NMT Medical Inc. (NSDQ:NMTI) has a new creditor.
The Boston, Mass.-based company entered into a $2 million credit agreement with LSQ Funding Group LC, an Orlando, Fla.-based company that "specializes in providing financing to small- and medium-sized businesses," according to NMT.
The company’s latest one-year credit facility is subject to "a borrowing base calculated as a percentage of domestic receivables that are pledged as collateral against the loan," according to a Securities & Exchange Commission filing. Agreements structured around factoring enable companies to bridge the gaps in cash flow between invoicing and payment collection, according to LSQ’s website.
Last October, NMT defaulted on a $4 million loan from Silicon Valley Bank, which agreed to forbear from calling in its note. The company ran afoul of a liquidity covenant in the terms of the SVB line, which it took out in June 2009. For a $2,500 forbearance fee, the bank agreed to hold off calling in its chit until Nov. 19, but according to the latest regulatory filing from NMT, the deal with SVB has been terminated.
The new credit agreement "replaces" the SVB line, CEO Richard Ellis said in a prepared statement.
"We continue to tightly manage our expenses while working closely with the Food & Drug Administration to evaluate our potential next steps relating to patent foramen ovale treatment for the stroke and transient ischemic attack indications," he said.
The company is considering all strategic options, according to the statement.
In June, shares of the company’s stock tanked on news that a clinical trial, examining the use of its flagship StarFlex PFO cardiac implant for treating stroke and TIA, failed to meet its primary endpoint of demonstrable superiority to “current best medical therapy for preventing recurrent strokes and TIAs.”
Looking to regain its footing, the company shuffled its executive deck in August, with former CEO Frank Martin and former board chairman James Mahoney stepping aside for then-COO Rick Davis. That prompted a de-listing warning from NASDAQ, because NMT then lacked the requisite number of directors for its audit committee. Though the company reported a significant second quarter profits that same month, its net earnings disapeared in the third quarter as losses outstripped the company’s revenue.