Jay, why didn't you mention in the header that this company is the company formerly known as Galileo Corp (GAEO) ?
You wrote: I know the company has a low of $2, but, I think that price reflected them going out of business. No, when this company goes out of business in less than 9 months, the common stock will be worth $ zero.
Anybody else know anything?
Yeah, i know what it says in their last SEC filing. Here's a few snips:
2. GOING CONCERN
The accompanying condensed consolidated financial statements were
prepared assuming the Company will continue as a going concern. As a result of a
number of developments which have had a materially adverse effect on the results
of operations, the Company has incurred recurring operating losses, working
capital deficiencies and, as of December 31, 1998 and September 30, 1998, was in
violation of certain covenants of loan agreements with a bank. These conditions
raised substantial doubt about the Company's ability to continue as a going
concern.
As a result of the aforementioned, the Company has taken a number of
steps to improve its financial condition, which are summarized as follows:
Private Placement - On January 26, 1999, the Company completed the sale of
2,000,000 shares of the Company's common stock, together with warrants for an
additional 2,000,000 shares, to an investment entity formed by the principals of
Andlinger & Company, Inc. for an aggregate purchase price of $6.0 million. The
warrants are exercisable for a period of 7 1/2 years at a price of $1.50 per
share, subject to an antidilution adjustment.
Loan Agreement - Also on January 26, 1999, the Company's bank loan agreement was
amended to reduce maximum borrowings to $13.0 million through June 30, 1999 and
$6.0 million thereafter and to extend the term of the loan through October 31,
2000. The financial covenants were also amended, and the bank agreed to waive
specified previous events of default. discussed in Note 9, the Company sold
certain non-strategic assets on July 1, 1999, with the sales proceeds of $8.6
million being applied against its bank borrowings. The Company had received an
extension from the bank with respect to reducing its maximum borrowings to $6.0
million and, therefore, was not in default at June 30, 1999.
Sale of Non-Strategic Assets - In addition to the sale of non-strategic assets
on July 1, 1999 (Note 9), the Company is also evaluating the possibility of the
sale of its Sturbridge, Massachusetts facility. There can be no assurance as to
whether or how quickly the Company will reach an agreement for the sale of that
facility.
Cost Reductions - During the three months ended December 31, 1998, the Company
terminated its Telecommunications business and further reduced the workforce by
49 employees. These reductions, coupled with reductions-in-force of 61 employees
in the fourth quarter of fiscal 1998, are expected to result in annualized cost
savings of approximately $5.3 million.
While the Company's management believes that it has taken the
appropriate steps to alleviate the liquidity issue, certain of these steps are
contingent upon future events, some of which are not within the Company's
control. Actual results may differ from management's expectations.
<PAGE> 9
As discussed in Note 2, as of December 31, 1998 and September 30, 1998
the Company was in violation of certain covenants contained in the Loan
Agreement. The bank waived these violations in the amendment to the Loan
Agreement executed in January 1999. As a result of the mandatory reduction in
the Loan Agreement to $6.0 million at June 30, 1999 and uncertainties associated
with the sale of non-strategic assets, the loan balance of $9.8 million and
$11.8 million is recorded as a current liability at June 30, 1999 and September
30, 1998, respectively. As discussed in Notes 2 and 9, bank borrowings were
reduced by $8.6 million on July 1, 1999 to approximately $1.1 million.
7. NONRECURRING CHARGES
9. SUBSEQUENT EVENTS
On July 1, 1999, subsequent to the end of the third quarter, the
Company sold its Scientific Detector and Spectroscopy Products (SDP) Business
and certain assets related to a previously discontinued business. The proceeds
from those transactions, totaling approximately $8.6 million, were applied to
the Company's indebtedness under its revolving credit agreement with its
principal lender reducing its indebtedness to approximately $1.1 million as of
July 1, 1999. The Company will recognize the gain from these transactions in its
fourth quarter financial statements.
FINANCIAL CONDITION
Beginning in 1997 and continuing through the first quarter of fiscal
1999, the Company experienced a number of developments which have had a
materially adverse effect on the results of operations. The Company has incurred
recurring operating losses through the first quarter of fiscal year 1999, and as
of December 31, 1998 and September 30, 1998 was in violation of certain
financial covenants of loan agreements. These conditions have raised substantial
doubt about the Company's ability to continue as a going concern. See Note 2 of
the Notes to Condensed Consolidated Financial Statements for additional
discussion.
On January 26, 1999, the Company completed the sale of 2,000,000 shares
of the Company's common stock, together with warrants for an additional
2,000,000 shares, to an investment entity formed by the principals of Andlinger
& Company, Inc. for an aggregate purchase price of $6.0 million. The warrants
are exercisable for a period of 7 1/2 years at a price of $1.50 per share,
subject to antidilution adjustment.
In January 1998, the Company entered into a revolving credit facility
with a bank (as amended in August 1998 and January 1999, the "Loan Agreement").
The Loan Agreement provides for a maximum commitment of $13.0 million through
June 30, 1999 and $6.0 million thereafter with interest payable on a monthly
basis at the bank's base rate plus 2% per year. loan, which is secured by
substantially all assets of the Company, also includes provisions which require
the Company to remit all of the net cash proceeds of asset sales (as defined) to
the bank. The maximum commitment will be reduced by an amount equal to the net
cash proceeds of asset sales and may not be reinstated. The then outstanding
balance of the loan is due and payable in full on October 31, 2000. The
outstanding balances of this facility at June 30, 1999 and September 30, 1998
were $9.8 million and $11.8 million, respectively. The carrying values of this
debt as of June 30, 1999 and September 30, 1998 approximated their fair market
values. In compliance with the Loan Agreement, a $0.1 million amendment fee was
paid to the bank on January 2, 1999, in addition to a fee totaling $0.2 million
payable quarterly in 1999.
As discussed in Note 2, the Company was in violation of certain
covenants contained in the Loan Agreement. The bank waived these violations in
the amendment to the Loan Agreement executed in January 1999. As a result of the
mandatory reduction in the Loan Agreement to $6.0 million at June 30, 1999 and
uncertainties associated with the sale of non-strategic assets, the loan balance
of $9.8 million and $11.8 million is recorded as a current liability at June 30,
1999 and September 30, 1998, respectively.
As further discussed in Notes 2 and 9 of the Company's Condensed
Consolidated Financial Statements, the Company sold certain non-strategic assets
as of July 1, 1999 with the cash sales proceeds of $8.6 million being applied
against its bank borrowings. Those payments reduced its borrowings to
approximately $1.1 million on July 1, 1999. The Company had received an
extension until July 14, 1999 for the debt reduction and, therefore, was not in
default at June 30, 1999. The Company is evaluating the sale of the Sturbridge,
Massachusetts facility. There can be no assurance whether or how quickly the
Company could complete that sale.
ITEM 1. LEGAL PROCEEDINGS
There is one class action lawsuit pending against the Company and
certain of its former officers alleging violations of federal securities laws
which was filed on June 21, 1999. This lawsuit consolidates and amends four
class action lawsuits filed during the first quarter of fiscal year 1999. The
Company is in the process of responding to the allegations contained in the
lawsuit. As indicated previously, the Company will vigorously defend this
lawsuit and believes that it is without merit.
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