As I see it there is a lot of risk to the investors as it is an unsecured loan. If Adveritas goes broke the shares are worth nothing and they are left empty handed. I dont have the clearest understanding of this debt product but I'd suggest this is a high risk loan and therefore not only is the 8% interest fair, it aligns with shareholder interest considering the timing and Adveritas' capital needs, lack of capital and cashflow negative situation. The loan requires confidence from the loan provider in Adveritas' long term success in order to either repay the loan in cash or shares so it would be seen as a significant vote of confidence in the business by sophisticated investors as well as a much needed boost to the cash balance.
I found it interesting that they stated they now have $8m in cash. Last quarter they had op loss of $2m with $6.5m left. $3m raise indicates they have only lost $1.5m this quarter despite having significantly ramped marketing back up after hiring a chief marketing officer so we could expect cash receipts to be up more than $500k this quarter, close to doubling quarter on quarter to $1150k+. Just reading between the lines here but seems to indicate a very positive trend.
I'm no accountant/lawyer/analyst/etc correct me if I'm wrong please and DYOR as always
AV1 Price at posting:
11.5¢ Sentiment: Hold Disclosure: Held
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