Derivatives trading software vendor, EasyScreen, is to raise at least £1.5 million in a placing and open offer at 29 pence per share. Without a cash injection the company directors project that working capital would run out mid-June 2002.
The new funding is the latest in a series of bond and equity issues designed to secure EasyScreen's working capital requirements. This latest move is designed to bridge EasyScreen's immediate cash requirements in a single draw down and is accompanied by carefully measured statements of confidence from company chairman, Phil Docker.
The directors expressed confidence that the company will produce year end results "in line with their previous expectations". Clearly all eyes will be upon the preliminary results due to be announced in June.
In the statement EasyScreen also referenced its or recently formed marketing relationships with Hewlett-Packard, NS Solutions and AKJ Inc. Additionally, EasyScreen announced that Paul Varcoe, product development director was leaving the board and taking a twelve month career break.
In October 2001 EasyScreen issued the eSpeed Bond (a £2 million secured convertible bond issued to eSpeed) and negotiated the GEM Facility (a £10 million equity line of credit with GEM Global Yield Fund Limited and GEM Investment Advisors, Inc.). EasyScreen stated on 3 October 2001 that it believed that the eSpeed Bond would provide sufficient working capital for the company's requirements for at least the following twelve months.
Events subsequent to that date have now altered the company's expectations of the timing of revenues, although the expected level of revenues and, in the belief of the directors, the prospects for the company, remain unchanged. A significant element of the revenue projected at the time of the circular of 3 October 2001 consisted of large scale solutions sales revenue which has not been achieved to expected timetable.
EasyScreen reports it is currently in discussions with several institutions regarding sales at a level in line with directors' previous expectations and they continue to believe that significant solutions sales will result. However, according to the statement, the timing of these potential sales and subsequent cash receipts by the company remain difficult to predict.
In March 2002, EasyScreen announced that it had placed 2,211,760 new ordinary shares for cash, representing 5 per cent of its then issued share capital, at 32.25p per ordinary share with existing institutional investors raising approximately £700,000 (net of expenses) to assist the company with its immediate working capital difficulties.
According to today's statement: "The directors believe that EasyScreen now requires to raise additional funds for its immediate working capital requirements and to develop the business further. The directors have therefore decided to secure financing by way of the placing and open offer. The board is seeking to obtain the necessary financing in this way to give qualifying shareholders an opportunity to maintain their level of interest in the company and to reduce business distraction by securing the required working capital in a single issue."
"While the company will, subject to its terms, continue to have available the GEM Facility until 6 September 2004 (against which it has, to date, made no drawings), this cannot currently provide sufficient working capital in a single issue. Had the company served a drawdown notice on 11 April 2002, the company would have been able to access up to £30,212 in a single drawdown. On the directors current short term projections the company only has sufficient working capital to continue trading until mid-June 2002 when the net proceeds of the Issue are scheduled to be received."
"On 21 February 2002, the company announced its trading results for the 3rd quarter to 31 December 2001. Since 31 March 2001 (the end of the financial year to which the last published annual accounts relate) significant cost cutting measures have been implemented and, although sales of stand-alone software products and prices have remained reasonably static, the company has made large solutions sales to each of eSpeed and Refco EasySolutions. The directors are confident the company will produce year end results in line with their previous expectations and anticipate announcing the preliminary results in June."