NeuroMetrix Inc. (NSDQ:NURO) officials continue to look for ways to boost the company’s coffers and shore up its flagging stock price.
The company will ask shareholders at its annual meeting in May to approve a reverse stock split, aimed at resuscitating NeuroMetrix’s flagging share price from around 50 cents apiece to anywhere between $1 and $4 per share. NURO shares have been hovering around 52 cents, up slightly from a 52-week low of 43 cents reached in March 2010.
In regulatory filings, company officials said they will look to boost that price by asking shareholders to green-light a reverse split in the range of 1:2 to 1:8. Companies typically use a reverse split to raise the price of outstanding shares because management thinks the stock is undervalued. The move enables a company to reduce the number of outstanding shares, thereby increasing their price. For example, a 1:2 split would change the value of NURO stock from about 23 million outstanding shares of stock valued at around 50 cents, to about 10.5 million shares valued at $1 each.
NeuroMetrix is a former Wall Street high flier that’s come back to earth in a big way. Since hitting a high-water mark of $39.35 per share in August 2006, the company’s stock has plummeted steadily since August 2010 under $1 per share.
Recently, the firm looked to create a cash cushion with a one-year extension of a revolving credit facility with Comerica Bank that would allow it to borrow up to $7.5 million.
NeuroMetrix has never pulled the trigger on the Comerica revolver, but that doesn’t mean it has no need for quick cash in a pinch — perhaps even more so with its recent turn to focus on the diabetic neuropathy market. For example, net cash used for operations at NeuroMetrix during the final three months of 2010 was $1.9 million, an $800,000 improvement over the prior quarter, but still lifting the overall cash burn during 2010 to $13.4 million.
The company reported a loss of $16.9 million, or 73 cents per diluted share, on revenue of $13.9 million in 2010.
