Answers gets new investor; Bio-Extraction sells stock; Ringbolt, Harris & Harris, Accentia plan offerings

By Kenneth Lim

Boston, June 17 - Answers Corp. landed a $6 million strategic investment from venture capital firm Redpoint Ventures.

Meanwhile, Bio-Extraction Inc. said it raised C$3.5 million through an unsolicited private stock placement.

Ringbolt Ventures Ltd. announced a C$20.3 million offering of units, while Harris & Harris Group, Inc. said it will sell $15.65 million worth of stock. Accentia Biopharmaceuticals, Inc. is also coming to the market with an $8.5 million convertible offering.

Answers gets Redpoint funding

Answers Corp. said it is selling $6 million worth of series A convertible preferred stock to Redpoint Ventures.

The preferreds are convertible into about 1.33 million common shares at $4.50 per share. Redpoint also received 50% warrant coverage, with each warrant exercisable at $4.95.

Answers common stock (Nasdaq: ANSW) declined by 3.83% or $0.15 on Tuesday to close at $3.77.

Redpoint has an option to purchase an additional $7 million of series B convertible preferred stock in the next year. The series B preferreds will be convertible into about 1.28 million shares of common stock at a conversion price of $5.50 per share, with 50% warrant coverage at an exercise price of $6.05.

Answers, a New York-based internet services company that runs the Answers.com and WikiAnswers.com reference sites, said it will use the proceeds to strengthen its balance sheet.

As part of the investment, Redpoint will appoint Redpoint partner Allen Beasley to Answers' board. If Redpoint exercises the second tranche warrant, it will be able to appoint a second board member.

"We are extremely pleased with this strategic investment and validation of both our products and growth opportunity by a top tier Silicon Valley venture capitalist," Answers chairman and chief executive Robert S. Rosenschein said in a statement. "With this partnership, we gain access to Redpoint's team, connections and industry experience. The last public company they invested in was Intermix, parent of MySpace, subsequently sold to News Corp. in 2006. We look forward to Redpoint's valuable contribution and support."

Beasley said in the statement: "The Answers properties, but especially WikiAnswers.com, represent the type of high growth opportunity we look for. With over 11 million monthly unique U.S. visitors in May, according to comScore, WikiAnswers is an emerging leader in the social knowledge space. We look forward to working closely with the company to help accelerate its growth."

Answers chief strategic officer Bruce Smith said the investment between the two companies was seeded in February 2008 while Answers was exploring an acquisition of Lexico. That acquisition was canceled on Feb. 13.

"We had tried last year to acquire Lexico, which is currently being acquired by IAC," Smith told Prospect News. "At the end of the roadshow [in early February]...one of the last groups we met was Redpoint. At the end of that meeting they said, 'We're not so interested in Lexico, but if the deal doesn't go through, we'd be interested in investing in your company.' And so that's how it got started."

Discussions regarding the Redpoint investment started after the Lexico deal was called off, Smith said. The pricing portion of the negotiations took a long time, he said, but Smith is pleased with where the deal arrived.

"The price that they're paying is a 15% premium to our closing price," Smith said. "The first tranche warrants are exercisable at $4.95, the second tranche warrants at $6.05. We're very pleased."

Smith said the $6 million from Redpoint will help to boost Answers' coffers. The company had about $5.5 million in cash and cash equivalents as at end-March.

"But what attracts us so much to this is, when you see they're going to own 14.5% of the company, is having Redpoint's involvement," Smith added. "In the roadshow we were very impressed with them as investors. They knew the industry very, very well and they knew our business very, very well. They're not passive investors...You can always go out and raise money from a passive investor, but that's not what we were looking for."

The company is now focusing on its WikiAnswers web site, Smith said.

"Our focus right now is to grow WikiAnswers," he said. "And that's their interest as well...We're hoping that they can help us with strategy, the best ways to execute and make WikiAnswers the best site that it can be."

Bio-Extraction welcomes funds

Bio-Extraction said it is selling C$3.5 million worth of stock in a private placement that was initiated by investors.

The placement involves 10 million common shares at C$0.35 apiece. Bio-Extraction common stock (TSX: BXI) closed at C$0.41 on Tuesday, higher by 5.13% or C$0.02.

Bio-Extraction, a Toronto-based developer of technology used to extract food compounds, said it will use the proceeds to upgrade protein separation equipment at its Saskatoon facility, as extra contingency funding and for working capital and general corporate purposes.

"We were presented with an unsolicited opportunity to accept additional funding into our treasury on what believe are fair terms relative to the terms on our last private placement in January 2008," Bio-Extraction chief executive Chris Carl said in a statement.

"This capital provides a greater financial cushion for our current construction and ramp up activities, as well as an opportunity to invest in some equipment that could generate substantially higher revenues than the original plan. We also believe that this investment represents a positive validation of our progress to date and the strength of our company as we continue to execute on our business plan."

Ringbolt raises C$20.3 million

Ringbolt Ventures plans to raise C$20.3 million through a private sale of stock and warrant units.

The company will sell 14.5 million units at C$1.40 per unit. Each unit consists of one common share and one half-share warrant with each whole warrant exercisable at C$1.90 for one year.

Ringbolt common stock (TSX: RBV) dropped 8.89% or C$0.16 to close at C$1.64 on Tuesday.

Wellington West Capital Markets Inc., the agent, has a greenshoe for an additional 7 million units, or C$9.8 million.

Ringbolt, a natural resource company based in Vancouver, B.C., said it will use the proceeds to develop its potash property in Utah and for working capital.

Harris & Harris plans placement

Harris & Harris Group said it is selling $15.65 million worth of shares through a direct offering.

The offering will comprise about 2.55 million common shares at $6.15 per share. Harris & Harris common stock (Nasdaq: TINY) closed at $6.73 on Tuesday, down 11.21% or $0.85.

New York-based Harris & Harris is a venture capital company focused on nanotechnology.

Accentia offers convertibles

Accentia Biopharmaceuticals plans to raise $8.5 million through a sale of 8% secured convertible debentures in a private placement.

The debentures are convertible into common stock at $1.10 per share. Accentia common stock (Nasdaq: ABPI) fell by 10.16% or $0.13 to close at $1.15 on Tuesday.

The offering includes warrants for approximately 2.8 million common shares, exercisable at $1.21 for six years.

Accentia, a Tampa, Fla.-based biopharmaceutical company, said the proceeds will be used to support development, regulatory and partnering strategies for its SinuNase and Revimmune treatments and for general purposes.

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