Xytronyx, a San Diego-based biotechnology company trying to develop a periodontal disease test kit, said cash problems will force it to miss the first dividend payments on more than $2 million in 9% convertible preferred stock sold last year over the quarter ended June 30.
Dividends on the Series B preferred stock were to have accrued over the first year, with the first cash payments due on the first anniversary of the sale. Dividends on the shares, which were sold in a private placement last year, were then to have been paid quarterly, the company said in a Wednesday release.
The company, however, does not now have adequate finances to pay the dividends under corporate law in Delaware. The defaulted dividend payments will continue to accrue and will be paid to shareholders when and if “funds are legally available.”
Xytronyx chief executive Peter Baram did not return telephone calls Wednesday for comment. The company said it is seeking more funds through a “foreign private financing.”