RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:TSO3 Inc has a 181 per cent upside, says Echelon WealthDrwrong, I agree with you that the sale of 200 units over the coming year would resolve all issues. Success feeds success. There would be no funding issues. But if such neat scenario does not materialize and tardiness creates funds requirements, TOS is likely to be in a bind and at the mercy of Courage.
Courage's financing is made up of a $15 million first lien non-callable convertible note and a $5 million (callable after 2 years) first lien term loan. Interesting covenants of the $5 million term loan include:
1. Minimum Liquidity. [The Borrower shall] Maintain at all times a minimum Liquidity of US$5,000,000
2. [The Borrower shall not] create, incur, assume or suffer to exist any Debt except for unsecured Debt, Debt subordinated to this Agreement and other Debt secured by Permitted Liens, provided that the total consolidated amount of the Debt of the Borrower described in this subsection (i) shall not exceed at any time an amount equivalent to 3.0 times the Trailing Consumables Revenues, and (ii) the indebtedness under this Agreement and the Note [the Note is defined as the Convertible Note];
Therefore, any meaningful debt would be junior to the term loan and the convertible note. Hard to see how debt could be raised without repaying the term loan and the convertible note is either repaid or converted. Concerning conversion, under the Convertible Note Agreement:
" The Note shall be converted in Conversion Shares at the Conversion Price in accordance with the following conversion schedule provided that at such time, the Milestones are achieved: (42) (a) 33% of the Principal shall be converted into Conversion Shares at the Conversion Price when the Current VWAP (in US dollars as reported on Bloomberg) is at 200% or above of the Conversion Price; (b) an additional 33% of the Principal shall be converted into Conversion Shares at the Conversion Price when the Current VWAP (in US dollars as reported on Bloomberg) is at 250% or above of the Conversion Price; and (c) the balance of the Principal shall be converted into Conversion Shares at the Conversion Price when the Current VWAP (in US dollars as reported on Bloomberg) is at 300% or above of the Conversion Price." [“Milestones” means (i) the completed installation of 400 Sterilizers in hospitals and medical clinics, for greater certainty, including the number of Sterilizers installed as at the date hereof and (ii) at least US$10,000,000 in Trailing Consumable Revenues. ]
If these conditions were met, hard to see that TSO3 would still need to raise funds. If the conditions were not met and additional funding is required, then .... beg Courage for relief!
To sum up, I would love to see 200 units sold in 2019 but I fear the consequences of tardiness.