Elio Motors (OTCQX:ELIO) has received a much needed investment from Overstock.com. According to a public release, Overstock has agreed to purchase $2.5 million in Elio equity at a price of $2.75 per share. Simultaneously, Elio Motors announced its intent to do an initial coin offering for a security token.
Concurrent to the equity injection, Elio board members Stu Lichter and Ken Way have agreed to convert all of the convertible debt of Elio that they collectively hold into common stock of Elio at the conversion price of $2.75 per share. The aggregate outstanding principal amount of the convertible debt is was stated at approximately $1.7 million.
At one time, Elio Motors was touted as an example of the future of the small IPOs. The very first Reg A+ issuer to sell shares and then quickly trade as a listed company, Elio paved the path for companies using the updated JOBS Act crowdfunding exemption. The price per share for investors during the Reg A+ crowdfunding round was $12 per share. Today, Elio trades far lower than that amount as a recent quote indicated Elio trading at $3.60 per share thus representing a significant haircut for early investors that held on to the equity.
“I believe Elio’s vision and business model to build a $7,500 ultra-high mileage, ultra-fuel-efficient car-like vehicle is a win for America. An Elio that was brought to Manhattan drew a crowd just parked against the curb. I sat in it for five minutes and was in awe. It is really comfortable, and feels like great fun. I am confident that this will become my car for at least two-thirds of the days I drive. Given its breakthrough pricing and ultra-low delivery cost, I anticipate that Overstock Cars and even Overstock Retail will play a role in bringing this product to the public.”
Even while the price of Elio shares have plummeted, investors should be relieved to hear this news. In recent months, Elio had indicated it was attempting to raise more money as the Elio vehicle, which was supposed to be in production some time ago, has yet to bless the streets in volume. Some industry observers wondered if Elio was heading into insolvency.
Regarding the ICO, Elio Motors said that it expects to launch a security token offering to fund production of the Elio vehicle.
JonesTrading Institutional Services is expected to act as lead placement agent for the STO. Elio Motors anticipates the crypto to be called ElioCoin.
“This is a huge day for the digital asset movement,” said Bryan Turley Managing Director for JonesTrading, “We believe that we have designed a unique STO that will compete in the digital token space. We anticipate that the Elio STO will give investors a new kind of investment option while being structured with the intention to comply with U.S. federal securities law requirements for sales of securities, as opposed to taking an approach that assumes that the token sale would not be a sale of securities.”
The ElioCoin STO will be issued under both Regulation D and Regulation S exemptions and sold only to accredited investors. Overstock is also the majority owner of tZero – the first approved ATS that is targeting the ICO sector by providing liquidity for digital assets.
“It is our fondest hope that, once issued and cleared for trading, ElioCoin may trade on the blockchain-based securities trading platform that is in development at tZERO,” said Byrne.
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