Commtouch Announces Private Placement of $3 Million; Company Meets Nasdaq Listing Requirements
October 11 2005 - 6:00AM
Business Wire
Commtouch(R) (Nasdaq:CTCH), the developer of ground breaking
RPD(TM) technology for real time anti-spam and Zero-Hour(TM) virus
protection, today announced that it has closed a private placement
of 6,000,000 Ordinary Shares of the Company at a purchase price of
$.50 per share for gross proceeds to the Company of $3 million. The
deal was led by Aviv Raiz and included DS-Apex Holdings Ltd. The
investors also will receive two sets of warrants, each representing
an option to purchase up to 1.5 million Ordinary Shares, with one
set exercisable within nine months at a per share price of $0.50
and the other set exercisable within five years at a per share
price of $0.65. Aviv Raiz commented: "Commtouch operates in an
important and growing sector, and I have no doubt that its unique,
proprietary technology, in conjunction with its business model,
will result in a growing and profitable company." Gideon Mantel,
CEO of Commtouch, remarked: "On the heels of a record quarter and
as the company continues opening doors to new business, we believed
it important to increase working capital as a show of additional
business stability and commitment of investors, both old and new.
This financing, coupled with continued improvement in financial
results, should allow us to meet Nasdaq's minimum shareholder
equity listing requirement into the foreseeable future. It is our
intention to earmark a portion of the financing proceeds towards a
more aggressive campaign bringing greater visibility to the unique
advantages of our anti-spam and Zero-Hour virus protection
products." The securities to be issued by Commtouch in the private
placement have not been registered under the United States
Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration or an applicable exemption
from the registration requirements. However, as part of the
transaction, Commtouch agreed to file a registration statement on
Form F-3 with the United States Securities and Exchange Commission
for purposes of registering the Ordinary Shares issuable in the
private placement. Additionally, for so long as the investors
maintain at least 60% of the securities issued in the private
placement, they shall be entitled to nominate one director to the
company's board of directors by way of inclusion of the candidate's
name on the company's proxy statement to shareholders. The company
plans to file shortly with the SEC a Form 6-K, inclusive of copies
of the private placement documentation. The company also announced
that, as of today's date, 53,010,318 Ordinary Shares and 6,680,000
convertible Series A Preferred Shares are issued and outstanding.
Nasdaq Related Announcement On October 6, 2005, the company
received verbal notification from Nasdaq that it was in violation
of Nasdaq's shareholder approval requirement for continued listing
as set forth in Marketplace Rule 4350(i)(1)(D)(ii), since the above
described transaction could result in the potential issuance of the
Company's Ordinary Shares in excess of twenty percent of the
pre-transaction outstanding Ordinary Shares at a price below the
greater of book value or market value without receipt of
shareholder approval. Upon receipt of this notice, the company and
investors under the private placement amended the transaction,
reducing the potential issuance of Ordinary Shares to below twenty
percent of pre-transaction outstanding Ordinary Shares. As a
result, by way of a letter sent to the company on October 7, 2005,
Nasdaq determined that, upon issuance of this public announcement,
the company has regained compliance with the subject Rule and the
matter is now closed. About Commtouch Commtouch Software Ltd.
(Nasdaq:CTCH) is dedicated to protecting and preserving the
integrity of the world's most important communications tool --
email. Commtouch has 14 years of experience developing messaging
software, and is a global developer and provider of proprietary
anti-spam and Zero-Hour virus protection solutions. Using core
technologies including RPD Recurrent Pattern Detection, the
Commtouch Detection Center analyzes 1.5 billion email messages per
month to identify new spam and malware outbreaks within minutes of
their introduction into the Internet. Integrated by about 30 OEM
partners, Commtouch technology protects thousands of organizations,
with 35 million users in 100 countries. Commtouch is headquartered
in Netanya, Israel and has a subsidiary in Mountain View, CA. For
more information, see: www.commtouch.com. This press release
contains forward-looking statements, including projections about
our business, within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
For example, statements in the future tense, and statements
including words such as "expect," "plan," "estimate," "anticipate,"
or "believe" are forward-looking statements. These statements are
based on information available to us at the time of the release; we
assume no obligation to update any of them. The statements in this
release are not guarantees of future performance and actual results
could differ materially from our current expectations as a result
of numerous factors, including business conditions and growth or
deterioration in the Internet market, commerce and the general
economy, both domestic as well as international; fewer than
expected new-partner relationships; fewer than expected license
agreements resulting from Commtouch's exclusive rights to market
DCC; competitive factors including pricing pressures; technological
developments, and products offered by competitors; the ability of
our OEM partners to successfully penetrate markets with products
integrated with Commtouch technology; a slower than expected
acceptance rate for real time AV solutions in general and the
Commtouch Zero-Hour(TM) Virus Protection product in particular;
availability of qualified staff for expansion; technological
difficulties and resource constraints encountered in developing new
products, such as the Zero-Hour solution; and the failure of
Commtouch to meet The NASDAQ Capital Market's listing standards in
the future, as well as those risks described in the text of this
press release and the company's Annual Reports on Form 20-F and
reports on Form 6-K, which are available through www.sec.gov.
Recurrent Pattern Detection, RPD and Zero-Hour are trademarks, and
Commtouch is a registered trademark, of Commtouch Software Ltd.
U.S. Patent No. 6,330,590 is owned by Commtouch.
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