In a recent interview Chris Richardson said there is a "bunch of news" coming up, which the Linius Board clearly has good line-of-sight on. The specific reason I see this as being important for the Company is due to its potential impact on its capital structure and funding, with what appears to me to be almost a binary outcome for its share price (which I have an interest in).
With funding in place through to 2020 according to management, Linius has just under 91 million options that will vest in the next 12 months, or not, subject to the share price. I have listed these below and used 10 cents as the threshold for including options. Other options with a strike price greater than 10 cents have been excluded. These options are:-
| Linius options |
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| 11,500,000 | 0.045 | 30-Nov-19 | 517,500 | Including 10 million options owned by Chris Richardson |
| 3,375,000 | 0.070 | 31-Dec-19 | 236,250 |
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| 3,375,000 | 0.075 | 31-Dec-19 | 253,125 |
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| 3,375,000 | 0.080 | 31-Dec-19 | 270,000 |
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| 3,375,000 | 0.085 | 31-Dec-19 | 286,875 |
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| 2,200,000 | 0.060 | 30-Jun-20 | 132,000 |
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| 2,500,000 | 0.075 | 29-Nov-19 | 187,500 | Gerard Bongiorno |
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| 61,260,000 | 0.075 | 29-Nov-19 | 4,594,500 |
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| 90,960,000 |
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| 6,477,750 |
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The key is the 61.26 million options that expire on 29 November for a potential value of $4.6 million. But, all the other options have a combined value of $1.9 million. All except one set of options expire in 2019, and those that expire in 2020 have a relatively small value of $132,000.
The critical vesting price is 0.075 and the critical date is 29 November, or 4 months from now.
In short, I believe the news Linius anticipates needs to get its share price sustainably above 0.075 by the end of November, so that all these options vest. If it does, it will have funding in place, it would appear, at least into the second half of 2020 and possibly towards the end of 2020. Also, if Linius can do a deal or two with a counterpart or counterparts that has/have high global brand recognition, and even more importantly, a deal or deals that bring some up-front money through the front door, all should be very good indeed. Clearly, the cash balance of Linius and the sustainability of its funding arrangements are major impediments to its share price.
This in a nutshell is how I am viewing the next four months and what Linius must do. If these options lapse, I envisage that I will probably have a poorly performing investment. If the anticipated news is sufficient to push the share price above 0.075 and keep it there, all in the next four months, then I think its prospects are good. For Linius to do all this its share price has to increase by 78.6% from today's close.
I very much doubt the information presently in the market is sufficient to rerate the share price sufficiently. It will have to be good news indeed to get the price to rise by 78.6% and to stay above that level. On top of that it all has to be done in the next four months. (If it was done later and it was really great news, they could raise money in that context, but it becomes a lot harder in my view. Furthermore, statements by management would seem to suggest that the game being played is to do it sooner. I doubt they will be to roll over the 61.26 million options again at effectively zero cost).
I believe the three directors stumping up cash in the latest raise, and Chris saying there is a "bunch of news" on the way, fits with my theory about how Linius expects (or hopes?) things to play out in the remainder of this year. I certainly hope they are right and can pull it off. It would be interesting to know what the bunch of news is that they are expecting.
(20min delay)