Well nice to see a couple of issues sorted and wrapped up before the end of the year, being the convertible note and the cash situation - although I don't think the cash situation is fully resolved, its going to depend on what 2023 brings us on the economic front and it may not be good which is why they couldn't depend on the financing from Alterna and needed the additional guaranteed funds from Colinton's.
There are positives and negatives to this announcement - but it had to happen, this issue had to be resolved, as I noted in an earlier post, to restore some investor confidence. Full marks for getting it done quickly.
It also means that Colinton still sees a future in Alexium, and by the end of 2025, the company may be in a far better position to pay the funds back, or that a 3c conversion per share will be a good deal for Colinton's. I suspect however that if the funds are paid back it will be via a share issue, but that won't be until sometime in 2025 and by then if all goes well, you may have decent sales coming in, and some agreements on the military side of things and the issue price will be at a higher price than where they are now and attract new investors.
On the other side of the coin, it means Colintons could end up with a sizeable chunk of the company one day, and that the
available debt only continues to increase ($7m + $3m/5m) ... so that Alexium will have potential debt
available of more than their current market cap, and that the debt will only build if their capitalize their interest (which they probably still should to preserve cash).
One other thing to note is Alexiums shareholders funds - I'm not a CPA Accountant, but existing funds are only $1.576m, if that sinks below zero I think they will need to raise further funds to return it to a positive balance - did this not happen before or am I thinking of another company?
Losses last year where $3m
So potentially they may have to raise funds anyway next year to resolve this shareholder funds issue
I'm not sure but even though they are capitalizing interest they still means its an expense on the P/L too - so no saving that way, however I'm not also sure what the changed terms (moving from 6c to 3c conversion) for the convertible note means on the P/L (re Gain/Loss on embedded derivative) and wherever this would mean a gain or a loss and potentially a big one ---- Any finance specialists out there?????
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