Wismer Martin Stock Offer Ok’d Sec Approves Revised Plan To Issue 6 Million New Shares

Wismer Martin Corp. has received permission from the U.S. Securities and Exchange Commission to go ahead with a proposed stock offering that would infuse capital into the troubled Spokane software manufacturer.

“The SEC has granted us permission to start accepting money from investors for the offering,” Doug Willford, Wismer Martin’s chief financial officer, said Wednesday.

Earlier this week, the company again revised its offering proposal by doubling the number of available shares from 3 million to 6 million. But the company also told the SEC it would reduce the estimated price of the offering from $1.25 per share to a range between 60 cents and 90 cents per share.

A sale of the full offering at 60 cents per share would produce $3.6 million. At 90 cents, it would yield $5.4 million.

Willford said the company’s board of directors will meet within a couple of days to set the specific price.

“What we’re doing is responding to the market price of the stock,” Willford said.

The stock has traded in the 50-cent range in recent weeks.

Under pressure from Seafirst Bank, which holds the company’s line of credit, Wismer Martin filed a registration statement with the SEC in June proposing an offering of 2 million shares at $1.25 per share.

At the end of July, the company amended the proposal to offer 3 million shares at $1.25. That increase, Willford said, came because of an increase in interest by people wanting to invest in Wismer Martin.

Wismer Martin needs the cash to pay off $500,000 it owes Seafirst on its line of credit, to satisfy the bank’s demand that it reach certain liquidity thresholds and to keep the struggling company afloat.

According to the registration statement, as of March 31, Wismer Martin had a capital deficit of $1.9 million, had a negative working capital of $2.5 million and had incurred a loss of $1.5 million for the first three quarters of the fiscal year. The company’s fiscal year ended June 30, but company officials have not disclosed fourth-quarter or year-end financial results.

While the 6-million-share offering at the lower price of 60 cents per share would produce about the same amount of cash for the company as the 3 million, $1.25-per-share plan, the dilution of current shareholders’ stock will be greater.

Ronald L. Holden, the company’s chief executive officer and majority shareholder, will have his ownership percentage of the company reduced from 54 percent to 48.5 percent.

Stan Hatch, the company’s former president and CEO, is the second-largest single shareholder. The current offering proposal would reduce his ownership percentage of the company from almost 10 percent to about 6 percent.

Wismer Martin adjusted the offering in July to produce more money after it had failed to meet minimum tangible net worth requirements made by Seafirst at the end of June.

The company had agreed that it would recover to a minimum tangible net worth of $3 million by June 30, but the actual figure on that date was only $1.4 million. Seafirst now requires Wismer Martin to hit a minimum tangible net worth of $2.15 million by Sept. 30.

If it does not, Seafirst can call the $500,000 loan and recover the money by foreclosing on the firm’s headquarters building in north Spokane.

Seafirst also told the company earlier this year it must reduce debt by $1 million and raise an additional $1 million in capital by Aug. 31.

, DataTimes