Breast cancer diagnostic company Real Imaging Ltd. (TASE:BCNT), which merged with stock market shell Bee Contact Communications Ltd., has changed its financial strategy. The company has cancelled a planned NIS 13 million secondary offering, and will try to raise the capital, and maybe more, from private Israeli and foreign investors.
Real Imaging CEO Boaz Arnon and director Ori Elan founded the company in 2004. The company's flagship product infrared diagnostic device MIRA can more accurately detect early-stage breast cancer than current mammography devices and is easier to use and without emitting dangerous radiation.
In late June, Real Imaging announced that it planned to raise capital at NIS 0.37 per share, and that most of the capital would come from current investors, Arnon, Elan, and the Reuben Brothers, a UK private equity company owned by David and Simon Reuben. However, the subsequent fall in Real Imaging's share price to NIS 0.10, giving a market cap of NIS 19 million, in line with drops in the share prices of other life sciences companies, prompted a change in plans. The drop was not due to any announcement by the company, but was part of the general poor market sentiment and a more thorough examination of the company, which has no sales yet, by investors.
On August 14, Real Imaging announced streamlining measures, after apparently concluding that it could not raise the capital it wanted on the market. The company also obtained a $500,000 bridge loan from its controlling shareholder, which it will have to repay within two months.
It is critical for Real Imaging to raise capital. A going concern warning was attached to the company's financial report for the second quarter by its auditors, after reporting NIS 87 in cumulative losses and cash reserves of only NIS 5,000. The company says that it will begin sales in 2012, subject to obtaining additional financing. Despite withdrawing its prospectus, the company may still use the prospectus for a future offering.
Published by Globes [online], Israel business news - www.globes-online.com - on September 4, 2011
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