http://shaw-capitalmanagementfactoring.com/2011/04/shaw-capital-management-factoring-hearusa-issues-going-concern-warning/
HearUSA said its accountants have a “going concern” about its ability to continue operating after it lost $7.7 million last year and got into a legal spat with Siemens.
The West Palm Beach-based company (AMEX: EAR), which sells hearing aids, has been trying to prevent Siemens from declaring it in default on a $2.3 million portion of a $32.7 million loan, which would be due in full if the German company prevails. HearUSA won a temporary injection against Siemens seeking to collect on the loan and that will be addressed at a May 2 hearing in New York.
With or without the dispute with Siemens, HearUSA has some problems. The company lost $7.7 on revenue of $83.5 million at its 175 hearing care centers in the fiscal year ended Dec. 25. In the previous year, it earned $1.5 million on revenue of $88.9 million. HearUSA finished fiscal 2010 with $3.9 million in just cash and equivalents.
According to HearUSA’s annual report:
If we are unable to generate cash from operations and/or raise capital through the issuance of securities we might have to cease operations…Because the Company may not be able to reduce its costs to offset cash shortfalls or to raise debt financing to meet its cash needs and pay any amounts due on the Siemens credit agreement, management believes that the company’s current cash will not be sufficient to cover the expenses the company will incur during the next twelve months, which may include the monthly payments due to Siemens under the supply agreement.
The company had 427 full-time and 58 part-time employees.
In addition, HearUSA said it hasn’t completed an impairment analysis on $51.6 million in goodwill and $12.1 million of other intangible assets.
Shares of HearUSA closed down 1 cent to 45 cents on Monday, before it released its annual report. The 52-week high was $1.58 on April 9, 2010. The 52-week low was 37 cents on March 17.
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