By Jennifer Chiou
New York, May 27 - IP Applications Corp. said it has agreed to negotiate the terms of a C$1 million non-brokered private placement of 10% convertible preferred shares with major shareholder Pender Growth Fund (VCC) Inc.
The preferreds will be priced at C$0.12 each and will be convertible into common shares on a one-for-one basis.
IP said that it expects to issue 4 million common share purchase warrants in connection with the placement. Each warrant will be exercisable for one share at a price of C$0.36 for five years.
After 18 months from closing, IP may elect to convert the preferreds if the closing price of its common shares is greater than C$0.40 for 30 consecutive trading days and the total trading volume over that period is greater than 20% of its share capital.
The preferreds may be called after five years.
This transaction awaits approval from IP's board, the TSX Venture Exchange and the administrator of the Small Business Venture Capital Act. Also, shareholders will vote on the issue at a July 28 meeting.
Proceeds will be used for working capital.
Pender has agreed to advance C$500,000 of the subscription proceeds to IP to assist with its operating cash flow. The advance will be evidenced by a promissory note and will be repayable on demand at any time after 75 days.
Based in Vancouver, B.C., IP Applications is a provider of managed software and support services that enable companies to deliver quality internet services.
| Issuer: | IP Applications Corp.
|
| Issue: | Convertible preferred shares and warrants
|
| Amount: | C$1 million
|
| Dividend: | 10%
|
| Price: | C$0.12
|
| Conversion ratio: | One common share per preferred
|
| Warrants: | For 4 million shares
|
| Warrant expiration: | Five years
|
| Warrant strike price: | C$0.36
|
| Agent: | Non-brokered
|
| Pricing date: | May 27
|
| Stock symbol: | TSX Venture: IPX
|
| Stock price: | C$0.07 at close May 26
|
| Market capitalization: | C$2.49 million
|
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