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Biotech / Medical : Fountain Pharmaceuticals (FPHI)
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To: r. peter Dale who wrote (37)8/24/1997 2:44:00 PM
From: r. peter Dale   of 78
 
Please excuse the back-to back posts:

I was scanning through some of the SEC documents posted by Fountain regarding their recent financing arrangement. The following paragraph comes from the SC 13D form filed on 08 August, 1997 (available through Edgar. Note: the 'reporting person' is [are] the new investors; the 'issuer' is Fountain - but don't trust me, use Edgar edgar-online.com

ITEM 4 PURPOSE OF TRANSACTION. As a result of these transactions, pursuant to a Stock Purchase and Subscription Agreement and the Certificate of Designation, the Reporting Person will have the ability to elect a majority of the board of directors of the Issuer. In this regard, the purpose of the transaction is to effect an equity investment in the issuer and to thereupon allow existing executive management to continue to operate the business although the Reporting Person will for the foreseeable future control the board of directors. The transactions will effect a change in voting control relative to the board of directors of the Issuer and subject to compliance with Section 14 of the Securities Exchange Act and the rules thereunder, the Reporting Person intends to exercise this voting control to eventually elect a majority of the board and to have that board thereupon effect those management decisions customarily reserved for the board of directors of a Delaware corporation.

My spin on this would be that Fountain is now under the control of an executive board whose highest priority is to operate a financially viable company. Recall, the new investors now have a $2,500,000 equity position in the company and the new board will be directly responsible to these investors. I suggest this concern over financial health is in dramatic contrast to the modus operandi of FPHI prior to this financing.

Best wishes,
Peter
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