Advantages
● Issuer retains control of timing and amount of each advance.
● Provides access to equity capital without the complications of traditional offerings.
● Typically priced off historical market prices and daily liquidity.
● Can be used in conjunction with a Security-Backed loan to access capital up-front.
Control of Potential Dilution
●Issuer can raise capital by issuing less shares as share price strengthens.
●Resulting in less dilution and share overhang.
Costs
●Lower legal.
●Lower filing fees.
●For one Equity Commitment transaction compared to multiple capital raises.
Market Acceptance
●Can be used to enhance borrowing capacity and credit for issuer.
●Can be used for private companies looking to go public and attract capital.
●Provides comfort to the financial markets that the issuer has a long term capital support.
Anticipated Process Timeline
| Week 1 | ||||||
|---|---|---|---|---|---|---|
|
Investor and company sign the Non Binding SEO term sheet. Once signed, investors send Engagement letter to company. |
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| Week 2 |
Investor conducts due diligence (financial, legal and operational). Investor’s counsel sends legal draft to the company and its counsel. |
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| Week 3 & 4 |
The company and its counsel render comments on the agreement. Address any additional due diligence points and Investor completes due diligence. Final draft of the agreement circulated. |
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| Week 5 |
Closing. |
Note: Timing can be decreased depending on certain factors.
Shareholder Approval
●Grant of issuance on non pre-emptive basis.
●Standard board authority required in order to issue new equity.
Prospectus (if applicable)
● Registration Statement may be necessary in order to enter into SEO
●Free trading, full-registered shares must be available at the time of initial funding
