New financing... would have liked to see them self fund expansion with some cash flow. Obviously they can't do that yet. If things hold true to past history, someone is going to run this stock up so the new investors can unload.
Electronic Control Security Raises $1.0 Million to Fund its Continuing Expansion, Build Out its Product Line and to Fully Repay Bank Loan; Convertible Debt Financing and Warrant Package Closed at Premium Above Share Price
1/17/2006 11:03:01 AM
CLIFTON, N.J., Jan 17, 2006 (BUSINESS WIRE) -- Electronic Control Security Inc. (EKCS), a leading integrated security provider and manufacturer of perimeter security systems, announced today that it closed a $1.0 million financing.
Under the terms of the financing, ECSI is issuing to institutional investors $1.0 million in principal amount of senior secured convertible debentures maturing on January 11, 2009 with interest payable at the greater of 8% per annum or the prime rate for the applicable interest period plus 2.5%. The debentures are convertible into common stock at a conversion price of $1.15 per share which is more than 10% higher than the closing price of ECSI on the day the funding closed. ECSI is also issuing common stock warrants to the investors to purchase up to 434,783 shares of common stock of ECSI, exercisable through January 11, 2009 at an exercise price of $2.00 per share - nearly double the closing price of ECSI shares on the day the funding closed. The debenture and warrant contain anti-dilution provisions.
Arthur Barchenko, President of ECSI, commented, "This funding is a significant event for the company and for our shareholders. It was done at a premium to our current share price, which demonstrates the confidence that these institutional investors have in our outlook. We intend to use the funds raised to facilitate the significant growth we have been achieving, to expand our product line to meet anticipated demand, and to fully repay our existing bank term loan."
The financing was completed through a private placement to four accredited investors and is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. For one year following the effectiveness of the resale registration statement, the holders of the debentures have the right to participate in ECSI's future equity or equity-linked financings. In connection with the financing, ECSI will pay fees to its placement agents aggregating $72,500 and will issue warrants to them to purchase up to 121,739 shares of ECSI's common stock. ECSI's current report on Form 8-K related to the financing contains more detailed information regarding the terms of the financing.
Signatures are so yesterday!
