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RM2 urgently seeks cash as bank balance rapidly dwindles
Sustainable pallet developer RM2 International updated the market on its cash position on Friday, having previously provided estimated information on its expected cash resources position over the following eight weeks on 1 December last year.
The AIM-traded company said its unrestricted cash position at 31 December was $4.1m.
After selling, general and administrative expenses, one-off costs and production expenses in January, it said it expected its cash balance at the end of January to be approximately $2m.
RM2 said its monthly cash burn rate, excluding production costs and one-off costs, and reflecting cost-cutting measures implemented to date was approximately $1.2m.
It said it had been able to extend its cash resources beyond earlier forecasts by renegotiating its production commitments, delaying the start of production in China, improving payment terms, reducing its running costs and the delayed realization of certain liabilities.
The board added that it remained committed to further reducing its overheads, and was continuing its efforts to monetize certain historical assets where possible.
"Taking into account production costs and known one-off costs, based on the information available to it today, the company currently expects to have sufficient cash to continue operating through the third week of February 2018, although this date could vary depending upon the outcome of ongoing discussions with third parties, including manufacturing partners and alternative sources of financing," the board said in its statement.
"The company has received positive feedback from trials undertaken by a number of potential customers in North America over the last few months and is in discussions with several Fortune 500 customers who have expressed an interest in the pallets.
"Notably, a leader in a North American specialty food sector has agreed to roll out ELIoT pallets in their supply chain subject to the pallet meeting KPIs throughout the implementation."
RM2 said it was continuing to advance its discussions with potential funding partners and customers in order to progress the business.
It added that it was continuing to take appropriate advice as it explored the financial and strategic alternatives available to it.
"The company will provide further updates as and when appropriate."