Rex Bionics Plc, the New Zealand firm listed on the London Stock Exchange's AIM market, said it will likely require external funding by April to remain a going concern.
The London-based company, whose REX exoskeletons allows wheelchair-bound people to walk, said the capital required by the company appears unlikely to be readily available from new public market portfolio investors. As a result, it has been exploring a potential product development agreement with a "substantial international partner" to develop its next generation device. Rex Bionics said any new exoskeleton would build on the existing REX device "while significantly reducing costs and improving both aesthetics and the speed and gait of the device".
It has also looked at options to raise equity funding of some 4.5 million British pounds to develop the new REX product to a prototype phase and to fund the company for a minimum of 12 months.
However, despite "intensive efforts" it has only received some indications of funding support which haven't been sufficient to cover the minimum requirement.
The company also said it is in discussions - in partnership with a third party private investment fund manager - to set up a new private development vehicle. The idea is that Rex Bionics would contribute essentially all of its operating business and the investor would contribute sufficient funding to the new operating company in order to develop the new REX prototype with the strategic international partner.
Under the scheme, Rex Bionics would sell its operating business to the operating company in exchange for a percentage equity interest in the private vehicle.
While the exact structure of the transaction is still to be determined it would give the company and its shareholders the opportunity to benefit from the future development of the REX device through its percentage ownership in the operating company, it said. The company's shareholders will have to approve the deal in a general meeting.
If the deal goes ahead one of the matters it will consider is whether and for how long it would be appropriate to continue trading on the AIM.
It underscored, however, that if this transaction does not pan out and it is unable to secure any alternative sources of funding "the company would cease to be a going concern, in which case shareholders could lose their entire equity investment."
The company also said that while it has broadened its global distribution network and delivered positive clinical data in the financial year to February 28, the level of unit sales in the period are expected to be below its previous expectations, with three sales or rentals in the six months to September 30, 2016 and a further one sale in the subsequent period to date. It had expected to sell seven units. It noted it has a further six REX devices on loan that could potentially yield further orders before the end of the financial year although there is no commitment or guarantee of these sales completing.
On the other side of the ledger it has continued to focus on cost control and expects cost saving to "more than offset" the impact of reduced sales in the year "such that the company expects its operating loss to be in line with management's expectations."