Ok. Call me stupid. What am I missing here.
CEO purchases shares "off market" (under market) then announces how chuffed he is that they have secured A$4 million of non-dilutionary term funding. That funding is actually secured against contractual inflows of U$3 million (which equates to around A$4.285 million, per their announcement of 29th April (in the update attached to the quarterly cashflows). So, in effect, all they are actually doing is "discounting" their forward receivables by 1 year. Nothing special to be honest, although they fail to disclose the "commercial" aspects of the transaction (such as the interest rate), which is likely to be roughly equivalent to (A$4,285,000-A$4,000,000) / A$4,000,000 = 7.125%, or thereabouts.
But here's what I don't get. The funding is obtained from a company called "Paddington Street Finance". That company is located at 2 Paddington Street, Paddington - which, by chance of chances, is also the same address as Regeneus Ltd. Simply put, someone from RGS has walked upstairs and asked the guy with the striped tie for "4 bucks to ties us over for the coming year". Nothing sinister, I guess, but hardly what I would call ground breaking.
The problem is that the company is actually burning through about A$2,993,000 per year in cash (ref: quarterly), with only around half of that going on R&D and the balance on staff and admin costs. Actual receipts from customers is only A$20,000 for the previous 12 months. That is, almost nothing. So bringing forward (discounting) future receipts is merely a survival tactic, not a structural or strategic one.
So. What am I missing?
And the share price rallies.....
Stumped.
Kit.
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