Financial issues nag Swissray as company seeks new financing

Company must restate financial results

Financial issues continue to dog digital x-ray developer Swissray International. While the vendor last month scored a large cash infusion that will help the firm market digital x-ray systems, Swissray has announced that it must restate its financial results for several recent periods due to accounting irregularities.

On the positive side, Swissray has landed a cash infusion of $5.5 million from London-based Rolcan Finance that marks the first step in the firm's medium-term financial planning, according to Ruedi Laupper, chairman of the New York City-based firm. Swissray announced in February that the company was restructuring to better focus on sales of digital x-ray products like its AddOn-Multi-System, which received 510(k) clearance in December (SCAN 1/21/98). The financing is designed to meet the company's working capital needs, according to the vendor.

In addition to the financing, Swissray has made several changes in its executive lineup and to its board of directors. The company is looking for a new CEO and CFO, and director Akbar Seddigh and director and secretary Daniel Wuersch have resigned from the company's board of directors to pursue other interests. The resignations will not affect the company's reorganization, said Erwin Zimmerli, director of the board.

Swissray did not state whether the departures were related to recent discoveries that may require the company to restate its financial results for fiscal 1997 (end-June) and the first quarter of fiscal 1998 (end-September). In a filing with the Securities and Exchange Commission on Feb. 23, Swissray said that the restatement may be necessary due to the accounting treatment in the statements for convertible debentures issued by the company, as well as for certain expenses that should have been classified in the company's 1997 results as ordinary expenses, but instead were classified as extraordinary expenses. Swissray in 1997 reported sales of $13.2 million and a net loss of $10.9 million. The revelations, as well as the departure of Swissray's CFO, have forced the company to postpone the filing of its results for the second quarter (end-December).

Finally, Swissray reported that a $30 million order for its digital x-ray equipment to a customer in South Korea may not occur due to economic problems in that country. Swissray management considers it doubtful that the order will be filled in the current calendar year, or at all, according to the company.