Response Biomedical (TSE:RBM) launched an internal audit of its exports to restricted companies in response to a Securities & Exchange Commission inquiry into sales to countries deemed "state sponsors of terrorism."
"The company discovered that a small number of its exports to Iran might have been subject to the controls of both the Bureau of Industry & Security and the Office of Foreign Assets Control," according to a regulatory filing. "As a result, the company has submitted a draft disclosure to both agencies and is conducting a full internal review of its exports to restricted countries."
Response Biomedical is the 2nd company in recent weeks to respond to SEC concerns about exports to suspect nations, following Zoll Medical which eased regulators’ concerns over its ties to Iran, Sudan and Syria just weeks before closing the books on a $2.3 billion buyout by Asahi Kasei Corp. (TYO:3407).
The SEC asked Response Biomedical to speak for sales to Cuba, Iran, Syria and Sudan, noting that the company has publicly stated that it sells its products in Latin America, the Middle East and Africa.
The Vancouver-based diagnostics devices maker has no "business dealings" with Cuba or Syria, according to a regulatory filing, and it’s sales to Sudan, which began in 2010, have been below $25,000 yearly and "are not material to the company or its future operations."
Sales to Iran, however, make up 5% of Response Biomedical’s $9 million annual global sales and "the Iranian market for medical diagnostics products is integral to our global sales strategy, specifically related to the Middle East," according to filings.
The company added that it plans to continue selling its products to Iran, but only those that meet de minimis requirements and are excepted from trade sanctions, which may mean halting sales on certain products sold to Iran now.
"Thus far, we have identified 2 products that do not meet de minimum requirements, and we have had limited sales of these products in Iran," according to the company. "Both of these products are readers designed to work in conjunction with our proprietary single-use test cartridges for diagnosis of cardiovascular related conditions. Those products are manufactured by an OEM supplier in Burnaby, BC, Canada. Again, we had limited sales in Iran of the products subject to U.S. export controls. Those sales represent sales of demonstration units to our distributor, and we do not intend to sell any additional quantities of these products."
"Other than Iran, the company does not intend to sell products into Syria, or Cuba, and intends to only sell products in Iran and the Sudan which meet the de minimis requirements and are not subject to U.S. export controls," Response Biomedical added. "Given that sales to date have been of medical diagnostics products used in improving human health and welfare, we also do not believe that these sales constitute a material risk to the company’s reputation and hence we believe that they do not have any negative effect on the company’s share value."
Response Biomedical did not immediately return requests for comment.
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