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SerVision needs funding to cope with mounting debt
SerVision shares plummeted over 20% on Monday after the digital security manufacturer warned that it urgently needed to raise funds.
The company's sales grew quarter-on-quarter throughout 2017 and, for the first time in its corporate history, those from the second half were stronger than those for the first six months of the year.
Yet it remained "a long way" from the sales target of $6.5m needed to trade at break-even, management said in a statement.
In the meantime, losses over the past three years had been financed via roughly $3.7m of debt.
SerVision manufactures video recording and transmission systems for the purposes of security and transport monitoring, with a variety of devices that stream video footage over cabled, wireless and cellular networks.
In its last financial report back in September, the company stated that over the six months leading up to 30 June it had increased its long term loans by $351,000 to $1.584m from $1.233m, and had secured a further loan of $541,000.
But now it was nearing the end of the line, having exhausted its debt facilities and as of the date of the current announcement it owed $0.9m.
Failing further near-term financing, it would be forced to convert some of that debt pile into equity, diluting current shareholders.
In order to avoid that, SerVision announced it had entered into talks with a potential investor who had also indicated that it might be willing to provide between $0.3m and $0.6m in bridge financing while a deal was thrashed out.
Nonetheless, management cautioned that, "at this stage no guarantee can be given on the loan being secured by the company nor to the terms of such loan funding. Nor can there be any assurances on any future refinancing of the company being successful."
At the financial year-end, the order book stood at $700,000 with a signed agreement in place for an additional $350,000.
As of 1139 GMT, SerVision's shares were down 25.96% at 0.32p.