From 10KSB/A filed 6/6/00, CHST says that it will attempt to raise an additional $1.4 mil. in equity this year and that it is in conflict with one of its convertible debenture holders.
sec.gov
LIQUIDITY AND CAPITAL RESOURCES
In December 1998 the Company made a private placement of $3,000,000 of 12% Secured Notes due December 21, 2003, the proceeds of which were utilized to finance the construction and capital improvements for new airport concessions, and to repay outstanding indebtedness. During 1999 the Company continued to need additional financing to establish its airport facilities, which was met primarily with equipment lease financing and two small private placements of Common Stock to accredited investors only pursuant to which approximately $467,000 of equity capital was raised. The Company's working capital position
improved in December, 1999 when the holder of $1,495,000 outstanding amount of 12% Secured Notes converted the entire balance held by him into Common Stock at a rate of $2.625 per share. In January and March, 2000, the remaining $1,505,000 of outstanding 12% Secured Notes were converted into Common Stock at the rate of $2.625 per share. The exercise of the outstanding warrants that were issued at
the same time as the Notes did not improve the Company's liquidity because they were exercised on a "cashless" basis, resulting in the issuance of shares without a capital contribution to the Company. The cashless exercise did, however, result in less dilution in the outstanding number of shares than if the warrants had been exercised for cash.
The prior holder of $1,505,000 of notes is also claiming that it is entitled to the issuance of approximately 106,000 additional warrants to purchase shares of the Company's Common Stock, as payment of accrued but unpaid interest in 1999, alleging that an agreement was made for the payment of such interest by the granting and "cashless" exercise of such warrants. The prior noteholder is asserting that the exercise price of such warrants should be $1.25 per share or less. The Company did not grant the warrants and does not believe that it agreed to grant them. The Company has tendered approximately $39,000 in cash to the holder as payment of the interest, and therefore deems the interest paid in full. The Company will vigorously defend against any claim made by the noteholder for additional shares of its common
stock. There is however, no assurance that the Company will not be obligated to issue additional warrants or shares as a result of this claim.
The Company's liquidity and working capital improved significantly commencing in January, 2000 as a result of (a) the exercise of outstanding warrants to purchase the Company's Common Stock for an exercise price of $5.40 per share, pursuant to which approximately $1,768,500 of capital had been raised as of March 29, 2000, with approximately 135,000 remaining $5.40 warrants yet to
be exercised as of that date, and (b) the private placement of approximately 240,000 shares of the Company's Common Stock for a price of $5.00 per share, pursuant to which approximately $1,200,000 of gross capital and approximately
$1,080,000 of net capital had been raised as of March 29, 2000. The Company ceased the private placement of its Common Stock at $5.00 per share and expects that the remaining outstanding warrants will be exercised at $5.40 per share, although there is no assurance as to it or when those warrants will be exercised. Assuming that the remaining 135,000 warrants with the $5.40 per share
exercise price are exercised, the Company would realize approximately $729,000 of additional capital. While the Company believes that the capital raised from the private placement of Common Stock and the exercise of the $5.40 warrants will be adequate to meet facility construction needs in 2000 and eliminate or substantially reduce the need for equipment lease financing, the Company intends
to seek at least an additional $1,400,000 of equity capital in 2000
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