Elcom Secures $7.9 Million (4.5 Million Pounds Sterling) Via an Issuance of Shares on AIM
December 21 2005 - 2:00AM
PR Newswire (US)
Elcom to net $5.7 million (3.2 million pounds sterling) after
Repayment of Loans NORWOOD, Mass., Dec. 21 /PRNewswire-FirstCall/
-- Elcom International, Inc. ("Elcom" or the "Company") (OTC:ELCO)
(BULLETIN BOARD: ELCO) and (AIM: ELC and ELCS), a leading
international provider of remotely-hosted eProcurement and
eMarketplace solutions, is pleased to announce that it has secured
$7.4 million (4.2 million pounds sterling), through an issue (the
"New Issue") of 277,685,000 new Elcom common shares (the "New
Shares") at a price of 1.5 pence (UK) or ($0.0266) per share. From
the proceeds of the New Issue, the Company will repay loans, plus
accrued interest, totaling $1.7 million (1.0 million pounds
sterling), resulting in proceeds to the Company of $5.7 million
(3.2 million pounds sterling). In addition, loans from a non-U.S.
investor(s), including accrued interest, of $0.5 million (0.3
million pounds sterling), will convert into additional shares,
resulting in an additional 20,563,711 New Shares being issued at
the New Issue price. The total value of the New Shares issued in
the New Issue and the loan conversion by a non-U.S. investor
represents $7.9 million (4.5 million pounds sterling) at the New
Issue price. This issuance of the New Shares was made in reliance
on the exemption from registration under Regulation S of the U.S.
Securities Act of 1933, for offers and sales of securities outside
the U.S. Under Regulation S, the holders of the New Shares are
prohibited from reselling such shares in the U.S. to U.S. persons
or entities or for the benefit or account of a U.S. person, for a
one- year period. During this one-year period, holders of the New
Shares may otherwise trade such shares in the United Kingdom
through the facilities of the London Stock Exchange's AIM market
("AIM") and outside the U.S., pursuant to Regulation S and subject
to securities laws applicable in the jurisdiction(s) in which such
shares are traded. The New Shares are listed under the symbol
'ELCS' (the 'S' denoting Regulation S shares) and trade on AIM but
will not commingle with the Company's common stock traded on the
OTCBB (and AIM under the symbol 'ELC'), until and unless the
Company registers the shares under the U.S. Securities Act of 1933
or an exemption from registration is available. THE ABOVE
REFERENCED SHARES OF ELCOM'S COMMON STOCK IN THE NEW ISSUE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES (OR TO A U.S. PERSON) ABSENT
REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION OR AN
APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. Mr. Crowell,
the Chairman and CEO of the Company, and Mr. Smith, the Vice-
Chairman of the Company, have previously made bridge loans to the
Company totaling $120,000 each, as disclosed in previous filings.
Mr. Crowell's loans, together with the interest thereon at 8%, will
be repaid from the proceeds of the New Issue (the net cash arising
from the New Issue referred to earlier in this announcement takes
account of this repayment). Mr. Smith's loan of $120,000, together
with the interest thereon at 8%, will be converted into
approximately 4.6 million common shares (at approximately $0.0276
per share), pursuant to the exemption from registration under
Regulation D. This conversion will be at a price slightly higher
than the New Issue price and will be consummated subsequent to the
New Issue. Under the arrangements described above, Elcom has
allotted 298,248,711 New Shares, representing approximately 83% of
the 359,530,571 shares outstanding after the New Issue and
conversion of non-U.S. investor loans. Application has been made
for these shares to be admitted to AIM, which is expected to become
effective later today. The Company has undertaken, in certain
circumstances, to effect the registration of the New Shares under
the U.S. Securities Act of 1933. Smith & Williamson Corporate
Finance Limited is the Company's nominated adviser and assisted the
Company in this transaction. Robert J. Crowell, Elcom
International, Inc.'s Chairman and CEO said, "This financing has
been in process for many months and represents the foundation for
Elcom's future growth, including the Zanzibar eMarketplace in the
U.K., our second government contract, which, quite possibly could
be the largest government eMarketplace in the world in short order.
