Iparty (AMEX:IPT)
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iParty Corp. (AMEX: IPT), a party goods retailer that
operates 51 iParty retail stores, today reported that it had
successfully concluded its previously reported discussions and
negotiations with an institutional accredited investor and raised $2.5
million through a combination of subordinated debt and warrants issued
on September 15, 2006.
Under the terms of the financing, iParty has issued a three-year
subordinated note that bears interest at an interest rate of prime
plus one percent. The note matures on September 15, 2009. In addition,
iParty has issued a warrant exercisable for 2,083,334 shares of iParty
common stock at an exercise price of $0.475 per share, or 125% of the
closing price of iParty's common stock on the day immediately prior to
the closing of the transaction. The agreements in connection with the
financing provide for certain restrictions, covenants and resale
registration rights with respect to the shares of common stock
underlying the warrant.
The issuance of the warrant triggers certain anti-dilution
provisions of iParty's Series B, C, and D convertible preferred stock.
As a result, the outstanding shares of these three series of preferred
stock will be convertible into approximately 442,354 additional shares
of common stock. The issuance of the warrant, however, does not
trigger the anti-dilution provisions of iParty's Series E or F
convertible preferred stock or any of its other outstanding warrants.
Sal Perisano, Chairman and Chief Executive Officer of iParty
Corp., commented, "We are pleased to report that we have successfully
completed our $2.5 million subordinated debt and warrant financing. As
we have previously disclosed, we have been evaluating and assessing
the amount and timing of any additional capital that may be required
to fund our operations in 2007 and beyond and, in connection with
those efforts, have been exploring various financing and strategic
opportunities. We believe that today's announcement and the capital
resources that it makes available to iParty, represents an important
step towards helping us address iParty's anticipated capital
requirements. Together with the financing that will be available to us
in October when we expect to exercise our right to convert at least
$1,150,000 of extended Amscan payables into a promissory note payable
over 36 months, the financing made available to us as a result of
today's announcement will assist us in developing our operating plan
for 2007 and beyond, and will help us to better support our general
operations, our anticipated infrastructure improvements, and our
continuing branding marketing efforts."
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. (AMEX: IPT -
news) is a party goods retailer that operates 51 iParty retail stores
and licenses the operation of an Internet site for party goods and
party planning at www.iparty.com. iParty's aim is to make throwing a
successful event both stress-free and fun. With over 20,000 party
supplies and costumes and an online party magazine and party-related
content, iParty offers consumers a sophisticated, yet fun and
easy-to-use, resource with an extensive assortment of products to
customize any party, including birthday bashes, Easter get-togethers,
graduation parties, summer barbecues, and, of course, Halloween.
iParty aims to offer reliable, time-tested knowledge of party-perfect
trends, and superior customer service to ensure convenient and
comprehensive merchandise selections for every occasion. Please visit
our site at www.iparty.com.
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995: This release contains forward-looking statements
that are based on our current expectations, beliefs, assumptions,
estimates, forecasts and projections, including those about better
business terms, future expectations of sales growth, improved gross
margins, profitability, the ability to take advantage of business
opportunities, and the industry and markets in which iParty operates.
The statements contained in this release are not guarantees of future
performance and involve certain risks, uncertainties and assumptions
that are difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed in such forward-looking
statements, and such statements should not be relied upon as
representing iParty's expectations or beliefs as of any date
subsequent to the date of this press release. Important factors that
may affect future operating results include, but are not limited to,
economic and other developments such as unseasonable weather, that
affect consumer confidence or consumer spending patterns, particularly
those impacting the New England region, where 46 of our 51 stores our
located, and particularly during the Halloween season, which is our
single most important season; intense competition from other party
supply stores and stores that merchandise and market party supplies,
including big discount retailers, dollar store chains, and temporary
Halloween merchandisers; the failure of any of our systems, including,
without limitation, our recently-installed point-of-sale system and
our existing merchandise management system, the latter of which was
developed by a vendor who is no longer in business and which we are
considering replacing in 2007; the success or failure of our efforts
to implement our business growth and marketing strategies; our
inability to obtain additional financing, if required, on terms and
conditions acceptable to us; rising oil and gas prices which impact
prices of petroleum-based/plastic products, which are a key raw
material in much of our merchandise, affect our freight costs and
those of our suppliers, and affect consumer confidence and spending
patterns; third-party suppliers' failure to fulfill their obligations
to us; the availability of retail store space on reasonable lease
terms; our ability to successfully integrate newly acquired stores or
to successfully exploit strategic opportunities as a result of new
agreements we may enter or as a result of any store closures by any of
our competitors; compliance with evolving federal securities,
accounting, and stock exchange rules and regulations applicable to
publicly-traded companies listed on the American Stock Exchange. For a
discussion of these and other risks and uncertainties which could
cause actual results to differ from those contained in the
forward-looking statements, see Item 1A, "Risk Factors" of iParty's
most recently filed Annual Report on Form 10-K for the fiscal year
ended December 31, 2005 and iParty's most recently filed Quarterly
Report on Form 10-Q.