14/07/2008 - 14:50

Structural Monitoring hits the wall

14/07/2008 - 14:50

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Osborne Park-based Structural Monitoring Systems plc has become the latest WA technology company to hit the wall, announcing today that it would be terminating the employment of all executives and staff.

Structural Monitoring hits the wall

Osborne Park-based Structural Monitoring Systems plc has become the latest WA technology company to hit the wall, announcing today that it would be terminating the employment of all executives and staff.

SMS has been working for more than a decade to commercialise innovative technology that is designed to detect structural flaws in aircraft fuselage.

The company has been working with Boeing, Airbus, the US air force and other aviation groups to test and refine its technology but has not yet generated revenue and has been unable to raise necessary working capital.

It has $1.1 million of cash reserves and is able to meet its existing commitments but cannot afford to continue its current operations.

"The point has been reached where it would be imprudent for the Company to incur any further liabilities until further funds are obtained," it said in a statement.

"Accordingly the Company has today issued termination notices to all executives and staff of the Company."

This followed staff cuts in May, when the company cut its research and development activities.

In the half-year to December 2007, the company's net loss was $1.8 million and its net cash outflow was $2.4 million.

It has accumulated losses of $36.8 million.

 

 

 

A company announcement is pasted below:

The Company wishes to advise the following regarding its current financial position, capital raising activities and plans for the Company going forward.

The Company announced on 20 May 2008 that it had reduced its staffing levels and was in the process of trying to raise additional capital. Since then the Company has been in discussion with various interested parties to raise additional capital to enable the on-going marketing and production of its CVM™ structural integrity monitoring products and services.

The position in which the Company finds itself is due in part to the current state of the financial markets, and the removal in the recent Federal Government budget of grant programs for near-term commercialisation activities. A previous Commercial Ready grant program had been contributing significantly to the Company's development costs.

The Company has, to date, not been able to finalise a capital raising with potential investors; discussions remain on-going with a number of interested parties.

The cash position of the Company is that it has sufficient reserves to meet all of its outstanding commitments including all employees' entitlements. The point has been reached where it would be imprudent for the Company to incur any further liabilities until further funds are obtained.

Accordingly the Company has today issued termination notices to all executives and staff of the Company. All employees have been asked to work out their notice periods which vary from 6-weeks for executives to 4-weeks for other employees. The terminations provide for re-instatement of employees should the Company be successful in obtaining the required funding.

All other costs have been reduced to enable the Company to continue in operation as long as possible on its available funds of $1.125 million so that the value of the CVM™ intellectual property rights and other assets of the Company are protected.

Payment of non-executive directors' fees has been suspended. The Company's Managing Director and Chief Executive Officer, Mr Mark Vellacott, remains on the Board.

Given the good progress that the Company has been making towards achieving regulatory approval for initial applications of CVM ™ technology on commercial aircraft and the growing level of enquiries from airlines and air forces around the world, it is unfortunate that current financial market uncertainties have impacted at this time.

The Company's Chairman, Sir John Walker said, "The Board continues to engage actively in discussions to seek further investment to enable this excellent Australian technology and the dedicated executives and staff behind it to be able to exploit their combined potential."

 

 

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