What is a typical private investment in a public equity (PIPE) transaction?

• The company sells unregistered common stock to a small group of institutional investors via a private placement.
• The company generally agrees to file a registration statement with the SEC to register these securities within 30-60 days after the placement.
• The price per share is at a discount to the recent average price and is negotiated with the investors.
• Most PIPEs include the issuance of a warrant to purchase additional common stock. The warrant exercise price is generally a modest premium to the placement price.
• A PIPE transaction can be executed quickly upon completion of due diligence.

Why should a company consider a PIPE?

• There is no up-front SEC registration
• Limited risk to the market price of the common stock as the transaction is confidential until it is consummated.
• The company can increase/decrease the size of the transaction based upon investor interest.
• New institutional investors become shareholders
• Limited marketing time and costs.
• Most transactions can be completed in less than 60 days.

Historical PIPE Transactions

The transactions below were completed by Sutter professionals at other firms prior to their joining Sutter Securities:

• Acacia Research $19,000,000
• Citizens, Inc. $12,000,000
• Cray Research Inc. $23,000,000
• Hollis-Eden Pharmaceuticals $28,000,000
• Informix $50,000,000
• Medscape $47,000,000 (Venture Capital Funding)
• Mpower Communications $17,470,000
• NGAS Resources $18,000,000
• Penguin Computing $20,000,000 (Venture Capital Funding)
• Verticalnet $9,100,000