On2 cuts warrant strike price for placed shares

By Susanna Moon

Chicago, June 20 - On2 Technologies, Inc. said it agreed to reduce the exercise price of warrants issued to Midsummer Investment, Ltd. and Rockmore Investment Master Fund in August 2006 to $0.69 from $0.77, according to an 8-K filing with the Securities and Exchange Commission.

The May 31 letter agreement applies to warrants for 1,973,684 shares. The June 15 letter agreement with Rockmore applies to 328,947 shares underlying the warrant.

The warrants contained an anti-dilution provision. The Midsummer agreement amended the anti-dilution provision so that the warrant strike price may not be reduced below $0.41 per share and the number of shares underlying the warrant may not be increased by more than 2 million shares.

The Rockmore agreement amended the anti-dilution provision of the warrant so that the exercise price of the warrant may not be reduced below $0.41 per share and the number of shares underlying such warrant may not be increased by more than 333,333 shares.

On2 is a New York-based company that develops full-motion, full-screen compression and streaming video technologies used via the internet.

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