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InVitro International Plans Merger With Foreign Firm


InVitro International, a floundering technical company, said it plans to merge with a foreign company that wants access to the U.S. stock market. Terms of the deal have yet to be decided, however.

Irvine-based InVitro, a marketer of tests for hazardous substances and child-safety products, signed a letter of intent to merge with privately held Shenyang International Inc., a holding company whose primary operations are in northeastern China. InVitro trades on the Nasdaq Small Cap market.

"The stock market listing is one of our several assets," InVitro President Richard Ulmer said.

Shenyang, which is based in the British Virgin Islands, has annual sales of about $15 million and is profitable, according to InVitro. The company, which employs about 300 workers, operates a hotel, distributes medical scanning devices and other medical products, and makes and sells computer systems.

Shenyang found InVitro as a merger candidate through a database that included "listed [on a stock exchange] companies whose cash supply has been dwindling," Ulmer said. He declined to give information on how Shenyang executives could be contacted.

Though terms of the deal have yet to be negotiated, InVitro said its current shareholders would retain a 20% stake in the combined company's stock. Any plans must get approval from securities regulators and shareholders.

InVitro was founded in 1985 but has struggled to hit its stride. It went public in 1991 and had accumulated a deficit of $23 million by the end of last September. During the year ended last September, its revenue slipped 6% to $1.1 million, while its losses narrowed to $1.9 million, from a loss of $2.8 million.

The company has placed high hopes on a product being marketed for identifying abducted children.

The product, called Guardian DNA, relies on genetic material swabbed from inside a newborn's cheek for positively identifying a child. The product is packaged with an 18-minute video of tips on child safety among other items. It is being sold to new mothers in hospital maternity wards for $49.95. Ulmer said the company has sold "tens of thousands" since it began selling the product last summer, but he declined to disclose the revenue generated thus far.

Experts in child abductions and obstetrics have said Guardian DNA appears to have merit but the circumstances in many cases of abduction mean its usefulness might be limited.

The company's stock closed at 25 cents a share Monday, up 6.3 cents for the day.

InVitro, recently concerned that it might fail to meet proposed Nasdaq listing requirements, proposed a 1-for-10 reverse stock split, which shareholders have approved. But the company hasn't proceeded with the split, Ulmer said.

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