Imagyn Faces Liquidity Problems

Imagyn Medical Technologies Inc. said it is facing a severe cash crunch and its auditors are investigating whether it can continue as a going concern.

The Newport Beach company, created when Urohealth Systems Inc. acquired Imagyn Medical Inc. in October, makes devices for diagnosing and treating urological and gynecological disorders.

It didn’t give details of the extent of its current liquidity problems, but management is looking at a number of remedies. “We have put together a company via acquisitions that has grown very rapidly. We need capital,” said Michael A. Montevideo, chief financial officer.

The company said it received $3 million in short-term financing from its senior lender, BT Commercial Corp., on Friday, and it “continues to seek additional financing on a short-term basis, and is having discussions with a number of potential lenders.”

Imagyn also said it will sell “certain nonstrategic” assets, which the company declined to identify, and use the proceeds to fund basic operations. It said it expects to complete one or more of the sales by the end of September.

In addition, Imagyn said it temporarily reduced the manufacturing output of its key surgical division, which will lower sales for the surgical products. The surgical division was solely credited with improving Imagyn’s sales in fiscal 1998, which ended March 31.

The company reported Monday that it lost $88.5 million, or $2.49 a share, for the fiscal year, compared with a net loss of $91.5 million, or $3.07 a share, for the previous year. Sales increased 12% to $105.5 million from $94 million.