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TranSwitch Corp. Message Board

  • gspg_1 gspg_1 Mar 28, 2011 6:53 PM Flag

    POS Overpriced Soon to be F/S Sub Penny - Back to GLU


    The finacial numbers here suck and so does the debenture debt:

    We continue to have substantial indebtedness.

    As of December 31, 2010, we have approximately $3.8 million in principal amount of indebtedness outstanding in the form of our 5.45% Convertible Notes due September 30, 2011 (2011 Notes).

    In addition to this indebtedness, we may incur substantial additional indebtedness in the future. The level of our indebtedness, among other things, could:

    make it difficult for us to make payments on our 2011 Notes;

    make it difficult for us to obtain any necessary future financing for working capital, capital expenditures, debt service requirements or other purposes;

    We may seek to reduce our indebtedness or fund our loss operations by issuing equity securities, thereby causing dilution of our stockholders’ ownership interests.

    We may from time to time seek to exchange our 2011 Notes for shares of our common stock or other securities. These exchanges may take different forms, including exchange offers or privately negotiated transactions. As a result of shares of our common stock or other securities being issued upon such conversion or pursuant to such exchanges, our stockholders may experience substantial dilution of their ownership interest.

    The terms of the 2011 Notes include voluntary conversion provisions upon which shares of our common stock would be issued. As a result of these shares of our common stock being issued, our stockholders may experience dilution of their ownership interest.

    If we seek to secure additional financing we may not be able to do so. If we are able to secure additional financing our stockholders may experience dilution of their ownership interest or we may be subject to limitations on our operations.

    If we are unable to generate sufficient cash flows from operations to meet our anticipated needs for working capital and capital expenditures, we may need to raise additional funds. However, events in the future may require us to seek additional capital and, if so required, that capital may not be available on terms favorable or acceptable to us, if at all. If we raise additional funds through the issuance of equity securities, our stockholders may experience dilution of their ownership interest, and the newly issued securities may have rights superior to those of our common stock. On October 21, 2009 we filed a shelf registration statement on Form S-3 (File No. 333-162609) (the “Shelf Registration Statement”) which was declared effective by the Securities and Exchange Commission on October 28, 2009, to sell up to $40,000,000 of our securities. During 2010 we issued shares for proceeds to the Company in an amount of $1,809,000 worth of common stock under the Shelf registration statement. Accordingly, we have a value of $38,191,000 of shares of our common stock, which could still be issued under this arrangement.

    If I wanted to buy a company with the financing of a Sub Penny stock why should I pay 4.02 for it?


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