eDiets.com (DIET) Announces Financing and Warrant Amendment

June 29, 2009 4:12 PM EDT

eDiets.com, Inc. (Nasdaq: DIET) announced that it has entered into a $500,000 Private Placement with certain members of management and the Board of Directors. In addition, the Company expects to raise approximately $2.5 million from the exercise of amended warrants. The Company will use the proceeds to fund future growth opportunities.

Kevin McGrath, President and Chief Executive Officer, commented, "During the first quarter of 2009, we implemented a number of strategic changes and cost cutting measures that are resulting in meaningful improvements in our second quarter operating results and overall business performance. In particular, as a result of the actions we've taken, we expect to be very close to operating cash flow breakeven in the second quarter. Because of these improvements, we will be able to use the proceeds from this raise toward future revenue expansion opportunities beginning in the third quarter. I am confident that our strategic plan and promotional initiatives have positioned our business for long-term profitable growth."

The Company also executed on an Agreement to Amend Warrants with Prides Capital Fund I, L.P., a major shareholder with two representatives on the Company's Board of Directors. Under the terms of the Warrant Amendment, the Company agreed to reduce the exercise price of the previously issued and outstanding 2.6 million warrants to $1.00 per share from the range of $4.25 to $6.00 per share on the condition that it is Prides Capital's intention to use its best efforts to exercise the amended warrants in the near future.

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