Oncor loses $5.5 million, warns of murky future It could be forced to cease operations

November 18, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

Oncor Inc., the financially troubled Gaithersburg biotechnology company, posted a loss of $5.5 million for its third quarter and warned that, due to "extreme financial difficulties," it may be forced to cease operations.

Despite the dismal financial picture, the publicly held company said yesterday in its quarterly filing with the Securities and Exchange Commission that it has no plans to file for bankruptcy protection, but cannot guarantee that creditors will not force it into involuntary bankruptcy.

Should it land in bankruptcy, there would be "minimal or no value remaining to the common shareholders" at the conclusion of the case, Oncor said.

Cecil Kost, Oncor president and chief operating officer, could not be reached for comment.

The company has 31.6 million shares outstanding.

Shares, which hit a 52-week high of $5.25 on Oct. 2 of last year, closed yesterday at 3 cents, up 2 cents. Oncor shares have traded on the Bulletin Board since its listing on the American Stock Exchange was suspended Oct. 2.

The company, which reported in its third-quarter statement that it has less than $1 million in cash on hand to pay for operations, said it's facing three serious financial pressures:

Holders of Series A convertible preferred shares are attempting to redeem the shares in an amount totaling $6 million.

The unidentified holder of a $4 million note, which Oncor says in its SEC filing is secured by "substantially all of the assets" of the company, has called the loan due.

The company has been asked to satisfy unsecured obligations totaling $3 million.

The company said in the quarterly report that it has no substantial cash reserves with which to pay these obligations.

Oncor said that as of Sept. 30 it had $734,000 in cash on hand.

The company's total operating expenses for the quarter were $8.9 million.

The company's $5.5 million loss in the quarter that ended Sept. 30, on revenue of $2.3 million, was equivalent to 17 cents a share. Oncor reported a net loss of $6.9 million, or 27 cents a share, on revenue of $3.1 million in the corresponding period a year ago.

For the first nine months, Oncor reported a net loss of $20.9 million, or 69 cents a share, on revenue of $9.5 million.

In comparison, the company reported a net loss of $21.8 million, or 86 cents a share, on revenue of $10.1 million for the corresponding period a year earlier.

Oncor said in its latest quarterly report that to stay afloat it has been selling assets as it attempts to market a test for the recurrence of breast cancer. It considers the test one of its chief sources of income.

It was unclear yesterday whether rights to the breast cancer test, which predicts the chances for the recurrence of cancer, are among the intellectual property assets for sale.

Meanwhile, the company has sold a research products division, one of its strongest revenue-producing units, for $3.2 million.

In its filing, the company said it is attempting to sell excess furniture and equipment and to collect on past due accounts to generate enough cash to pay for operations. Oncor also said it has trimmed back operations and staff to reduce costs. The company has fewer than 30 employees remaining.

Pub Date: 11/18/98

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