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Shares in DeepVerge plummeted on Wednesday after the life sciences firm warned it might be unable to raise sufficient capital to meet debt obligations.
In a statement on Thursday, the Dublin-based business, which tests skincare products and develops water-based technology, confirmed that it was conducting an equity raise.
Proceeds from such a raise would go on paying off a loan facility taken out with Riverfort Global Opportunities and investment group Ya II Pn in March.
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This credit facility is worth up to £25million, of which the company initially withdrew £4million and must make the first repayment of around £500,000 by this Sunday.
It also intends to put some of the money towards ‘working capital requirements’ in anticipation of reaching profitability and positive cash generation sometime during 2023.
Last year DeepVerge completed a successful £10million equity raise as part of efforts to expand its various businesses, including Modern Water, which was bought two years ago.
However, the firm told shareholders that ‘although the institutional equity roadshow is progressing well with positive feedback, there can be no guarantees that sufficient equity funds can be raised, nor the terms thereof.’
Following the announcement, DeepVerge shares plunged by 45.2 per cent to 3.1p, meaning their value has fallen by more than three-quarters so far in 2022.
The group said it had agreed with lenders that no ‘default event’ would take place should it fail to make any due loan repayments of the Riverfort loan by 14 November, as long as payments are made in full following the completion of a fundraise.
DeepVerge is a personal healthcare business that uses artificial intelligence and Internet of Things technology to analyse bacteria, viruses and toxins.
One of its divisions, Labskin, is often used by pharmaceutical and cosmetics manufacturers to test the effect their products have on human-like skin.
Labskin was recently selected to take part by a division of the US Director of National Intelligence in a three-year project to evaluate radiation exposure among civilians and military personnel.
Another branch of the company, environmental division Modern Water, recently won a contract to provide equipment that can monitor water toxicity and pollution in Qatar ahead of the FIFA World Cup starting in November.
In its most recent interim results, DeepVerge reported revenues jumped by 94 per cent to £6.4million thanks to stronger demand for water monitoring and membrane technology.
However, the group still made a £2.2million loss partly because administrative costs were boosted by higher staff numbers and rising orders for its goods and services.
