By the way, it appears all is not peaches and cream in the capitalization department. The recently announce funding seems to have hit at least a minor snag. By now $1.5 million of NPCT Series B preferred shares were supposed to have closed, but unfortunately only 1/3 of that money has been raised and the company seems to be in the middle of renegotiating the original agreement, or looking for someone to step in and complete the contract.
Needless to say, capitalization troubles are not new to INCE/NPCT, and the company has survived to date. It'll be interesting to find out who NPCT/INCE finds to buy the remaining Series B and C shares.
Taken from the recent NPCT 10K:
This agreement was supposed to provide the Company with $1,500,000 in capital during the next twelve months with up to a total of $8,500,000 over a 24-month period. As of September 30, 1998, the Company has received $750,000 under the original agreement. The agreement has been amended to allow the Company to assign the remaining commitment to another party. The Company is currently seeking a substitute investor to fulfill the terms of the agreement. If this agreement is performed in full, it will provide the Company with enough capital to meet its plan of operation for the next year. There is no assurance, however, that the Company will be able to find a substitute investor and therefore meet its ongoing capital requirements. This transaction is described in detail in Note 12 to Notes to Financial Statements.
(snip)
a. At the first closing, on July 23, 1998, the Company issued 50,000
Series B Shares at $10 per share resulting in net proceeds of $440,000 net of $60,000 of issuance costs. At the second and third closings, scheduled to be executed in August and September, 1998, the Buyer was to acquire 50,000 Series B Shares at $10 per share at each closing. As of September 28, 1998, the second and third closings have not been executed. Management is in the process of negotiating new agreement terms and believes that the financing will continue on a delayed schedule.
(snip)
2. Going concern, results of operations, and management's plans:
The Company's financial statements for the year ended June 30, 1998 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the year ended June 30, 1998, the Company reported a net loss of $1,137,334 and a deficit of $1,624,426. The Company has experienced difficulty and uncertainty in meeting its liquidity needs. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
