Thursday, 6 November 2008

LMS Medical Battens Down The Hatches

LMS Medical Systems (LMZ - TSX)
Shares outstanding: 25.8m
Fully Diluted: 30.7 million

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News from the company today that it was implementing a re-structuring plan to dramatically cut costs through a 50% staff reduction was not a total surprise in light of October 27th announcement that four directors had resigned. All signs point to the obvious that money is very tight.
Although the cuts were not detailed, the release did say that the focus is on its current customer base plus service and support for distributors and health care clients. LMS currently has its risk management technologies for Obstetrics installed in approximately 100 hospitals.

LMS is out trying to attract new money, which needless to say is a difficult task made much tougher in this environment.

What's hard to swallow is the LMS had tremendous momentum in Q4F08 (March 31) announcing a record quarter and a sharp upswing in annual sales to just under $5 million. It looked like the company was finally on its way after years of work and millions of dollars in R & D expenditures.

The first quarter of Fiscal 2009 (June 30) was the kick in the belly as LMS delivered almost every penny of the $800 thousand in sales but its big U.S. partner was nowhere to be seen. We're waiting on Q2F09 numbers but these latest moves say the company is battening down the hatches.

As for what's next, we're sitting on pins and needles. It's clear all stops are being pulled to keep the company running while it trys to regain traction.

To read the news release click here.