Tut Placement to Raise $14.9M

Tut Systems announces agreement for $14.9 million private placement financing

July 20, 2005

2 Min Read

LAKE OSWEGO, Ore. -- Tut Systems, Inc. (Nasdaq: TUTS - News), a leader in delivering video and data services over broadband networks, today announced that it has entered into definitive agreements with institutional investors for a $14.9 million private sale of common stock and warrants to purchase common stock. Tut Systems expects to close the transaction on or prior to July 22, 2005, subject to customary conditions including approval from The Nasdaq Stock Market, Inc. Tut Systems will use the proceeds from this transaction for general working capital.

Under the terms of the financing, Tut Systems will issue an aggregate of 5,535,000 shares of common stock at a per share price of $2.70, and warrants to purchase an additional 2,767,500 shares of common stock. The warrants will expire in 2010 and, beginning in January 2006, are exercisable at a per share price of $4.25. Tut Systems also has the right to call the warrants in the event that the common stock trading price exceeds $7.44 per share for twenty consecutive trading days. If exercised in full, the warrants would provide an additional $11.8 million in proceeds to the company.

"This financing provides Tut Systems with a fully funded business plan, which we believe will enable us to turn cash flow positive in the second half of 2006," said Sal D'Auria, Chairman, President and CEO of Tut Systems. "This funding provides us with the capital to expand our leadership position in our core IPTV markets, and to pursue top tier carrier opportunities around the world with our content video processing and FTTH edge modulation solutions. We are excited about the emerging opportunities in the IPTV market space and the confidence that our new investors have placed in Tut Systems."

Tut Systems Inc.

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