Replies to post #72882 on e.Digital Corporation (fka EDIG)

[HotrodHans]

Cass...I see you are now

a paid financial expert...isn't that what that dollar sign is above right...lol.


so it seems EDIG has to issue more shares to cover for Bristol's sell???

Looking forward to your analysis. this should be intersting.

It would be nice if we could get it posted to the con board and see what happens.

When is everyone gonna learn.

If by some chance this eVU makes good..it would be a miracle.

If not..I think everyone should form a class action law suit...I can't see letting RP and crew slide on this.

Maybe Mark can give us a little heads up on his venture.

[Cassandra]

Recalculating the dilution...

It's staggering! If e.Digital registers all of the common shares needed for currently convertible instruments, the upcoming registration of shares should be at least 55-60 million and quite possibly more.

The 2/24/06 $1.5 million PIPE financing pricing shares at $0.08 reset the conversion price on all of the outstanding warrants, preferred convertible shares and the 12% convertible promissory notes to $0.08 due to the anti-dilution clauses in all of these financings.

Although the number of warrants remains constant regardless of the conversion price, the number of common shares into which the outstanding convertible shares and notes can be converted increases in proportion to a decrease in the conversion price. This is because they are sold at a dollar value (a toxic design) and not a number of shares value (a sign of strength).

The new $0.08 conversion price yields the following in convertible shares:

 
 Old Warrants........................6,182,500  
 Series D CP Shares.................18,777,911  
 Series EE CP Shares.................5,903,238  
 12% CP Notes.......................18,750,000  
 Est Accum Int/Div.....................350,000  
  
 TOTAL FOR PRIOR FINANCING..........49,963,650 
 	 
 New $1,500,000 PIPE................18,750,000  
 A & B Warrants......................9,375,000 
  
 TOTAL FOR NEW FINANCING............28,125,000  
 	 
 TOTAL CONVERSION SHARES............78,088,650 
 Less Est Previously Registered....(20,000,000) 
 EST SHARES NEEDING REGISTRATION....58,088,650 
 

This is what I call staggering dilution. These tens of millions of shares will need buyers above $0.08 so the financiers can recoup their investment and profit.

Sadly, they are committing their 100 million newly-authorized shares to financiers at an alarming pace and there is no true floor. Anytime they sell shares below $0.08, all of the existing convertible instruments will be repriced and all but the warrants will cause an increase in convertible shares.

Two other financings to be considered are the $350,000 note EDIG filed through a stealth REGDEX paper filing on 12/29/05 and the $900,000 15% note due in September.

Even though the site administrator paid to obtain a copy of the REGDEX filings, all it revealed is that it was a $350,000 loan - no terms were revealed.

If that loan/note has conversion privileges tied to the conversion price of all of the other convertible financings, it would add another 4,375,000 convertible shares.

If the 15% note is also eventually made convertible, that would add another 10-11 million convertible shares.

There has been a major promotion conducted on several penny stock news services in the last few weeks and a lot of momo traders have played it along with the hedge funds like Bristol. Savvy momos were likely clued into the pump and were able to front-run and sell on the run-up with the CP financiers.

Some less savvy traders who don't understand the game or the importance of DD on pending dilution, will l take a loss or become a bagholder waiting for the next run.