Newe: e.Digital had a working capital deficiency of over $1.9 million at 9/30/03. The $1.2 million Series E financing most likely did not even restore them to having positive working capital.
As long as the warrants remain "out of the money" (priced at $.60 and $1.00), they are of no value to the financiers or to the company. The bad thing about them is that e.Digital allows the 3 million warrants to be considered an "underlying long position" for the purpose of authorized short selling. The financiers make the most money by shorting the stock and covering at 15% below the price they short it down to. That's why this type of financing is called a "death spiral."
After February 19, the conversion price will be the lower of (i) $0.45 and (ii) 85% of the average of the volume weighted average price per share during the ten consecutive trading days immediately preceding the conversion date.
The 9,157,895 shares to be registered for the Series E is only the "initial maximum." If e.Digital sells shares any for less than $.19, the potential number of conversion shares would exceed that number and the number of conversion shares required for the Series D would also increase.
Lastly, as of 11/7/03 there were 155,241,328 shares outstanding (from the 10Q). After the registration of of the nearly 20 million conversion shares, the number of registered shares will be over 175 million. You were off by 4 million (assuming that you didn't actually mean 171,188,000,000 when you said 171,188M).
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