Voxel Decides Bankruptcy Is Only Way Out
Voxel said Tuesday it filed for reorganization in federal bankruptcy court in Santa Ana, citing its inability to negotiate a plan to pay a recent $1.9-million judgment.
The Laguna Hills company, which is developing a medical system that generates three-dimensional X-rays of the human body, said it failed to settle on a payment schedule with General Scanning Inc., which won the award.
Even without the judgment, Voxel’s debts of $2.6 million exceeded its assets of $2.5 million at the end of March, according to the company’s court filing for reorganization under Chapter 11 of the federal bankruptcy code.
Its largest creditor is a group of private investors who provided a $2-million cash infusion in March in exchange for promissory notes and warrants to purchase stock.
The company, founded 10 years ago, has yet to develop a marketable product using its technology. It lost nearly $6 million last year.
Voxel has enough cash to continue operating at least another month or two, said chief executive Allan Wolfe.
After the bankruptcy filing was disclosed Tuesday, Voxel stock dropped 47% on the Nasdaq market to close at a new 52-week low of $1.25 a share, off $1.13. Earlier this year, the stock had traded in the $5 range, but plummeted 60% on May 11 when the arbitration award was announced.
The award ended a dispute that arose last year over General Scanning’s contract to develop a prototype product, using Voxel technology, that the Laguna Hills company could market. General Scanning, a Watertown, Mass., maker of lasers, claimed Voxel hadn’t paid for engineering services.
While in reorganization, Voxel aims to keep developing a product that can be marketed next year. The company has put in escrow deposits from 14 hospitals that have agreed to use its system, once Voxel comes up with a marketable version.
Victor Woolley, General Scanning’s chief financial officer, said he was “disappointed” by the company’s court filing. Woolley said he recently attempted to persuade Voxel to give General Scanning rights to an interest in the Laguna Hills company’s technology.
However, Voxel refused. Nanette D. Sanders, its lawyer, said potential investors objected to the company giving up more interest in its technology.
Wolfe said he’s continuing to scout for new investors and possible corporate partners. He said the company needs at least a few million dollars to keep going at its current level of operation.
Last month, the company trimmed its 43-employee work force to 30, eliminating positions in sales, marketing, engineering and administration.