1a21 RAISES NECESSARY CAPITAL
May 2, 2006
Completes $15.5 Million Private Placement
a21, Inc. has announced the completion of a private placement of $15.5 million of Secured Convertible Notes ("Notes") with institutional and accredited investors. In its recently released annual report (See Story 828) the company reported that it had an accumulated deficit of $14.2 million and a working capital deficit of $946,000 and that there was "substantial doubt about its ability to continue as a going concern." The Company expects to use the proceeds of this private placement to repay existing debt, provide working capital, and for acquisitions and expansion.
The financing was led by StarVest Partners, L.P. and QueeQueg Partners, L.P. which purchased an aggregate of $5 million of the Notes. Morgan Stanley also invested $5 million. Laura B. Sachar, founding partner of StarVest will be nominated for a seat on a21's Board of Directors at its next annual meeting of stockholders. The Company currently has four outside directors out of eight total directors.
"I am excited about the prospects of a21," said Ms. Sachar. "We believe in a21's business plan and look forward to assisting them in achieving their objectives."
The Notes, due March 2011, bear interest at 5% per annum, and are convertible into shares of the Company's common stock at $0.65 per share. In addition, if the 45 day volume weighted average price of the Company's common stock equals or exceeds $1 per share, the Notes will automatically be converted into a21's common stock under certain conditions. As part of the transaction, the Company agreed to file a resale registration statement with the Securities and Exchange Commission covering the common stock into which the Notes are convertible within six months.
"We are pleased that this investor group recognizes the progress the Company has made by electing to complete this financing at a premium to the current market price of our common stock," said Albert H. Pleus, Chairman and CEO of a21. "While about 50% of the Notes were purchased by our existing investors, we have also added some very important new investors to the Company. The financing allows us to improve our capital structure, retire certain outstanding warrants, strengthen our balance sheet, and support the next phase of the Company's growth."