Already threatened with exclusion from the NASDAQ due to stock market shortcomings, the Quebec company LeddarTech, specializing in vehicle driver assistance technologies, is struggling to improve its results in order to reassure wary investors.
In its third-quarter 2024 results, published late Wednesday, LeddarTech posted revenues of $1.4 million, flat year-over-year, and an operating loss that swelled to $10.3 million, compared to $8.4 million for the corresponding quarter last year.
LeddarTech’s third-quarter net loss also rose to $7.45 million, compared to $4.15 million a year earlier.
According to its president and CEO, Frantz Saintellemy, LeddarTech has continued “to make excellent progress with leading automotive OEMs and suppliers,” as well as “key technology partners, including Arm Automotive and Texas Instruments.”
Financially, LeddarTech’s situation remains tense despite the conclusion of an interim financing agreement with its main lenders and capital investors, including Desjardins and the Crown corporation Investissement Québec.
Financial liquidity
In its financial statements as of June 30, LeddarTech indicates that its cash reserve (or “cash balance” in accounting jargon) stood at $5.7 million.
This amount of cash is reduced by more than half compared to the balance of 14.3 million recorded three months earlier, on March 31.
It is also significantly lower than the $29.2 million in cash that appeared in LeddarTech’s financial statements as of December 31, 2023.
In its most recent financial report, LeddarTech indicates that it has “reached an agreement in principle with several of its principal shareholders and its principal lender” in order to have access to “bridge financing” (or interim) of up to $9 million, as well as a temporary easing of its financing conditions with Desjardins.
According to LeddarTech management, this interim financial contribution will allow it to “continue its discussions with certain potential strategic investors in order to obtain additional equity of US$35 million.”
LeddarTech did not specify a target timeline for these so-called “strategic” investment discussions; a term that, in business circles, can mean the sale of a major stake or the complete purchase of the company’s share capital.
Tight deadlines
However, according to the disclosed terms of its interim financing agreements, which are scheduled to run until November 15, LeddarTech has until October 14, two months from now, to provide “satisfactory evidence of investor(s) participation in the equity financing.”
This deadline of “sufficient proof” of capital investment is also one of the conditions for obtaining the entire bridging financing of 9 million.
This interim financing is planned in two stages: a first tranche of 6 million made available to LeddarTech from August 19 (next Monday), and a second tranche of 3 million is planned for Tuesday, October 15.
That would be the day after the October 14 deadline for LeddarTech to provide “sufficient proof of investment,” and a month before the end of the $9 million bridge financing on Friday, November 15.
This date of November 15 will also be that of the period of easing of financing conditions which was granted by Desjardins.
In fact, it is on this date that the amount of “minimum liquidity” to be maintained at LeddarTech will rise from its reduced level of around 1 million to its full original amount of 5 million.
NASDAQ
In the meantime, LeddarTech’s management must also find a way to resolve the notice of violation of market value requirements that was served on it last week by the administrators of the NASDAQ market.
LeddarTech has 180 days, until mid-November, to regain compliance with NASDAQ requirements.
Failure to do so could lead to its exclusion from listing on the main exchange for technology companies in North America.
According to the notice of violation, LeddarTech failed to comply with certain rules required to maintain listing. Namely, a minimum stock price of US$1 per share, a minimum value of shares held by the public of US$15 million and a minimum market capitalization of US$50 million.
Just seven months after their NASDAQ listing on December 22, 2023, LeddarTech shares slipped below US$1 per share in mid-June.
These days, they trade around 55 cents per share, which translates into a market capitalization of just $15 million for LeddarTech, below the minimum valuation requirements on NASDAQ.