Cash? No Worries Mate!Beech is right. Cash is not an issue. Berendt made it an objective in one of his recent news releases to protect our status as a going concern.
That means Berendt always wants to be able to show to our public audit firm that we have more than enough cash on hand to get us through the next twelve months. Otherwise the audit firm would insist that we put a going concern qualification in note 1 to the financial statements before they would agree to certify our financials at June 30th 2015. Such a going concern qualification would be problematic if we were to have a US Exchange listing.
I have seen talk in various posts about four sources of cash in addition to what we have in the bank now. I will add a fifth item to the list:
- Collect the $3m holdback on the sale of animal health. That gets released over time on a schedule specified in the share purchase agreement. Any problem not disclosed to the purchaser during the due diligence process and discovered since then would be deducted from the holdback.
- Collect the $3m working capital growth calculated from June 30th 2013 audited financials to April 15th 2014 sale-closing-date balance sheet, per the share purchase agreement. This should be a no-brainer to agree on and complete.
- Sell the VMC for more than the debt outstanding related to it. By June 2015, this outstanding debt will be about $7m, since there are ongoing regular debt payments required per the loan agreements.
- Partnership agreement for the US market, containing an up-front payment as well as later milestone payments.
- Exercise of warrants which expire on Sept 20, 2015. These were part of the units sold in Sept 2013. There are 16.9m warrants with an exercise price of 40 cents. There are also 2.1m warrants with an exercise price of 29 cents that were paid to the brokers for handling the offering in 2013. The warrants are not traded on any exchange. If the TST stock price exceeds 40 cents in mid-Sept, 2015, holders must write a cheque to the company to convert the warrants to shares which can be sold, otherwise the warrant expires worthless. The 40 cent warrants will generate $6.8m cash and the 29 cent warrants will generate $0.6m cash, all paid into our bank. Typically the share price of a biotech stock runs up in the months prior to the FDA decision as fast-money moves in. If we get fast track designation (which the FDA gave us before) then the FDA decision will be announced around Oct 1, 2015. Therefore, I expect the stock price in Sept 2015 will be well above 40 cents. Therefore I expect we will get this additional cash totalling $7.4m.