Replies to post #71810 on e.Digital Corporation (fka EDIG)

[friendlyfred]

I would have to agree with you. The numbers were surprising but the "market" doesnt seem to be anticipating anything great for at least the near future. We shall see, as always. Without substantial developments propping it up, the next stop for the share price is 5 - 6 cents.

[Cassandra]

The albatross around e.Digital’s neck...

The backlog of toxic convertibles.

An update to this post: http://www.investorshub.com/boards/read_msg.asp?message_id=8153215

At 9/30/05 there were 12,167,926 registered shares reserved for conversion as follows:

Series D Convertible Preferred Shares: 7,728,947
Series EE Convertible Preferred Shares: 2,438,979
Warrants for 12% Convertible Promissory Notes: 2,000,000

There are also now conversion rights to 6,578,947 shares by the 12% CSP noteholders ($1,250,000/.19). There will be more if e.Digital sells the remaining $250,000 notes.

This means that there are now 18,746,873 conversion shares currently priced at $0.19 but would be re-priced to match the price of the shares in a new financing. In the case of the Series D and EE shares and the 12% CSP notes, this increases the number of shares that can be converted. There are 2 million warrants regardless of the price.

If e.Digital does an equity financing at $0.8/share, this number would rise to a staggering 41,773,824 shares.

A financing at $0.07 would raise it to 47,455,799 conversion shares.

They also still have the $900,000 15% note to pay off next year.

All of that is before whatever shares would be needed for the new financing.

If priced at $0.08, each $1 million financed would equal 12,500,000 shares. If priced at $0,07, $1 million = 14,285,714 shares.

Given the low volume/demand of the last couple of years, the market can not absorb numbers like these without tanking the price.

I would not be surprised to see them do a small financing for $1 million or less within the next 2-3 months. This would reset the conversion price only on the Series D and EE shares and the CSP warrants. However, they would have to do another S-3 to make sure that there were enough registered shares available.

If they sell over $1 million in the 180 days after the new date of the 12% CSP notes, their conversion price will be reset as well.

They also still have the $900,000 15% note due next Sept.

The increasing realization of the significance of this massive dilution that EDIG already committed to is probably why the share price hit a nearly 7 year low (not since Jan 1999).

[zippity]

Sometimes I doubt you are just ine person. But those are the facts.