Vendor builds relationship with ElscintCash-flow difficulties at speciality MRI developer Magna-Lab haveresulted in problems with the firm's listing on the NASDAQ stockexchange. NASDAQ informed the Hicksville, NY, company last monththat it is
Cash-flow difficulties at speciality MRI developer Magna-Lab haveresulted in problems with the firm's listing on the NASDAQ stockexchange. NASDAQ informed the Hicksville, NY, company last monththat it is out of compliance with the exchange's listing requirementsfor the small cap market, based on its financial results for thesecond-quarter (end-August). NASDAQ and Magna-Lab have scheduleda hearing for Dec. 15 to discuss the listing, according to vicepresident John Haytaian.
Magna-Lab received Food and Drug Administration clearance inSeptember for its lead product, the 0.3-tesla Magna-SL extremityscanner. The company is still gearing up its sales and marketingeffort for Magna-SL and has not yet recognized revenue from theproduct.
As a result of the delay in cash flow, Magna-Lab found itselfout of compliance with NASDAQ rules, which stipulate that companiesmust have $1 million in assets and $2 million in net worth tobe listed on the exchange. Magna-Lab went public last year ina public offering that netted the firm $5.4 million (SCAN 5/5/93).The company's stock was trading at around $3 a share in earlyDecember.
Magna-Lab is dealing with the situation by securing additionalcapital to bring it back into compliance, Haytaian said. The companyclosed a privately placed bridge loan for $400,000 that matureson May 22 or on completion of more permanent financing. Magna-Labis also drumming up additional financing through negotiationson a strategic alliance, and the company's long-term health isnot in question, Haytaian told SCAN.
"The company is capable of continuing forward," Haytaiansaid. "To do certain things that we have planned, we needan infusion of capital to put into play full production capabilities."
On a positive note, Magna-Lab has signed a letter of intentto enter an international sales and distribution agreement withElscint for Magna-SL. Elscint was given marketing rights to thescanner in various countries outside the U.S., including Southand Central America, Germany, Italy, Spain, South Africa, Israeland some Asian and Pacific Rim countries. Magna-Lab will continueto handle sales and marketing of the scanner in the U.S., Haytaiansaid.
The two companies are also in discussions about a technologycooperation agreement, which could lead to Elscint's manufactureof Magna-Lab magnets. There are also ongoing discussions aboutfinancial issues, according to Haytaian.