I would like to thank all of our channel partners and clients who
have supported and assisted Elcom over the past year." Mr. Crowell
continued, "Importantly, we expect this financing to allow us to
expand our presence in the U.S. through various initiatives
currently underway, two of which were contingent on receiving this
funding. These U.S. initiatives are in the early stages, such as
Oakland Unified School District's eMarketplace, but could be
substantial in the future. I believe this financing will allow us
to position Elcom as a leading provider of public sector integrated
eProcurement and eMarketplace systems across the world, and will
result in additional opportunities for the Company with other
governments as well as in the private sector. We intend to move
very quickly from a reactive mode to a proactive model." As a
result of the New Issue, the anti-dilution provision contained in
the Company's 10% Convertible Debentures that were issued in 2003
("Convertible Debentures") has been triggered. Hence, following the
New Issue, the conversion rate for the approximately $1.3 million
principal amount of the Convertible Debentures, and accrued
interest thereon, will be $0.046 per share versus the original
$0.1246 per share conversion rate. The Convertible Debenture
document was filed as Exhibit 4.17 to the Company's Form 10-K for
the year ended December 31, 2003, filed with the Securities and
Exchange Commission on March 29, 2004. The Company also announces
that in accordance with accepted best practices in corporate
governance, it will separate the functions of Chairman of the Board
and Chief Executive Officer ("CEO"). Effective December 21, 2005,
Robert J. Crowell will continue as Chairman of the Board and John
E. Halnen, current President and Chief Operating Officer, will
assume the additional role of CEO. Robert J. Crowell, the Company's
Chairman of the Board, stated, "With the Zanzibar eMarketplace
contract in place and the Company's long-awaited financing
completed, I am pleased to have my role in the Company shift, as it
has over the last six months or so, to a more strategic planning
one. Leading the planning for the future of the Company, in
conjunction with the Board including John Halnen as a director and
as CEO, is something I am very much looking forward to." John E.
Halnen, the President and new CEO, stated, "With multiple new
initiatives coming on line in the U.S. and U.K., I look forward to
my enhanced responsibilities. With over ten years with Elcom and
eight years with Bob Crowell previously at NEECO, Inc., I feel our
ability to work together is about as strong as it can be. I believe
Elcom is uniquely positioned to take advantage of emerging demand
for public and private sector eMarketplaces and look forward to new
opportunities in the future." About Elcom International, Inc. Elcom
International, Inc. (OTC:ELCOOTC:andOTC:AIM:OTC:ELCOTC:and ELCS)
(BULLETIN BOARD: ELCO and AIM: ELC and ELCS) , operates elcom, inc.
("Elcom"), an international B2B Commerce Service Provider offering
affordable solutions for buyers, sellers and commerce communities
to automate many or all of their procurement processes and purchase
most or all of their goods and services in a 'private' eMarketplace
system. PECOS, Elcom's remotely-hosted flagship solution, enables
enterprises of all sizes to achieve the many benefits of
eProcurement and eMarketplace functionality, with the system hosted
by Elcom at its own data center, eliminating the burden and cost of
in-house programming, IT infrastructure and ongoing catalog content
and system management. More information is available from our
integrated web site at: http://www.elcominternational.com/
Additional information regarding Zanzibar can be found at the
following website address/URL:
'http://europa.eu.int/idabc/en/document/4986/194' The Company does
not endorse or confirm any specific information in these articles
as they have been published by the IDABC European Government
Services of the European Commission. STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT Except for the historical
information contained herein, the matters discussed in this press
release could include forward-looking statements or information.
All statements, other than statements of historical fact,
including, without limitation, those with respect to the Company's
objectives, plans and strategies set forth herein and those
preceded by or that include the words "believes," "expects,"
"targets," "intends," "anticipates," "plans," or similar
expressions, are forward-looking statements. Although the Company
believes that such forward-looking statements are reasonable, it
can give no assurance that the Company's expectations are, or will
be, correct. These forward-looking statements involve a number of
risks and uncertainties which could cause the Company's future
results to differ materially from those anticipated, including: (i)
the possibility that the Company will have to raise additional
working capital to fund operations during 2006 and the availability
of any such funding to the Company; (ii) its history of ongoing
operating losses; (iii) the substantial number of common shares
issued in this Regulation S issuance and the possible impact on the
market for the Company's shares; (iv) the ability of the Company to
perform under its contracts with Capgemini and PA Shared Services
Limited ("PASSL"), a member of the PA Consulting group of
companies; (v) the overall marketplace and clients' acceptance and
usage of eCommerce software systems, eProcurement and eMarketplace
solutions including demand therefor by both Scottish and U.K.
public entities; (vi) the costs of building the Zanzibar
eMarketplace system versus the revenues derived therefrom; (vii)
the impact of competitive technologies, products and pricing,
particularly given the substantially larger size and scale of
certain competitors and potential competitors; (viii) control of
expenses; (ix) the consequent results of operations given the
aforementioned factors; and (x) other risks detailed from time to
time in the Company's Annual Reports on Form 10-KSB, Quarterly
Reports on Form 10-QSB and in its other SEC reports and statements.
The Company assumes no obligation to update any of the information
contained or referenced in this press release. Company Contact:
Investor Relations e-mail: DATASOURCE: Elcom International, Inc.
CONTACT: Investor Relations at Elcom International, Inc., Web site:
http://www.elcom.com/ http://www.elcominternational.com/
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