TiVo 2003 Annual Report Download - page 71

Table of Contents
The following table summarizes the activity related to redeemable convertible preferred stock for fiscal years ended January 31, 2004, 2003, and 2002:
Redeemable Convertible
Preferred Stock
Additional
Paid-In Capital
Total Shares Amount
BALANCE, JANUARY 31, 2001 and JANUARY 31, 2002 1,600,000 2,000 46,553,000 46,555,000
Accretion to redemption value of Redeemable Convertible Preferred Stock 1,445,000 1,445,000
Redemption of Series A Convertible Preferred Stock (1,600,000) (2,000) (47,998,000) (48,000,000)
BALANCE, JANUARY 31, 2003 and JANUARY 31, 2004 — $ — $ — $ —
Common Stock
On January 30, 2004, the Company issued 8,000,000 shares of its common stock, par value $.001 per share, at $9.30 per share to institutional investors.
The issuance of the shares was registered pursuant to the Company's $100 million universal shelf registration statement on Form S-3 (File No. 333-106731).
The net proceeds from this sale were approximately $74.1 million after deducting our estimated offering expenses of $343,000.
On July 1, 2003, the Company issued approximately 2.9 million shares of its common stock, par value $.001 per share, at $9.26 per share. Net proceeds
were approximately $26.1 million after deducting cash offering expenses of approximately $500,000. The shares of common stock were registered pursuant to
the Company's universal shelf registration statement on Form S-3 (File No. 333-53152) under the Securities Act of 1933, as amended, as supplemented by a
registration statement on Form S-3 (File No. 333-106507) filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended.
On October 8, 2002, the Company entered into an agreement to issue 6,963,788 shares of common stock, 3 year warrants to purchase 1,323,120 shares
of common stock and 4 year warrants to purchase 1,323,120 shares of common stock to institutional investors for $25.0 million in cash. The common stock
and warrant offering price of $3.59 was based on a 3.0% premium to the trailing 10-day average closing price of the Company's common stock ending two
days prior to the closing date. The number of three and four year warrants issued were each based on 19% of the total number of common shares issued to the
institutional investors. The investors were New Enterprise Associates and Crosslink Capital.
This transaction triggered an adjustment to the conversion price of the convertible notes (see Note 8. "Convertible Notes Payable"). Because this
transaction was an issuance of common stock and warrants, the indenture governing the convertible notes required the Company to determine the value
attributed to the common stock, which it calculated by determining the value to be attributed to the warrants by using the Black-Scholes option pricing model
and subtracting the value of the warrants from the total value. The warrants were valued using the Black-Scholes model with a fair market value of the
Company's common stock at the date of issuance of $3.50, a strike price of $5.00, a risk free rate of return of 2.25%, a dividend yield of zero percent, and a
volatility of 50%. Accordingly, the 3 year warrants to purchase 1,323,120 shares of the Company's common stock, which will expire October 7, 2005, were
valued at $1.1 million; and the 4 year warrants to purchase 1,323,120 shares of the Company's common stock, which will expire October 7, 2006, were valued
at $1.4 million, for a total warrant value of $2.5 million or 10% of the total cash proceeds.
The Company, as an incentive to induce conversions of these notes, temporarily reduced the conversion price of the notes pursuant to the terms of the
indenture governing the notes from $3.99 per share to $3.70 per share for the 20 business day period from December 30, 2002 through January 28, 2003. As a
result of the temporarily reduced conversion price, note holders converted $22.7 million in face value of convertible notes payable at the incentive conversion
price of $3.70 per share and the Company issued 6,135,400 shares of common stock as a result of these conversions.
During the fiscal year ended January 31, 2003 the Company issued an aggregate of 275,438 shares of common stock as a result of two convertible note
holders converting $1.1 million in face value of convertible notes payable at the conversion price of $3.99 per share, in accordance with the terms of the
Convertible Notes Payable Indenture.
During the fiscal year ended January 31, 2004 the Company issued 2,506,265 shares of common stock as a result of a related party convertible
noteholder converting $10.0 million in face value of convertible notes payable at the conversion price of $3.99 per share, in accordance with the terms of the
Convertible Notes Payable Indenture. After this conversion, as of January 31, 2004, the Company had outstanding convertible notes payable at face value of
$10.5 million, held by approximately four noteholders.
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