Medical imaging devices maker Imaging3 (OTC:IMGG) this week filed for Chapter 11 bankruptcy after plodding through years of rough financial sheets.
The 3D medical diagnostic imaging devices maker announced that it filed last week for bankruptcy in the U.S. Bankruptcy Court for the Central District of California.
The company, founded in 1993, has to date been unable to raise enough revenue to cover research & development, marketing, operating and other costs, Imaging3 disclosed in its 1st quarter financial report, when it also noted that it may be forced to file for bankruptcy in order to stay in business.
Imaging3 president & COO Christopher Sohn tendered his resignation earlier this year, which was effective at the end of the company’s 1st quarter. He stepped down to pursue other interests, according to an SEC filing, and was paid a severance of about $9,100.
The company’s net revenues during the 3 months ended March 31, 2012, sank 27% compared with the same period last year, mostly due to decreased sales, according to regulatory filings. Equipment sales during Q1 2012 amounted to about $55,500, compared with $161,700 during Q1 2011. The company noted that, although significant efforts had gone toward marketing its refurbished equipment, much of its quarterly revenues now come from sales of parts and services for products under warranty or under service contracts.
Imaging3 recorded a $1.6 million net loss for its 1st quarter, compared with a loss of $216,400 during the 1st quarter of 2011. Losses are expected to continue, the company reported in its latest financial report.
"The company does not have sufficient capital to meet its current cash needs, which include the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended," according to the report. "The company intends to seek additional capital and long term debt financing to attempt to overcome its working capital deficit. The company will need between $50,000 to $100,000 annually to maintain its reporting obligations."
Imaging3 may attempt to conduct additional private placement stock sales to raise new capital, and the device maker also plans to cut operating and other costs, but "there may not be sufficient funds available to the company to enable it to remain in business and the company’s needs for additional financing are likely to persist," according to SEC filings.
Imaging3 earlier this year issued more than 6.3 million shares of common stock to Cranshire Capital to reimburse Cranshire for legal fees in a bid to dismiss a pending lawsuit. Cranshire, which was part of Imaging3’s $1 million private placement in October 2010, sued the firm for allegedly diluting its share value with a securities purchase agreement in October 2011.
