A post picked up over at Raging Bull; looks like some movement, of sorts. Reverse split in the works, as well (check 8K filing):
4/16/00 - INTERCELL CORPORATION - Shareholder Letter
Dear Intercell Shareholder:
As I publicly stated on many previous occasions, "When I felt confident that I had Nanopierce Technologies, Inc., properly positioned to accomplish its Strategic Business Plan, I would direct my time, attention and efforts to resurrecting Intercell Corporation." The recent filings with the SEC, obviously mean, that time has arrived. It is no easy task to resurrect something that was nearly dead. Judging from the comment and controversy provoked by our announced plan I thought it appropriate to share some thoughts with our shareholders so that they could assess the significance of the plan with more dispassionate objectivity now that the shock and emotional reaction has subsided. The recent precipitous decline in the stock market valuation of our stock, shared by many other companies, obviously, heightened the apprehension of many of our shareholders.
In January 2000 the Intercell that I and my trusted advisor and friend, Stanley Richards faced was not a pretty picture and posed a daunting challenge even to two battle hardened warriors. It called for the development of a rescue plan, employing draconian measures, with the highest possible degree of assured success that we could devise. The plan carried with it a very high risk to the participants. The plan was UNANIMIOUSLY APPROVED BY THE BOARD OF DIRECTORS OF INTERCELL. Here was the Company we faced.
1.. The Company had current debt and payables of $6,280,000 which included nearly $3,347,000 of liabilities from discontinued operations, primarily all related to the Sigma 7-bankruptcy proceeding.
2.. The Company had outstanding nearly 100,000,000 shares, virtually all of its authorized capital, which resulted from conversions by preferred shareholders at very low prices. This not only resulted in heavy dilution of the common stock but also created a serious problem for the Company with significant legal liability since the Company still had outstanding many securities convertible into common stock, which it could not honor. Had not certain persons, including myself and my wife, undertaken very high risk to acquire or otherwise eliminate those convertible securities, the Company could have been forced into bankruptcy or suffered the possible loss of one of its most valuable assets, the Nanopierce shares.
3.. With 100,000,000 shares outstanding, nearly 98,000,000 shares in the float and securities convertible into as much as an additional 120,000,000 shares it was impossible to obtain financing for the Company from any traditional source. The only alternative left was to approach individuals, known to me and Stanley Richards, who relying on our achievements with Nanopierce, would undertake the very high risk involved and back our plan.
4.. The Company faced a very serious legal threat asserted by the Series D Preferred Shareholders when they were unable to convert their shares into common stock. Unresolved, that threat could have enabled them to obtain a very quick Summary Judgment against the Company and then to execute on the judgment by going after the very valuable block of Nanopierce shares held by the Company. Or, alternatively, it almost certainly would have forced the Company to resort to protection under the U.S. bankruptcy laws. Either alternative had unacceptable consequences for the Company.
5.. Aside from this actual asserted legal threat, there remained the potential threat that the holders of all other convertible securities could be expected to assert similar claims for up to another 90,000,000 shares. This potential threat had to be eliminated.
6.. With the large number of shares outstanding, the Company faced the virtually impossible task of trying to obtain a quorum of 34,000,000 shares, from a highly fragmented shareholder base of over 4,500 shareholders just to convene a shareholder meeting. Without the ability to hold a shareholders' meeting nothing could be done to resurrect the Company. We had to develop a mechanism to assure that we could successfully call, notice and convene a meeting where we knew we had a quorum and could control the voting power. We estimate the cost merely to have the shareholders meeting will exceed $65,000.
7.. After great cost and huge effort we managed to finally bring the Company current in its reporting requirements with the SEC and IRS. That effort alone cost the Company in excess of $250,000 in legal and accounting professional fees, all of which were paid by loans to the Company made by myself or arranged by Stanley Richards from his family and close friends. The Company was faced with severe legal threats from both regulatory authorities until these delinquencies were resolved. The exceptional performance of Kristi Kampmann who is not the Chief Financial Officer of the Company [of INCE], in successfully and timely resolving these matters, cannot be praised too highly.
8.. The Company had pending several lawsuits against it including the litigation with Louis DiFrancesco, which had to be prosecuted or resolved to our satisfaction. We obtained the Court Order we wanted.
9.. The Company had less than $100,000 to implement any plan of rehabilitation or for operating capital.
10.. The capital structure and financial condition of the Company effectively eliminated the likelihood of obtaining any serious interest from others about transferring new opportunities to or merging with the Company to make it an operating company.
Despite this bleak picture Stanley Richards and I were convinced that we could rely upon the same individuals who helped make Nanopierce what it is today, to implement a plan to save the Company. We were not disappointed. Assuming the very high risk involved, which has been magnified by recent market conditions, we all pulled out our checkbooks. So, to implement the plan here is what the group has done and will do to save the Company.
1.. Contributed $1,000,000 cash to the Company.
2.. Obtained temporary voting control to assure to the best degree possible that the plan will be successfully implemented.
3.. Assisted in arranging for the resolution of matters with holders of convertible preferred instruments.
4.. Appointed two new directors to the Company, which now means that the Board of Directors consists of four disinterested directors out of five members.
With this financing and support we immediately accomplished the following important objectives in rehabilitating the Company.
