- Shares in Holista CollTech (HCT) have nosedived today after ASIC punished the biotech company for continuous disclosure breaches
- The corporate watchdog said yesterday it was restricting the way Holista can raise funds for the next year following some dodgy reporting in 2020
- In March, Holista said it was testing its Path-Away compound against COVID-19, but failed to mention it was actually testing the product on feline coronavirus — a surrogate for COVID-19 but not COVID-19 itself
- Then in April, the company said it was expecting $3.8 million in NatShield hand sanitiser sales for the first six months of 2020
- Holisa revealed in July it missed this sales target by 87 per cent and was now expecting just $500,000 in sanitiser sales revenue
- Holista brushed off ASIC's announcement today and said it wasn't planning on raising any funds in the next 12 months, anyway
- Nevertheless, shares tumbled over 22 per cent to close worth just less than 9 cents each
Shares in Holista CollTech (HCT) have nosedived today after the Australian Securities and Investments Commission (ASIC) punished the company for continuous disclosure breaches.
After market close yesterday afternoon, the corporate watchdog announced it was restricting the way Holista can raise funds for the next year following some major misreporting from the company earlier this year.
At the forefront of the disclosure breaches are announcements from March and April 2020 regarding the company's Path-Away sanitiser, its effect against COVID-19, and predicted hand sanitiser sales.
Holista brushed the news off, saying it had no intention to raise capital over the next 12 months anyway.
A rollercoaster year
Long-term HCT shareholders have been taken on a wild ride this year, with several share-price spikes over 2020 quickly followed by sudden crashes.
The company was thrust into the spotlight in late-January when it revealed an overwhelming surge in orders for its NatShield hand sanitiser, which uses Holista CollTech's Path-Away antiviral compound.
However, in the following months, HCT had to make several market retractions after a string of careless reports.
Among these was the first concern in ASIC's report, where Holista CollTech told investors on March 16 it would begin testing its Path-Away product's efficacy against "COVID-19, the coronavirus which has infected over 146,000 and killed at least 5,400 people globally as at 13 March 2020".
Holista failed to mention, however, it was testing the product against feline coronavirus — a surrogate of COVID-19, and not COVID-19 itself.
Then, on April 20, HCT told shareholders it was expecting a whopping $3.8 million in total sales revenue for orders of around 425,000 bottles of NatShield hand sanitiser.
On July 9, however, the company said it had missed this sales target by 87 per cent and revised its expected earnings from sanitiser sales to just $500,000. Shares tumbled over 34 per cent on the news. ASIC determined that this news should have been announced to the market by June 29, 2020.
Cash raising restrictions
In light of all this, ASIC has restricted HCT's eligibility to issue a "reduced-content prospectus" when raising cash.
Normally, a company can put new shares on offer using a reduced content prospectus which only contains information relating to that particular offer. In some cases, the company does not have to disclose any information to raise new funds.
These privileges have now been revoked for Holista CollTech.
"ASIC found that Holista CollTech’s continuous disclosure breaches occurred at a time when the market was affected by the ongoing uncertainty of the global pandemic, and that the impact of those breaches was compounded due to several other statements being made during the same period that was later retracted by the company," the watchdog said.
ASIC added that its investigation into Holista is still ongoing.
Today's news comes just two days after Holista shares surged on the news that its Path-Away compound had officially been proven effective in killing 99.9 per cent of SARS-CoV-2 — the actual virus that causes COVID-19.
The company acknowledged ASIC's announcement and said it is considering whether or not to appeal the decision through the Administrative Appeals Tribunal.
Nevertheless, Holista seemed relatively unfazed by the news.
"Holista currently has no intention to raise capital over the next twelve months as it considers it has sufficient resources to execute its current growth strategy," the company said.
Investors, however, were certainly less nonchalant about the ordeal.
Shares in HCT once again tumbled 22.61 per cent today to just under 9 cents each at 3:09 pm AEDT.