of the stock on the date of conversion. Say the investor begins to sell the company's shares short when the stock is trading at $5, eventually sells 1 million shares, receiving $5 million and successfully depressing the share price to $1. He then converts the debenture into common stock at a rate of $1 a share and receives 1 million shares which he delivers to cover the short position. He has earned a $ million profit in exchange for $1 million in short term financing.


Death spirals are, however, the worst case scenario, and one to be avoided even if it means foregoing a PIPE. That does not mean that PIPE investors are willing to allow their shares to remain unregistered. Most insist upon speedy registration following the delivery of funds. In some instances, the investors will not receive common stock, but in =stead are issued a debenture or interest bearing preferred shares, ach of which can be converted into common stock once the underlying common shares have been registered. That way the PIPE investors receive interest while awaiting the day when they can convert and sell their shares- again at a discount to the market.


PIPES have one other attractive feature; they provide speedy access to cash without regulatory scrutiny. In a public financing the company would be required to file registration documents with the Securities and Exchange Commission, disclosing material details about the identity and nature of the investors. PIPES remain private - and so do the people who fund them. On the positive side that allows the public company to move quickly. On the flip side, it means investors and regulators are deprived of meaningful information about those investors, many of which may simply be offshore companies with nominee directors and officers.


PIPES provide an appealing mechanism, provided they are utilized judiciously. On the other hand, when companies issue PIPES repeatedly they leave shareholders diluted and disgruntled, and create a public float that may cause them to drown in their own shares.


Money is flowing again, but the individuals who are providing it are sophisticated, shrewd, and dedicated to profit. In order to be treated fairly in these transactions, public companies should be equally focused on their goals and set reasonable limits on the price they are willing to pay for an infusion of capital.

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Now we are all a little more knowledgable about PIPES...unfortunately it seems some here didn't want us to know this....

between this and naked shorting..what's going to happen...I haven't the slightest idea...

Mguru..chime in anytime.

It's Saturday night.....going out with some friends....and some are EDIGGERS..