AFP hit by recession; misses debt payment

AFP Imaging has been feeling a recessionary pinch since last summer,in both its medical imaging and graphic arts businesses. The firmwent into default in May after failing to make a payment on subordinateddebt. AFP is trimming expenses to bring them in line with lowerrevenue and talking with lenders about ways to pull out of default,said chairman David Vozick.

AFP manufactures image intensifiers, video cameras, film processorsand other hard-copy-oriented medical imaging devices. The Elmsford,NY, vendor is also exclusive U.S. distributor for mammographysystems manufactured by Soredex of Finland. It sells the mammographyequipment under the AFP label. Mammography sales were not hitas hard as the other equipment, Vozick said.

AFP attempted to launch a line of lithotripters last year,but this effort derailed when the manufacturer, Breakthrough Medical(BMC), was forced to halt shipments. BMC is being sued by Direx,a competing lithotripter firm, on technology infringement grounds.BMC also ran into regulatory compliance problems at the Food andDrug Administration (SCAN 6/6/90).

The lithotripter delay was not responsible for AFP's decliningsales, however. The firm did not have a sales base to declinefrom in this area, Vozick said.

Cost-cutting efforts appear to be paying off. AFP had a netloss of $172,000 for the third quarter of fiscal 1991 (end-March).While this was a drop from AFP's net profit of $328,000 in thesame period of 1990, losses declined from $244,000 in the secondquarter and $700,000 in the first quarter of 1991. Net sales declined23% in the third quarter from $12.2 million in 1990 to $9.4 millionthis year (see graph, page four).

"The trends are continuing favorably for the fourth quarter,"Vozick said.

AFP's sluggish sales in the graphic arts field can be attributedlargely to the recession in advertising and print media pages.The decline in medical demand, however, is harder to pin down,he said.

"Sales for capital equipment, whether it was in the medicalside or graphic-arts side, just dried up in August, Septemberand October. On the medical side, I have no inkling why hospitalsand doctors didn't commit for capital goods," Vozick toldSCAN.

BRIEFLY NOTED:

• Molecular Biosystems (MBI) raised gross proceeds of $43.7million from the sale of 1.9 million shares of common stock lastmonth to institutional investors in Europe and the U.S.

The San Diego contrast agent developer will use the funds toexpand operations as it nears U.S. market approval for Albunex,an ultrasound echocardiography agent (SCAN 9/26/90). The cashwill also help fund testing of Albunex for expanded indicationsand the development of several magnetic resonance imaging agents,the company said.