15th Jan 2016 08:49
LONDON (Alliance News) - CloudTag Inc Friday said it has secured a GBP1.3 million unsecured convertible loan note facility to allow the company to fill its customer orders after launching its first product back in November.
CloudTag was preparing to launch its proprietary wearable device in late 2015, preparing for orders and negotiating commercial agreements before recently launching the product at the Consumer Electronics Show in Las Vegas last week.
The CloudTag Track is the "most personalised weight loss and fitness wearable" on the market, according to the company, using the beatSMART clip for daily tracking of the users heart and to allow users to charge the device whilst wearing it on their wrist.
The personal health monitoring company said the CES enabled it to progress existing relationships and build new ones, and said it held conversations with some of the world's largest consumer technology manufacturers, one of Europe's leading sporting goods distributors and two of North America's largest department stores and retail groups - all of which were not named.
Cloudtag added that it also held talks with insurance providers and mobile phone operators about business-to-business opportunities.
"The directors of CloudTag are confident that several of these opportunities will lead to commercial arrangements and look forward to updating the market in due course as discussions progress further," said CloudTag.
Moving forward, it said it will focus on increasing production in the Far East in preparation for commercial quantity orders that are expected to emerge in the second quarter of 2016.
CloudTag has now secured a GBP1.3 million unsecured convertible loan note facility from Hector Ltd, a private equity company specialising in hi-tech small and medium businesses. Those funds will be used for purchase order funding with manufacturers and business-to-business partnerships during 2016, it said.
Purchase order financing is a funding option used by businesses that need cash to fill single or multiple customer orders, addressing cashflow problems. Essentially, those funds will ensure CloudTag can fulfil orders.
Any funds drawn down from the facility will carry an annual interest rate of 10% and an administration fee of 3.7%. CloudTag can draw down the funds in as many tranches as it likes. Hector, as the lender, can choose to convert any tranche of drawn down funds into CloudTag shares at a conversion price of 2.25 pence per share - a premium to its current share price.
CloudTag shares were down 5.9% to 2.0 pence per share on Friday morning.
However, the company has said it will only be able to issue those shares if it has sufficient authority from shareholders, meaning it may have to seek shareholder approval depending on the size of the share issuance at the time.
In a separate matter, CloudTag has issued 2.5 million new shares in the company to settle outstanding fees totalling GBP53,125 owed to a third party consultant.
By Joshua Warner; [email protected]; @JoshAlliance
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