SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 25, 1999
NEWCOM, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-23079 95-4485355
(State or other Jurisdiction (Commission (I.R.S. Employer
of Incorporation or Organization) File Number) Identification No.)
2335 Alaska Avenue
El Segundo, California 90245
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 643-5300
FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT:
31166 Via Colinas
Westlake Village, CA 91362
ITEM 5. OTHER EVENTS
On May 25, 1999, the Registrant, NewCom, Inc., issued the following
press release describing certain material changes in its business.
NEWS
FOR IMMEDIATE RELEASE
CONTACT:
Steven C. Veen Diane Will
NewCom, Inc. Willstar Consultants, Inc.
310-643-5300, Ext. 215 214-954-9300
[email protected]
NewCom Announces Cessation of Day-to-Day Operations;
Efforts to Effect a Recapitalization;
Anticipated Delisting of Securities from the Nasdaq Stock Market.
EL SEGUNDO, CALIFORNIA, May 25, 1999---NEWCOM, INC. (Nasdaq: NWCM) today
reported certain material developments regarding its business and operations
which have taken place since January 1999 regarding (1) the termination of its
working capital line, (2) cessation of day-to-day operations, and (3) the
anticipated delisting of its securities on The Nasdaq Stock Market.
Termination of Working Capital Line; Cessation of Day-to-Day Operations
In January of 1999 the Company reported that Deutsche Financial Services ("DFS")
deemed it ineligible to obtain advances under its working capital line and that
DFS would not agree to resume advances until such time as NewCom was able to
demonstrate an improvement in its accounts receivables borrowing base. As a
result, steps were taken by the Company to reduce overhead until additional
financing could be obtained. The Company immediately implemented a series of
layoffs of personnel and entered into discussions with DFS and others to
restructure its indebtedness and obtain new sources of working capital. The
Company also intensified efforts to collect outstanding trade receivables. As a
result of the lack of financing, since January 1999, the Company has been unable
to sell any material amounts of goods.
To date the Company remains unable to obtain any new sources of financing and
100% of collections from prior product sales have been applied by DFS since
January 1999 to reduce the outstanding indebtedness under the working capital
line. Accordingly, NewCom has been forced to suspend its day-to-day operations.
This in turn has required that NewCom lay off substantially all of its
operational personnel and close its principal offices in Westlake Village,
California.
DFS, in its capacity as a secured lender, has taken possession of NewCom's
inventory with a view towards its liquidation. Proceeds from the sale of the
inventory will be used to satisfy the Company's indebtedness to DFS, which is
estimated to be in excess of $8 million. DFS has also instituted legal
proceedings against NewCom to collect any remaining outstanding balance owed by
NewCom to DFS under the credit line.
Efforts are continuing to restructure the business and capital structure of
NewCom. Such a restructuring may involve discontinuing NewCom's traditional
computer peripherals business and engaging in a new line of business. However,
the ability to successfully restructure NewCom's business is dependent upon a
number of factors, including obtaining new sources of debt or equity financing
and the successful restructuring of NewCom's indebtedness. Presently, NewCom has
no commitments to obtain additional working capital, nor have any formal
agreements been reached with any of its principal creditors to effect a
restructuring. There are no assurances that NewCom will be able to effect a
restructuring. Furthermore, unless and until NewCom is able to obtain working
capital, it does not expect to have sufficient resources to complete its annual
audit and timely file its Form 10-K with the SEC, normally due 90 days following
the end of NewCom's February 28 fiscal year end.
Anticipated Delisting of Common Stock and Warrants
In February 1999 the Company was notified by The Nasdaq Stock Market, Inc. that
NewCom was not in compliance with one of the Nasdaq listing requirements which
required that the issuer maintain a market value of its public float of not less
than $5 million. The Company was granted until May 25, 1999, to come into
compliance with the $5 million public float requirement or its securities would
be delisted by Nasdaq at the opening of business on May 27, 1999.
As the Company has been unable to comply with Nasdaq's public float requirement
it anticipates that its Common Stock and publicly traded Warrants will be
delisted at the opening of business on May 27, 1999. The Company expects that
the Common Stock will trade on the NASD, Inc. Electronic Bulletin Board
effective May 27, 1999, under the symbol NWCM.
Any statements that are not historical facts contained in this Press Release are
forward-looking statements that involve risks and uncertainties, including but
not limited to the Company's ability to obtain financing and to restructure its
business and capital structure.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEWCOM, INC.
(Registrant)
Date: May 25, 1999 By: /s/ Steven C. Veen
-----------------------
Steven C. Veen,
Chief Financial Officer
(Chief Financial and
Accounting Officer)
