Placement proceeds slated for operations, acquisition programs
By Jennifer Chiou
New York, June 21 - Spare Backup, Inc. raised $1.5 million via a convertible revolving credit note issued to private investor Biofilm IP, LLC, according to an 8-K filed with the Securities and Exchange Commission.
Under the terms of the agreement, Spare Backup can draw down a maximum of $300,000 per month up to the maximum amount.
Borrowings will bear interest at 10% per year. There will be no prepayment penalties for the note, which matures on June 17, 2014.
Biofilm may at any time elect to convert any portion of the then-unpaid loan amount into restricted common stock at the greater of $0.05 per share or a 25% discount to the five-day average closing bid price of Spare Backup stock immediately prior to the company's receipt of written notice. The company's stock closed at $0.05 apiece on June 21.
In addition, the Minden, Nev., developer of online backup software will issue 50,000 shares of non-convertible series B preferred stock and warrants to purchase 5 million Spare Backup shares at an exercise price of $0.09 cents each, an 80% premium to the company's closing share price on Tuesday.
Each preferred has voting rights of 400 votes per share and will be issued within two months.
The warrants expire on Jan. 17, 2016 and are callable if the five-day average of the company's stock price exceeds $0.60 per share.
Proceeds will be used to support the company's U.S. operations and the launch of numerous customer acquisition programs with its E.U. and U.S. partners, according to a news release.
"This financing allows us to move forward on a number of launches with our distribution partners, which focus on Spare Mobile," chief executive officer Cery Perle said in the release.
"We believe that our aggressive cost-cutting measures, coupled with the availability of these funds, will provide us with sufficient operational cash flow as we acquire a significant ongoing subscription revenue stream in the E.U. and in North America."
| Issuer: | Spare Backup, Inc.
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| Issue: | Convertible revolving credit note
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| Amount: | $1.5 million
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| Maturity: | June 17, 2014
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| Coupon: | 10%
|
| Price: | Par
|
| Conversion price: | Greater of $0.05 per share or a 25% discount to the five-day average closing stock price
|
| Warrants: | For 5 million shares
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| Warrant expiration: | Jan. 17, 2016
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| Warrant strike price: | $0.09
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| Investor: | Biofilm IP, LLC
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| Settlement date: | June 17
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| Stock symbol: | OTCBB: SPBU
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| Stock price: | $0.05 at close June 21
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| Market capitalization: | $11.48 million
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|
|
| Series B preferreds
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| Stock: | 50,000 shares
|
| Dividends: | None
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| Conversion: | None
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