BioVeris Corp. stands to lose most or all of its $41.2 million investment in a joint venture with its chief executive's son if he doesn't raise money to keep it operating, the company said yesterday in its quarterly filing with the Securities and Exchange Commission.
In lawsuits against Jacob Wohlstadter that were settled last week, the Gaithersburg biotechnology firm said Wohlstadter promised to find outside funding for the venture but never succeeded. Legal papers filed in June by BioVeris put its investment in the venture at $115 million.
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As part of the settlement, BioVeris agreed to sell its interests in the venture to Wohlstadter for fair market value, less a prearranged discount. The company said yesterday that the value of its interests in the joint venture was $1.2 million as of March 31.
A spokesman for the company declined to comment yesterday on the quarterly report.
For its first fiscal quarter ended June 30, BioVeris reported unaudited revenue of $8.2 million, up from $5.1 million in the same period the year before.
However, the company recorded a loss for the quarter of $12.9 million (48 cents a share), up slightly from $12.5 million (47 cents) during the quarter last year.
The company said $3 million of its $3.1 million increase in revenue came from increased sales by the joint venture between Jacob Wohlstadter and BioVeris. The joint venture was set up to design testing technology for drug development companies.
BioVeris filed its delayed annual report earlier this week, a few days before a scheduled hearing by the Nasdaq Stock Market on whether to delist the stock because of the company's failure to report earnings.
The company, which reported quarterly and annual losses, had said it was previously unable to provide results because of the dispute with Wohlstadter over $7 million in joint venture funds he allegedly spent on cars and real estate.
As part of the settlement, Wohlstadter agreed to turn over financial records that allowed BioVeris to complete its financial reports.
The company's quarterly filing yesterday with the SEC was a day late.
Shares of BioVeris closed yesterday at $7.08, down 19 cents.