Martin Jetpack's thirst for funds delivers it to Chinese shareholders
Christchurch-based Jetpack developer Martin Aircraft Company has working capital for two more months as its Kong Kong shareholder pulls back on further funding until it secures more control.
The Jetpack's future is in the hands of 52 per cent shareholder KuangChi Science as the share price sinks to 6 cents a share compared with $1.75 about two years ago.
Chief executive James West said the company had assumed it would be able to use a previous $10 million underwriting commitment from KuangChi Science to help develop a new engine.
But this was now unlikely until KuangChi Science gained more control.
* Jetpack shares dive as Martin Aircraft Company shareholders offload
* Jetpack founder Martin speaks out about Rodl
* Martin Jetpack staff and directors overboard
Control of the Australian Stock Exchange-listed company will be the subject of a special shareholder meeting on June 28 in Christchurch.
The one agenda item seeks to overturn a constitution rule requiring a majority of directors live in New Zealand.
"The independent directors note that gaining approval for the proposed resolution is likely to be a material factor in KuangChi Science's decision to continue to support the company in the future."
Martin Aircraft needed to develop or commission a new engine capable of operating at least 50 hours before overhaul for it to be considered commercially viable, he said.
The current engine life was about 30 hours and required replacement every week which had caused delays.
There had been several versions of the engine, but they had to be capable of competing with other engines capable of operating up to 1500 hours to be commercial, West said.
He was also exploring the possibility of private share placements with individuals associated with KuangChi Science.
This would significantly swamp the interests of existing shareholders given the placements would be based on the current 6c a share price.
Alternately the company could undertake a broader capital raising but West said it would be challenging to complete it in the required timeframe and the requirements for more clarity round commercialisation.
In the the interim financial accounts ending December 2016 the company had cited the KuangChi Science's $10m underwrite as its basis for being a "going concern".
West highlighted recent successful free flight testing progress of manned and unmanned Jetpacks.
A disgruntled Sydney-based shareholder Ralf Rodl who claims to have lost $1.25m said he was unlikely to vote at the upcoming special meeting.