Wismer Martin has filed a registration statement with the federal Securities and Exchange Commission for a public offering of 2 million shares of common stock.
The financially troubled company made the offering after being ordered by its principal creditor, Seafirst Bank, to raise cash of $1 million and convert $1 million of subordinated debt to equity by Aug. 31.
A prospectus for the stock offering describes Spokane-based Wismer Martin’s relationship with Seafirst in detail:
Wismer Martin held a $1.2 million line of credit with Seafirst, but fell out of compliance with several conditions of the line of credit earlier this year.
At the time, the company owed Seafirst $851,000 on the credit line.
In April, Seafirst converted $500,000 of that amount to a term loan that Wismer Martin paid later that month. The line of credit was reduced to $500,000, with almost $350,000 outstanding. Wismer Martin has until June 30, 1996, to pay off that debt, which is now collateralized by the company’s office building.
Wismer Martin will offer 1 million shares of stock to the public at $1.25 per share. The asking price of the company’s stock in the over-the-counter market is currently 85 cents per share.
Ronald L. Holden, Wismer Martin’s principal shareholder, board chairman and chief executive officer, announced at the company’s annual meeting in February that the company was preparing a stock offering. A Scottish venture capital investment firm would buy a significant amount of the offering, he said at the time.
Holden also expects employees to buy some of the stock.
“The company anticipates that a significant number of the cash shares will be purchased by employees …” the prospectus also states.
Earlier this year, the company collected checks and paycheck deferrals from employees that could be applied to the purchase of stock from the anticipated offering. The company returned the money it had collected from employees, though, following inquiries from the securities division of the state Department of Financial Institutions.
Some Wismer Martin employees had complained to the securities division that the solicitation of funds was coercive. And they questioned whether the company could collect money related to a stock offering that had not been registered with the state or the SEC.
The other 1 million shares will be offered by Wismer Martin to the holders of its convertible subordinated debentures. Debt service on those $3 million in convertible debentures is costing the company more than $200,000 a year.
The minimum subscription for the offering to go forward is apparently $500,000. “If only the minimum number of cash shares are sold, the company will be able still to meet its financial requirements,” the prospectus states.
The consolidated financial statement accompanying the prospectus indicates the depth of Wismer Martin’s financial problems.
“The company has a capital deficit of $1.9 million, negative working capital of $2.5 million, and incurred a significant net loss of $1.5 million from operations for the nine-month period (ended March 31),” according to notes to the financial statement.
Spokane-based Wismer Martin develops, markets, installs and supports information systems which automate physician practices, hospitals and managed-care organizations.