Lucid Explores Options, Looks for PE Investment

Last updated: Watercooler

The company makes cellular imaging systems for dermatologists

Medical device company Lucid Inc., which raised concern about the company's future, is exploring strategic alternatives, including a possible private equity investment.

The Rochester, N.Y.-based company incurred net losses of about $4.2 million for the nine months ended Sept. 30, down from an $8.8 million loss the company sustained for the first nine months of 2012. Lucid had an accumulated stockholders' deficit of about $10.6 million as of Sept. 30.

In a Nov. 8 filing with the U.S. Securities and Exchange Commission, Lucid says that the company's forecast through the end of the year projects further losses, and it anticipates it needs to raise more capital to fund operations. Although the company is working to develop and expand products offerings, it anticipates generating losses at least for the next year.

Lucid operates as Caliber Imaging & Diagnostics, a medical device company that develops, manufactures, markets and sells point-of-care cellular imaging systems. The company's technology provides dermatologists with images of skin and other tissues that can be looked at immediately or transferred to a pathologist.

Lucid hired Scott Taylor & Associates to negotiate with third party payers in an effort to obtain coverage and reimbursement. The company believes that third party payers would reimburse doctors for using their products, but is unsure about the timing of the reimbursement and if it will be enough for the physicians.

Lucid is also considering strategic alternatives, including private equity of debt financing. "Going through money raising you're always open to any alternatives, but we believe the best opportunity for us is the general solicitation," says Lucid CFO Rich Pulsifer.

The possibility that Lucid may not find debt or equity finding raises substantial doubt about its ability to continue as a going concern, or without the threat of liquidation, the company says in the SEC filing.

The company hired New York investment bank H.C. Wainwright & Co. LLC in August to help develop strategic partnerships, or assist with an M&A transaction or stock offering.

Lucid has also taken several steps to reduce working capital needs and restructure the company.

As a cost saving measure, in January, the company dissolved subsidiary Lucid International Inc. In 2012, Lucid restructured to streamline infrastructure and decrease operating expenses.

The company has a $7 million loan from an affiliate, Northeast LCD Capital LLC. Lucid amended that loan in October so that it matures July 5, 2020. In May 2013, Lucid borrowed an additional $5 million from the same affiliate. That loan matures in November 2014.

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