Baboom, the online music service associated with Kim Dotcom, appears on track to raise A$4.5 million (NZ$4.8m) from investors.
It has outlined its plans to list on the Australian sharemarket.
However, Mega, which Dotcom launched as a successor to his frozen Megaupload business has lost its chief executive, Stephen Hall, just ahead of its planned backdoor listing on the NZX.
A new chief executive for Mega has yet to be named.
Baboom issued a prospectus for its A$4.5m capital raising last month. The company is offering 11.5 per cent of its share capital through the offer. The offer is open to professional investors willing to invest a minimum of A$20,000 and values the nascent business at A$39.5m.
Ben Yeo, senior adviser at Melbourne-based Novus Capital, which is lead broker for the raising, said just over $3m had been raised to date. He was confident the offer would be fully if not oversubscribed by the time it closed on Friday after a one-week extension.
The offer document said Baboom would launch during the fourth quarter of this year . It intended to apply to list on the Australian Securities Exchange (ASX) by the end of the year.
Baboom chief executive Grant Edmundson said in a covering letter that Baboom would create a "win-win scenario" for artists and consumers by letting people download the equivalent of 10 to 15 free albums a year while still paying the artists who created them.
Subscribers would earn the right to free music by viewing "targeted advertisements".
The company has not said what music rights it hoped to acquire. A graphic in its offer document showed a mock-up of Baboom's website featuring music from Miley Cyrus, Michael Jackson and Alicia Keys.
It cautioned that "owing to Kim Dotcom's Megaupload heritage, some users and music suppliers may not favour using or engaging with Baboom, and labels may be reluctant to license material".
However, Baboom would provide a legitimate platform for music downloads and streaming, it said.
It would target countries in Southeast Asia, Australasia, southern and east Africa and Europe that were "underserved" by existing online music services. It would be marketed most heavily in territories where music piracy was endemic, Baboom said.
Dotcom had no day-to-day role in Baboom and held no stake in the company, but it would be implementing his vision and "leveraging off Kim Dotcom's pioneering brand", the offer document said.
Separate business Mega is proposing to list on the NZX through a reverse takeover by NZX-listed shell company TRS Investments in a transaction that would value Mega at about $210m on paper.
The listing would not raise any fresh capital for Mega and TRS said last month that the backdoor listing would be delayed a couple of months, until the end of August, while Mega sought US$7m (NZ$7.9m) in extra funding.
Hall, who is a former chief executive of biotechnology company Genesis Research & Development, told Fairfax Media this afternoon that he was unable to provide an update on the capital raising as he was no longer Mega's chief executive.
Hall deferred comment to Mega director Mathias Ortmann, but said he was still involved with the firm and was focusing on getting it on the NZX.
Ortmann, one of the former Megaupload executives indicted alongside Dotcom on copyright and racketeering charges, said he hoped to be able to comment this week.
- The Dominion Post