1.. Engaged Kutak Rock, our securities lawyers, to immediately prepare all proxy solicitation materials and related instruments to hold a Special Meeting of the Shareholders, at the earliest possible time, to approve the corporate matters necessary to accomplish the plan described in the Report on Form 8-K filed recently. Those tasks have essentially been completed and we intend to file such materials in the very near future with the SEC.
2.. Paid or made arrangements to pay all payables.
3.. Eliminated all current liabilities in the approximate amount of $5,721,000 (except for the deferred gain of $423,000 on sale of subsidiary stock, $136,000 in notes payable to related parties and certain amounts representing accrued salaries). We acquired the outstanding $750,000 convertible debenture held by the Augustine Fund, LP, which could have been converted into a minimum of 75,000,000 shares thereby eliminating the dilution, which would have resulted.
4.. Eliminated the legal threat posed by the Series D Preferred Shareholders, by acquiring their shares. Corporate Advisors, Inc., owned by my wife Cheri and Triad Investors, LLC controlled by H. Glenn Bagwell paid approximately $3,705,000 in cash and securities to accomplish this transaction. This is not an insubstantial amount to pay to eliminate a real problem, despite what some on the chatboards might think. It represents a very high-risk investment and we would have undertaken it only if we were convinced that the plan would work. Additionally, the 19,006,458 common shares converted from such preferred shares are now owned by persons friendly to the Company.
5.. Gemini Investments, LTD and Corporate Advisors, Inc., again under very demanding time constraints and conditions, acquired all of the outstanding convertible Series C Preferred Shares held by a large foreign institution. At least now the 32,094,916 common shares underlying those securities are in the hands of persons who are friendly to the Company. Again, this transaction did not come cheap or easy. We had one day to close the transaction or the opportunity was lost. Stanley Richards once again rose to the challenge and made the financing and other arrangements for us not to lose the opportunity and close before the deadline.
6.. We forced the successful conclusion of the Sigma 7-bankruptcy proceeding by overbidding the bogus offer of a very hostile collection firm, which threatened to keep the Company and many other persons held hostage for years. The firm was planning to file at least twenty lawsuits alleging millions in damages, based on spurious claims, against the Company and others. Thankfully, the court saw through the charade, when the collection firm, in open court challenged by the judge, failed to offer even one penny for the purportedly valuable claims. We paid $25,000 to bring the matter to a favorable conclusion. This now allows the Company to eliminate the $3,347,000, Sigma debt included in our current liabilities off our books.
7.. As a result of all of these transactions, the Company has eliminated all payables, short-term and long-term debt. We retain sufficient liquidity to pay future expenses associated with the Special Meeting of the Shareholders, other operating costs and for future acquisitions.
8.. We have obtained an offer of a $30,000,000 structured financing from Ladenburg Thalmann. This is not the same financing, in similar amount, which Nanopierce has signed an agreement for with Ladenburg Thalmann.
With all of that accomplished, we are now conducting due diligence on six outstanding opportunities, which could make the Company a viable operating company. We are concentrating our efforts on technologies which are complimentary to those of Nanopierce or which are in the communications and information markets. Confident that our plan will succeed we are narrowing the scope of our selections. All of them offer exciting potential for the Company.
Despite the often malicious and slanderous criticism directed against my team and me, we are neither discouraged nor dissuaded from pursuing our plan. The negative bashing only hurts the shareholders. Bashing discourages new investors and prompts existing shareholders to sell their holdings. This depresses the stock price making financing more expensive and dilutive to the shareholders. As I have always stated, silent character assassins have never impressed me or my team hiding behind their cowardly cyber anonymity and their refusal to publicly identify themselves.
We are available and will talk to anyone if they merely have the courage to call us. Even more importantly, if they are convinced that we are merely engaging in self dealing and profiteering against the Company despite the large sums we have put at risk, then please submit a better plan.
I, Stan Richards and the others in Denver who have developed and financed our plan with serious money and at great risk invite those who disagree with our plan to come to Denver and meet with us. Be prepared however to provide a plan; at least $5,000,000 in cash and securities; financing offers from reputable sources of at least $30,000,000 and professional support to convince us that you are serious. If you can command the allegiance of a more dedicated team than the one which I have assembled, please bring them along. I have issued this challenge in the past and the phone is strangely silent.
Kathy Knight-McConnell has provided much astute comment on our recent filings to clarify a lot of misinterpretation of those documents. The restricted 1,500,000 Nanopierce shares purchased by Triad Technologies, LLC and Technology Investors, LLC were not used to acquire the Series D Preferred Shares. No matter what is said, the purchase of those shares still involved a high degree of risk since as of today they have lost more than 50% of their value and remain restricted. If, the purchasers profit handsomely in the future they deserve to do so, since they accepted a very high risk
If you are interested in learning what this team did to help create the investment opportunity in Nanopierce, you might want to read my letter to the shareholders of Nanopierce.
We are encouraged however that the vast majority of the shareholders are supportive of our plan and convinced of our good faith, based upon the deluge of favorable phone calls we have received in our offices. We are trying to do what is best for our shareholders. Those who remain or become shareholders will be highly rewarded, in my opinion. We look forward to seeing you at the Special Stockholders Meeting. When you receive your proxy, vote according to your conscience.
Respectfully,
Paul H. Metzinger
President and Chief Executive Officer. |
