Medical device company AirXpanders, Inc. (ASX: AXP) today announced the voluntary suspension of trading of its securities as it undertakes the review of various matters pertaining to its operations, including resolving an anticipated debt covenant breach with its lender.
This follows the trading halt announced last week due to pending notification to AXP’s lender of an anticipated breach of a specific financial covenant in its debt agreement. The uncertainty relating to the outcome of the notification has also instigated the company to go on a trading halt.
The anticipated debt covenant breach addresses the shortcoming of minimum net revenue that has been achieved by the company in the first quarter of 2019. AirXpanders currently anticipates net revenue for the first quarter of 2019 to be in a range of US$1.65 million to US$1.75 million that reflects a breach of the financial covenant requiring the company to achieve a minimum net revenue for the first quarter of 2019.
However, the company has reportedly received a positive response from its lenders in the first round of discussion. Based on a preliminary discussion with the lender, the company expects the lender will waive the covenant violation for the first quarter of 2019, subject to the agreement and completion of documentation.
The voluntary suspension also highlights the company’s ongoing review and evaluation of opportunities to raise additional capital, including the related terms and timing.
In today’s market release, AirXpanders, Inc. stated that it expects to resume trading once any registration statement filed with the United States Securities and Exchange Commission (SEC), if any, is declared effective by the SEC and upon the commencement of the capital raise. AXP further stated that there is no certainty of the duration it would take as it partly depends upon any review process by the SEC.
Further, the company does not see any certainty that the future covenant violations, if any, would be waived off in the same way, therefore, it is currently evaluating its prospects of meeting the covenants in the coming quarters. It is also reviewing its operations and considering possible changes that it believes may, if able to be implemented, help address the revenue shortfall.
The voluntary suspension is expected to remain in place until at least Monday, 6 May 2019, told AXP. The company further assured its shareholders that they would be kept informed of any change or update, but as of now, there is no assurance that whether it will be able to raise additional capital or that any capital can be raised on a timeline that will meet the Company’s requirements.
As at 2 April 2019, AXP remains suspended on the Australian Securities Exchange at the company’s request. The stock last traded at $0.035 with a market capitalisation of $19.55 million.
In the long run, the company has witnessed a massive sell-off on the stock exchange as the stock price declined by 90.65% over the last 12 months including a negative price change of 7.89% in the past one month.
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