I notice in the Company's most recent 10-q that they recently completed a Reg S offering. I have included the excerpt from the 10q as follows:
"In September 1996, the Company completed a private equity financing in which it issued 500,000 shares of its convertible Series A Preferred Stock for an aggregate net purchase price of $4,780,000 to certain off-shore investors. The Preferred Stock may be converted at any time after November 3, 1996 into common stock at a conversion rate equal to 71% to 80% of the then current market price of the Company's Common Stock. The discount increases over a period of nine months. Holders of preferred stock are entitled to receive cumulative ividends of $0.15 per share in stock or cash, at the discretion of the Board of Directors, on each of the 90th, 180th and 270th day after the issuance date."
It is interesting to note the corresponding decline in stock price from the time that the deal was closed until now. These types of corporate financings are generally most unfavorable for stock price action. It is also interesting to note the amount of money that the company has spent trying to get their product to market. Again I quote from the 10q:
"Through September 30, 1996, the Company had raised a total of approximately $57,263,000 in equity financing ($4,780,000 from a private placement in September 1996, $6,050,000 from a private placement in July 1995, $9,222,000 from a registered direct placement in October 1994, $25,101,000 from its initial public offering in January 1992, and $12,110,000 from the sale of stock prior to its initial public offering), and had generated $4,231,000 in net interest
income. Through September 30, 1996, the Company has recorded 8,179,000 in revenues, of which $6,410,000 were from product sales, $769,000 were from Orbos technology contracts and $1,000,000 was received from Teramecs in December 1991 as payment for the marketing and distribution rights for its products in Japan. The Company has used cash in its operating activities totaling $41,519,000 from its inception through September 30, 1996..."
And finally it appears that the money raising and further dilution may not be over: "To the extent that existing resources and anticipated revenue from the sale of the Piccolo and VetScan systems are insufficient to fund the Company's activities, additional
funds will be required to be raised from the issuance of public or private securities. There can be no assurance that any financing will be available, or if available, be available at terms acceptable to the Company. |
