American Bio Medica Corporation (ABMC), a leading diagnostic test kit manufacturer, has recently completed a major asset sale to Healgen, signifying a significant milestone in the company’s ongoing business strategy. Despite facing challenges related to supply chain delays and decreased product sales, ABMC remains focused on exploring strategic transactions and pursuing new business opportunities.
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Asset Sale Finalization
On February 28, 2023, ABMC finalized the Asset Sale to Healgen, which involved selling substantially all of the company’s operating assets but excluding its cash, accounts receivables arising before the closing date, and certain other assets. Healgen paid an aggregate purchase price of $3 million, with $300,000 being held back in a retention fund to cover potential indemnification claims over six months following the close.
Net Proceeds
Following completion of the asset sale, ABMC received net proceeds amounting to $247,000 after accounting for a loan with Healgen ($965,000), the Cherokee LSA ($1,031,000 for principal and interest through February 27, 2023), the 2019 Cherokee Term Loan ($252,000 for principal and interest through February 27, 2023), delinquent property-related taxes ($193,000), and current property-related taxes ($12,000).
Strategic Acquisitions and Public Company Status
ABMC’s Board of Directors believes that the company’s status as a fully reporting public company is an asset attractive enough for inducing others to enter into business combinations with the company. It is seeking the potential of strategic acquisitions, which may result in entering into a new line of business, while leveraging the publicly traded stock as a transaction consideration to enhance shareholder value. However, if the company fails to make any strategic acquisitions or enter into strategic transactions, the Board may later decide to dissolve the company and distribute any remaining assets to the shareholders.
Cost Reduction and Fiscal Measures
Alongside the Asset Sale to Healgen, ABMC has been focusing on cost reduction and fiscal measures to ensure better financial outcomes. In Q1 2022, payments totaling $10,000 were made to the company’s Chief Executive Officer/Principal Financial Officer, Melissa Waterhouse, who had voluntarily initiated a 20% salary deferral program since April 2022.
Employee Retention Credits Refunds
Additionally, ABMC has been working actively to receive Employee Retention Credits (ERC) refunds related to wage payments in the first and second quarters of 2021. On June 2, 2022, the company received a refund for the second quarter in the amount of $199,000 – $198,000 claimed as a refund and $1,000 in interest. While the company had not yet received a refund of $202,000 for the first quarter as of March 31, 2023, updates on this refund are expected.
Conclusion
In conclusion, American Bio Medica Corporation has undergone significant changes and demonstrated an unwavering commitment to long-term growth and shareholder value optimization. The completion of the Asset Sale to Healgen marks a critical juncture for the company, and ABMC looks forward to pursuing future strategic acquisitions and opportunities.