Struggling explosive-detection technology company Implant Sciences Corp. bought more time to pay its debt.
The Wilmington, Massachusetts-based company develops and manufactures detection devices for explosives and drugs. Implant's products are used by the Transportation Security Administration (TSA) in the U.S., STAC (Service Technique de L'Aviation Civile) in France, German Ministry of the Interior and Ministry of Public Safety in China. The company's products are deemed "qualified anti-terrorism technologies" by the U.S. Department of Homeland Security.
Implant's administrative agent for some of its notes, Bam Administrative Services LLC, agreed to amend the notes and extend the maturity date to March 2017, according to a filing with the U.S. Securities and Exchange Commission. In exchange for that deal, Implant's interest rate on the notes has increased from 15 percent to 16 percent. The company also came to an agreement with DMRJ Group LLC to extend those notes' maturity to March 31. 2016.
The maturity extensions should give the company some time to reap rewards of recent product orders, Implant says. Though the company has a long history of incurring losses, it just received the largest order in its history.
The TSA ordered 1,170 of Implant's QS-B220 desktop explosives trace detection systems. Implant also received an order from the European Civil Aviation Conference, recently.
"We believe these credit extensions provide the time needed as we seek to realize the revenue from these orders," says Implant CEO Bill McGann.
The company has faced financial difficulties in the past. In the three months ended December 2014, Implant's revenues decreased 32 percent to $2.1 million from $3.2 million the year before. The company's net loss also increased in those three months, from $6.2 million, compared with $4.4 million the year before, SEC filings show. Adjusted Ebitda was a loss of about $3.5 million, the company says.
During those three months. Implant's research and development costs increased, as did the amount the company spent on already-increased interest for its notes. (Implant had extended their maturity before this most recent extension). The company also had fewer sales in that time period.
Outstanding debt under the notes, combined with uncertainty surrounding forecasted financial results, raised substantial doubt about Implant's ability to continue as a going concern, or without the threat of liquidation, the company says in its latest quarterly filing with the SEC, filed on Feb. 17.
As of Dec. 31, Implant had a $179.5 million deficit and $71.2 million working capital deficiency.
To see Mergers & Acquisitions previous coverage of Implant, read Implant Sciences Needs Capital to Fund Operations. For the previous edition of Turnaround Tuesday, see Facing Default, EveryWare Plans Pre-Packaged Bankruptcy. For a list of struggling companies, check out our Distressed Company Watch List.