Ailing Universal Medical seeks financial salvation
By KRIS HUNDLEY
cSt. Petersburg Times, published March 13, 1998
Seven weeks after being locked out of its headquarters,
Universal Medical Systems Inc. said it is searching for new
capital to salvage the beleaguered company.
The medical equipment company near Largo has been all but
defunct since Jan. 21, when its landlord sued for eviction and
changed the locks on its facility off Ulmerton Road. UMSI
immediately laid off its dozen employees, many of whom had
not been paid for months.
The company, which has not filed any financial reports for
1997, has also seen its stock price plummet. Investors, once
intrigued by UMSI's promising high-tech medical equipment,
have fled the stock in droves. Though the stock traded as
high as $3.371/2 in March 1996 and analysts once promised
it would hit $8 to $10 this year, for the past several weeks
shares have been priced at less than a nickel. UMSI's shares
closed at 0.037 cents, up 0.006 cents Thursday.
UMSI was formed in late 1995 to acquire and develop new
medical technologies. Though the company, which once
employed about 50 people, had several products under
development, only one, the CT Simulator, was in production.
The CT Sim had been developed by Medical High Technology
International of Clearwater, one of UMSI's early acquisitions.
The CT Sim is a CT scanner with additional computer
hardware and software that allows it to design accurate
radiation treatment plans for cancer patients.
MHTI sold about 40 of its CT Sims around the world and
was developing an advanced model when it ran out of money
and turned to UMSI for capital. The necessary financing
never materialized and the high-tech devices on which UMSI
based its hopes were never completed. Dennis D. Cole,
UMSI's counsel and director, said the company would post
an unspecified loss in 1997. In 1996, the company reported a
loss of $3-million after failing to sell any equipment.
In an effort to secure financing, UMSI's board of directors
said Thursday they had approved a 1-for-25 reverse stock
split. Investors with 25 shares of UMSI worth 3 cents each,
for example, will now own a single share worth 75 cents.
Companies typically do a reverse stock split to reduce the
number of shares outstanding and boost the stock price,
although once the reverse split is completed, the price again
fluctuates according to supply and demand.
UMSI also said Thursday it had received a proposal from
Global Emerging Markets Group, a New York City
investment banking firm, to raise up to $1-million for the
company. The fund-raising effort by GEM is contingent on
UMSI's reverse stock split, and securing revised terms from
earlier lenders.
UMSI also has to agree to use the proceeds for completion of
three CT Sim machines that have already been sold and
shipped to Taiwan.
Rick Joshi, an analyst for GEM, which has invested in UMSI
in the past, said its proposal for new financing is tentative.
"That proposal is extremely preliminary at this point," said
Joshi, who rated UMSI a strong buy in June.
While announcing its latest fund-raising efforts, UMSI also
revealed that several other planned acquisitions or orders had
failed:
The sale of a CT Simulator to M.D. Anderson Cancer Center
in Orlando, announced in April, was canceled.
A commitment of $5-million from Select Capital Advisors
Inc. of Miami, announced in November, was not completed.
Only $400,000 was funded.
Plans to acquire two high-technology biomedical companies,
announced in September, have been scrapped.
cCopyright 1998 St. Petersburg Times. All rights reserved. |
