Viscotech Inc. Harvard Case Solution & Analysis

Question1) What are Viscotech’s and Jones’ problems at this point in time?

Since Viscotech is in the process of developing medical products that it will sell for commercial purpose, meanwhile, its already generated funds have been consumed in the research and development already done. However, Viscotech needs more finance in order to continue the development work, meanwhile, the medical product is in final stage of completion and Viscotech wants to launch the medical product as early as possible in order to generate revenues and start earning profits. Therefore, Viscotech has used MIFT as a vehicle in order to raise finance for Viscotech, with the intention that the investors of MIFT will be later on given an option either to exchange their MIFT shares with Viscotech shares or to claim their invested money back.However, after raising the interim funds through MIFT,without the publication of offering circular, O’Connor decided to change the means of financing being considered because he was unable to spend time in preparation of offering circular of Viscotech.

Meanwhile, O’Connor was silent regarding the future of MIFT and the interim funds raised through MIFT. However, raising funds through MIFT requires some rule of the Securities and Exchange Commission to be followed by the issuing authority which was not followed by Viscotech while raising the required funds through MIFT; therefore, Viscotech was exposed to the charges applied by SEC for not adhering to the rules of the SEC. Meanwhile, Viscotech was facing issues in order to raise money so that the business can be supported.

However, Paul Benjamin,an attorney, is concerned about the issue that in the course of raising money through MIFT, whether, Viscotech has violated the rules of the Securities and Exchange Commission or not. However, if Viscotech has violated the Securities and Exchange Commission then it will have to face the consequence. Furthermore, since Kenneth Jones has been in possession of the information regarding the raising of fundraisingmoney being pursued by Viscotech. Hence, he is responsible to carry out the due diligence in the process of raising funds through MIFT. However, as per the concerns of Paul Benjamin, if he has been failed to adhere with the Securities and Exchange Commission policies, he will also be exposed to the consequences of not conducting due diligence in the process of raising funds.

Question2) What should Jones do?

Jones is in a position where he has the dual responsibilityof good faith that it owes dues the information and knowledge he has about the funding process being managed by Viscotech for raising money. However, as per the advice of Jones has received from the advocate, that he should clear his position in front of the Securities and Exchange Commission regarding the raising of money through MIFT. However, disclosing the probable use of funds raised through MIFT byViscotech Inc. would put the company in troubles and Viscotech would be exposed to charges of Securities and Exchange Commission imposed on Viscotech for the intended use of funds being raised through medical investment fund trust. However, if Jones does not disclose the issue to the SEC, then his own position would be in trouble.

Additionally, where Jones has the duty of good faith toward Viscotech as his employer, he also has the duty to report the misconduct or any violence of the SEC rules being done by his employer.Further, if Jones does not disclose the matter to SEC he will be exposing the potential investor’s funds to the risksbeing used other than the primary use of funds raised through MIFT. Therefore, working in the best interest of the SEC who is the governing body of all the registered companies, Jones should report the issue to SEC. Meanwhile, he should freeze the funds that have already been raised through MIFT, so that no further inappropriate use of funds can be made.

Question3) (a) At this point in time, what is Viscotech’s best strategy for raising funds?

Since currently the Viscotech business is in development phase and required additional time for presentation. Further, the business needs are such that they required more capital finance in order to finance the setup. Meanwhile, currently Viscotech do not have any operation that which could use to evaluate the performance of the company before the issuance of finance. However, the best strategy that is available for Viscotech is to use equity finance, that will raise from the cofounder or other inventors who have alreadycontributed, in the business generated different levelof current. However, the rise of money is also dependent on the understanding of its previous investors who had been financing the current business. Hence, the use of equity finance would be a serious suitable means of rainingfinanceinformation...................

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Focuses on the efforts of a small company to raise funds in various ways. In their efforts to raise equity capital, the company makes a number of violations of SEC. The case includes an example of how poor, aggressive Prospectus and tight, conservative circular. Rewritten version of the previous case. "Hide
by Michael J. Roberts Source: Harvard Business School 29 pages. Publication Date: March 16, 1993. Prod. #: 393117-PDF-ENG

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