Iatia's cash flow prompts ASX query

Microscopy company Iatia has received a 'please explain' from the Australian Stock Exchange after its fourth quarter results showed the company had a net negative operating cash flow for the quarter of AUD$671,000 and $296,000 cash remaining.

But the company said it had subsequently announced a private placement of 16.5 million shares at $0.0303 to Malaysian investor Moneylink, providing $500,000 towards the development of surveillance and detection applications of its technology. The agreement also includes the provision of 16.5 million options to Moneylink and the possibility of another $500,000 investment plus options in the 2004-2005 financial year.

In addition to today's investment, the company is also looking at other ways to raise money, according to company secretary Roman Nadjecki. A money-raising placement with current shareholders is being planned for the near future, he said, and is expected to raise between $0.5 million and $2.3 million.

Iatia is also seeking research funding through the Australian Department of Defence through its commercial support funding program. Najdecki said that if successful, funding would start from July 2004. Research support is also being sought from the US Navy.

The move to focus on defence applications signals a change in the company, which originally targeted life science applications for its microscopy tools.

Najdecki said that Iatia was now marketing its technology to microscope companies rather than end-users, as demonstrated by its recent deal with BioRad Asia-Pacific. He noted that sales through BioRad would begin in the second quarter of this financial year, with cash flow starting in the third quarter.

In the mean time, the company has made significant staff cuts in marketing and administration, Najdecki said, concentrating its efforts in the development of defence applications.

Iatia's share price (ASX:IAT) remained unchanged at $0.046 at the time of writing.