Tut Systems, Inc. Announces Private Placement Financing
August 23 2006 - 8:00AM
PR Newswire (US)
LAKE OSWEGO, Ore., Aug. 23 /PRNewswire-FirstCall/ -- Tut Systems,
Inc. (NASDAQ:TUTS), today announced that it has entered into
definitive agreements for the sale of $7.0 million of 8%
convertible notes ("notes") to private investors. The notes mature
in August 2009. Interest on the notes is payable quarterly in cash
or shares of common stock. The notes are convertible at a
conversion price of approximately $1.24 per share into 5,631,536
shares of the Company's common stock. The Company also issued to
the investors common stock purchase warrants to purchase 2,815,768
shares of common stock. The warrants will expire in August 2011
and, beginning in February 2007, are exercisable at a per share
price of approximately $1.36. If exercised in full for cash, the
warrants would provide an additional $3.8 million in proceeds to
the Company. Tut Systems expects to close the transaction by August
24, 2006, subject to customary conditions. Tut Systems will use the
proceeds from this transaction for general working capital. "We
analyzed the timing and structure of a number of strategic
financing alternatives. This transaction strengthens our balance
sheet and provides Tut Systems the working capital to continue to
expand our market leadership in our core markets. It also allows us
to pursue both direct and partner opportunities with various top
tier telcos," said Sal D'Auria, Chairman, President and CEO of Tut
Systems. The shares that may be issued in connection with this
transaction have not been registered under the Securities Act of
1933, or any state securities laws, and were sold in a private
transaction under Regulation D. Unless the shares are registered,
they may not be offered or sold in the United States except
pursuant to an exemption from the registration requirements of the
Securities Act and applicable state laws. Tut Systems plans to
register the shares issuable upon the conversion of the notes, as
well as the shares issuable upon the exercise of the warrants, for
resale on a registration statement to be filed with the Securities
Exchange Commission within 30 days of the closing of the
transaction. Forward-Looking Statements Safe Harbor Statement under
the U.S. Private Securities Litigation Reform Act of 1995: This
press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Specifically, without limitation, forward-looking statements
include statements relating to our ability to expand market
leadership and pursue partnerships with top tier telcos.
Forward-looking statements are based on management's current
expectations and beliefs, and are subject to risks and
uncertainties. As a result, actual results may differ materially
from the forward-looking statements contained herein. Risks that
relate to these forward-looking statements include the risks
inherent in new and developing technologies and markets, the risk
that competitors will introduce rival technologies and products,
and the risk that the expected financial benefits of expanding our
core market will not be achieved as a result of unforeseen costs or
events. Further detailed information about risk factors that may
impact our business is set forth in our periodic filings with the
Securities and Exchange Commission. We expressly disclaim any
obligation to update or alter our forward-looking statements,
whether as a result of new information, future events or otherwise.
About Tut Systems, Inc. Tut Systems, Inc. delivers advanced content
processing and distribution products as well as comprehensive
system integration services for deploying next-generation data and
video services over broadband networks. Service providers, content
providers and government agencies worldwide use Tut Systems
solutions to deliver broadcast-quality video over broadband
networks. Tut Systems is headquartered in Lake Oswego, OR. For more
information visit http://www.tutsys.com/ or call 971-217-0400.
DATASOURCE: Tut Systems, Inc. CONTACT: investors, Scott
Spangenberg, or media, Keith Wymbs, +1-971-217-0400, or Web site:
http://www.tutsys.com/
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