Polymer company AorTech posted a drop in sales in its half yearly report, primarily as a result of a lawsuit and development costs.
The medical supplies company achieved sales of $822,000 for the six months ended September, of which $724,000 was the sale of polymer to customers, compared to last year's revenue of $2.63m.
Last year's sales were boosted following a renegotiated licence deal with St Jude medical centre.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, the deal went sour on October 9th, after AorTech served St Jude a lawsuit claiming breach of contract.
St Jude denied the allegations and subsequently filed papers in the US courts seeking a declaratory judgement saying they were not in breach. They were granted a temporary restraining order in November, preventing AorTech from terminating the contract at issue.
AorTech continued to supply materials to St Jude and the cash position was looking critical by the end of October. The company had to gain support from investors, including existing shareholders, to finance the company and the costs of the impending litigation.
The dispute was resolved on Monday, but neither party has admitted liability.
The costs of the lawsuit contributed to the company's lower revenues in the six month period.
The figure also reflected the total deduction of $1.51m incurred by the costs of polymer manufacture, development expenditure, amortisation of intangible assets and administration.
The company said it started the financial period with cash of $1.91m but losses and currency movements between the sterling and the dollar led to a closing cash balance of $295,000.
AorTech was also affected by a sale that fell through for the acquisition of its polymer business.
"The sale process was unsatisfactory due in the main to the difficult time frame that was imposed as a result of the dwindling cash position," the company said in a statement.
Funding was needed to bridge the timescale anticipated to a sale of the polymer business. AorTech concluded that the issue of loan notes was the only option for providing sufficient funds to the company and to protect the interests of shareholders.
Shares fell 4.40% to 87.00p at 11:40 Thursday.
RD
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
