Electronic Sensor Technology Inc (ESNR)

[Fred Kadiddlehopper]

News for 'ESNR' - (DJ Creditors to Vote on ZNose Machine Seller's Bankruptcy-Exit Plan)


By Katy Stech

The Nevada-based seller of zNose machines, which can detect traces of cancer, explosives and palm tree fungus, is preparing to ask its creditors to accept payment reductions so that the company can get out of bankruptcy.
Electronic Sensor Technology Inc.'s (ESNR) 33 creditors have until April 15 to vote on the company's reorganization plan, according to a timeline set earlier this week by Judge Peter Carroll of the U.S. Bankruptcy Court in Santa Barbara, Calif. Under that plan, those creditors could either get repaid 15% of what they are owed or take an ownership stake in the company.
Electronic Sensor officials said that reorganizing will give the company a fresh financial start to pursuing new ways to use its zNose machines, which they said can pick up on soft-tissue carcinomas that indicate lung cancer and breast cancer. The company filed for Chapter 11 protection on Oct. 23 before it could finish switching to focus on the health-care industry, saying it needed a $1.9 million bankruptcy loan to survive.
Formed in 1995, Electronic Sensor Technology hasn't made money yet on the sale of chemical-vapor detection instruments, which can pick up on compounds in concentrations so small that they are measured in parts per trillion.
The zNose machines have a range of applications: They can detect toxic contaminants in water and soil. They can also help companies screen incoming raw materials and check the quality of products in the food and pharmaceutical industry. Company officials are also trying to figure out how reliably zNose machines can detect a fungus that is infecting palm trees and threatening palm oil exports in countries such as Malaysia.
But zNose machine's sales have been flat during the last three years after falling 70% from a sales peak of $2.2 million in 2008, according to court papers.
The company has struggled to profit from annual maintenance fees or software licenses because its equipment "was designed to be durable and without a consumable component," Chief Executive William Wittmeyer said in earlier court papers.
The company has also tried to sell the technology to Homeland Security Department officials who could use it to detect trace amounts of explosives, nerve agents and chemical weapons, but government agencies have been slow to improve contraband-testing processes, he added.
"Congress annually delays the implementation of the screening requirements," said Mr. Wittmeyer, who is one of the company's three employees.
The company hasn't had luck in finding investors to extend additional money.
Under the company's reorganization plan, its current ownership, which is divided among about 45 investors, would be canceled. Company officials could get final approval from the court to enact the plan at an April 29 hearing.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)

Write to Katy Stech at [e-mail]

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(END) Dow Jones Newswires
March 05, 2015 12:34 ET (17:34 GMT)
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