CyberCash (Nasdaq: CYCH), today announced that it received US$10 million in capital funding to support the launch of its new InstaBuysm e-commerce service. The new service is an addition to the CyberCash online payment system, which allows online stores to process credit card payments from online shoppers. While competition is fierce among e-commerce services and high-tech products, in general, the CyberCash online payment system still enjoys a virtual monopoly in its market segment.
According to CyberCash, “The additional funds will help to support marketing, sales and customer support efforts behind CyberCash’s InstaBuy Service unveiled in August of 1998.” The new round of financing was provided by funds managed by Rose Glen Capital Management, L.P. and The Palladin Group, L.P. In Thursday morning trading, CyberCash stock was up 5.58%.
The last round of private placement funding for CyberCash was on February 5, 1998, when the company announced that it raised $15 million.
CyberCash is positioning InstaBuy as a “one-click” online purchasing service, in the sense that the system stores the buyer’s billing information on a CyberCash server, thereby eliminating the need for the buyer to re-register each time they make an online purchase in any Web site that uses CyberCash technology.
CyberCash claims that merchants gain significant increases in revenue due to higher purchase completions with InstaBuy and the implementation of new Loyalty and Affinity programs that the InstaBuy allows. However, the company has not offered any independent data to support its claim.
The private placement announced today involves the issuance of Units, each consisting of one share of the Company’s common stock and a warrant to purchase 0.75 shares of the Company’s common stock. The purchase price is $16.40 per Unit, which is 105% of the closing bid price of the Company’s common stock on January 5, 1999. The exercise price of each warrant is $20, subject to reset under certain circumstances beginning one year after the date of issuance.
CyberCash, Inc., headquartered in Reston, Virginia, was founded in August 1994. Its online payment processing products and services include Secure Payment/SET, CyberCoin and PayNow electronic check. In October 1998, the company reported third quarter revenues of approximately $4.5 million, up nearly 200% from the third quarter of 1997.