CEO of company praised by Oprah quits
Year and a half ago, legendary talk show host recommended UltraShape's fat dissolving device. Israeli company pins slump in sales on downturn on global markets
Avi Huppert, until now the company's chief operating officer, will step in to replace Eyal as CEO of the company's subsidiary starting this month.
The company's financial reports from the past year indicate that it has a negative cash flow from operating activities, which is why the board of directors decided to put an alternative work plan into motion.
The plan includes cutting back on company expenses, postponement of planned activities, additional downsizing of its workforce and streamlining all expense items – with the exception of fees due to the Food and Drug Administration for the approval of the company's product in the United States.
Furthermore, the company announced its plans to seek financing for its activity for which it plans to hold a financing round either by issuing rights or by other means.
A year and a half ago, talk show icon Oprah Winfrey catapulted the company's stock price 60% in one day after a positive review of the product was posted on the Oprah magazine website.
On Wednesday, the company posted the review on its own website and the share leapt 63.3% on an unusual NIS 26 million ($7 million) turnover.
Going concern warning
The UltraShape board of directors maintains that in the event that the said plans are unsuccessful, the company's status as a going concern will be in question.
Aside from a slump in sales, the credibility of UltraShape's forecast for the due date of the FDA's approval of its new waist sculpting device, the Contour 1, remains in question.
Until last May, investors hoped that it would get the approval by the end of 2011; however, the company then announced that the approval was scheduled for the first quarter of 2012.
In its second quarter reports, UltraShape once again updated its forecast and now says that it will gain the approval only in the fourth quarter of 2012, if at all.
UltraShape's third quarter revenue was $1.3 million – a 45% dip as compared with the same quarter last year. UltraShape pins the slump on a slowdown in its Europe, Canada and Latin America sales.
UltraShape's bottom line was hammered with a $1.6 loss. The company ended the same quarter in the previous year with a $1.2 million loss.
Snir Handler contributed to this report
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