CG,
I would think if it was a financing, it would be no less
than 4.05, but, only a stone's throw above. I would just
tighten that to 4.50 to 4.10.
Financing sometime soon is necessary. The question is
before or after UK. If the players are willing to play
ball then everybody wins on a before (wink wink).
Options look good, institutional investment is set up,
shareholders get the kick up despite a 5%? dilution, and the
company is not strapped for cash at all.
If on another hand money is needed big time for an objective
such as WF10 or Canadian infrastructure - we could be seeing
a larger placement.
DMX needs to pick up some 10 million Cdn. If a 2.5 million
placement brings in about that, then they're burning the
candle at both ends again (as they're already done with
those short term notes) by financing OXO further than the
value the UK partner will add. That might not be much more
than $3 million Cdn and you can't do much with that.
Bottom line for me, a placement better mean that they add
one years cash flow to treasury that is protected for that
reason and is only used when revenue starts to balance
expense.
A larger placement will tell us that something else is in
the works. A 5%, then UK, then partner, and then around
$5 million to OXO is fine too. Any more cash than that for
OXO from a 5% and I will have the first serious error in
business plan execution marked. Because 6 months from now
we would be right back to another necessary placement and
counting on timing for US and the NAZ to come together just
doesn't cut it strategically given the experience (track)
record. There are too many possible cards here though to
just lay down one scenario. The negatives are all in
execution to stock price - the positives are all in
opportunities. The best example of this is JNJ cash down.
The UK will keep us qualified for the NAZ; but, counting
on any sort of approval timing is a proven fool's game.
I've been busy talking to every source I have, and its
unanimous (?) that DMX can easily do a placement.
Setting the table now for the next year has to be a balanced
approach between moving cash flow back to a position of
strength, and having enough to move ahead with Canada, any
new product testing, and any funding required for OXO.
The next while's trading will tell us a lot I think.
If it pounds back into the downtrend and pushes below 3.50,
we can forget placement and better get the UK finished to
keep moving.
If it mysteriously hovers in the 4.10 to 4.50 range with
some forays into the high 3's and 4's, I think we'll know
where that placement will be centred.
And if we break up on volume I would think we'll know the UK
is first, and DMX (Ms. K) is comfortable they can do a
successful placement at a higher value and is willing to
run cash down further before doing so.
Any other opinions would be very welcome.
Wolf |
