The Advance Nanotek Ltd (ASX: ANO) share price is falling today after the company announced details of a possible capital reductions program, a profit update and an update on the impact of the coronavirus.
Advance NanoTek shares were trading as much as 11% lower shortly after the announcement but have since recovered some of those losses to be down by 5.6% at the time of writing.
Details of a new possible capital reduction
This afternoon, Advanced NanoTek announced it has started investigations into a possible capital reduction. If the reduction were to go ahead, the company noted it would occur before the end of FY20.
Advance NanoTek estimates that it will consider up to 7 cents per ordinary share. However, this consideration will be subject to no further adverse market conditions, significant currency exchange fluctuations, nor any further decline in sales orders.
Profit update
In today's ASX release, Advance NanoTek also provided an update on its profitability to date. The company noted it has recorded just over $1 million profit before tax for the month of February 2020. Along with this, the company added that its operations remain debt-free, and it has in excess of $1.9 million in the bank.
Additionally, Advance NanoTek is in the process of shipping additional powder and dispersions to an FDA-approved warehouse in the US. With these new shipments in place, the company commented it will be in a position to transport its product to any location in the US and Canada within 7 days.
Canadian market update
The company also revealed it has signed a new distribution agreement with Deveraux Specialties to be Advance NanoTek's non-exclusive distributor for Canadia.
Advance NanoTek is currently focused on growing its Canadian operations over the next year, with a goal to achieve similar growth rates recently seen in the US market. Speaking to this, the company highlighted a very rapid growth of 280% in the US over the past 7 months.
Coronavirus impact
Last but not least, today's announcement provided an update with regards to the impact that the coronavirus is having on company operations.
Advance NanoTek stated it has received some concerning feedback from its US distributor. Due to the reduction in holiday bookings, brand owners and retailers are not building up inventory for the approaching summer season.
However, this development doesn't appear to have phased Advance NanoTek. Being the safest active ingredient on the market, the company's view is that its product will continue to experience demand.
