History
3DX Technologies, a Houston 3-D seismic oil and gas explorer, spent its 1996 IPO money within a year, nearly failed, and merged into Esenjay in 1999.
1996-1997: Listing and a fast burn
3DX Technologies Inc., a Houston-based company incorporated in Delaware, described itself as a "knowledge-based" oil and gas explorer built around 3-D seismic imaging. It planned to explore through joint ventures. In October 1996 it registered an IPO of 2,500,000 shares at an estimated $13-15 each. The offering priced in December at $11, below that range. The company sold 2,400,000 new shares and existing shareholder Landmark Graphics Corporation, a 3-D seismic software company and technology partner, sold 100,000. The company raised about $24.55 million net of underwriting discount, before expenses.
The money did not last. For 1997 the net loss widened to $11.0 million from $2.7 million, mainly because of a $9,061,240 fourth-quarter write-down of the value of its oil and gas properties. Cash fell to $1.57 million from $17.5 million a year earlier.
1998: Distress
In June 1998, with cash low, 3DX sold 1,462,044 shares at $1.50 each in a private placement, raising about $2.2 million. Buyers included CWS Limited-Liability Company, Minnowburn Corp. and Susan Morrice. The price was 86% below the IPO price, and buyers received protection if the company later sold shares even more cheaply.
In September the company re-filed its 1997 accounts with a going-concern warning from its auditor, Arthur Andersen. An April 1998 bank covenant breach had forced $2.0 million of long-term debt to be treated as due within a year. The company had also lost a further $6.4 million in the first half of 1998 and had a $2.8 million working-capital deficit. Management said it might cut spending or consider a sale or merger.
1998-1999: Search for a buyer
In November 1998 3DX signed a non-binding letter of intent to merge into Fortune Natural Resources Corporation, which would issue 0.75 of its shares for each 3DX share. The parties did not sign a definitive agreement by the December 31 deadline, and 3DX ended the letter in January 1999.
In April 1999 Nasdaq removed 3DX from its SmallCap Market because the share price had not held above the $1.00 minimum bid. The stock was expected to move to the OTC Bulletin Board.
In May 1999 3DX signed a definitive merger agreement with Esenjay Exploration, Inc. Shareholders could choose 3.25 Esenjay common shares or 2.75 shares of a new Esenjay convertible preferred stock for each 3DX share, subject to shareholder approval at both companies. The merger was completed, and in October 1999 3DX deregistered its securities, ending about three years as a standalone public company.
Written from the 10 story beats below (1996 to 19 Oct 1999), which come from the company's own announcements and filings.