RE:RE:Significant delay in new plant...They went from good and growing profitability to marginal profitability this past quarter. We've went from expecting the new plant to be completed last June to finding out they need significant money to finance phase I before it is even completed. They are also evaluating financing options for the following:
"Moving forward, while we have temporarily slowed down the pace of our research and development programs with dry formulations of our value drivers, avenanthramides and beta glucan, due to the site transition project, we expect to pursue their development as active ingredients to serve large, wellestablished and growing markets like functional foods, drinks, and nutraceuticals. We are in the process of evaluating investment and financing options so we can move forward as rapidly as possible to assess their safety and efficacy through pre-clinical and clinical research programs to be conducted over a 24-month period."
"The Company is currently in progress to complete its new manufacturing facility which involves substantial capital expenditures for engineering and design, permitting, construction of leaseholds, equipment, as well as other related costs required to meet the strict requirements for major customers. The scope of the original planned manufacturing facility has been redefined throughout fiscal 2014 to take advantage of new manufacturing process design opportunities that are expected to provide value to the Company and its shareholders in future years. As a result, the facility has not yet been completed and the overall planned investment for the first phase of the facility has been expanded and is currently estimated at $12,200,000 of which the Company has completed and recorded approximately $6,500,000 at December 31, 2014. As a result of the increased scope of the project, the Company had a working capital deficiency of approximately $1,317,000 at December 31, 2014 and will require additional financing to complete the first phase of the manufacturing facility. Subsequent to the year end, the Company issued an aggregate of $960,000 of unsecured 8% convertible debentures that mature on December 31, 2016 and entered into a new loan agreement which can be drawn to a maximum of $900,000, bears interest at 3.84%, and will mature on July 1, 2020. The proceeds from these new financings will be used to address the working capital deficiency that exists at December 31, 2014 and towards completion of the Company’s new manufacturing facility. The Company estimates that the cash flows generated by its operating activities as well as cash available through other sources will be sufficient to finance its operating expenses, ongoing capital investment, and current debt repayment, but will still require additional funds in the amount of $3,700,000 to complete the new manufacturing facility. The Company relies upon revenues generated from the sale of active ingredients, the proceeds of public and private offerings of equity securities and debentures, income offerings, and government funding programs to support the Company’s operations. Total common shares issued and outstanding as at April 21, 2015 were 61,632,281 (April 14, 2014 - 60,403,948). In addition, 3,881,667 stock options as at April 21, 2015 (April 14, 2014 – 3,950,000) were outstanding that are potentially convertible into an equal number of common shares at various prices. To meet future requirements, Ceapro intends to raise additional cash through some or all of the following methods: public or private equity or debt financing, income offerings, capital leases, collaborative and licensing agreements, and government funding programs. However, there is no assurance of obtaining additional financing through these arrangements on acceptable terms, if at all. The ability to generate new cash will depend on external factors, many beyond the Company’s control, as outlined in the Risks and Uncertainties section. Should sufficient capital not be raised, Ceapro may have to delay, reduce the scope of, eliminate, or divest one or more of its discove