Unmanned aerial vehicle firm Strat Aero PLC (LON:AERO) plummeted almost 12% midweek as it repeated it has filed a legal action against former chairman and chief executive of its subsidiary Aero Kinetics.
Responding to press speculation in an update, the firm said the case alleges fraud and breach of contract arising from misrepresentations made by Mr W Hulsey Smith.
These were material in its decision to acquire Aero Kinetics, it claims.
"The board strongly believes it has a robust legal position and will update the market as legal action progresses and as its plans for the Aero Kinetics business evolve in accordance with its regulatory obligations," it told the brief statement.
It added there were a number of potential resolutions in relation to the action including the cancellation of the purchase of Aero Kinetics as well as actual and consequential damages.
Strat Aero added it had enough cash for the near term and expects to raise further funds in the current quarter to provide working capital.
The board is evaluating potential funding options, which may include the issue of equity, and will provide further updates in due course it added.
Shares fell 11.76% to 1.875p.