I was asked by a poster today,as a response to a previous post ,my thoughts on the press release about PyroGenesis’s transaction with HPQ Silicon.
Longer post,but since you asked…
The use of a debt-to-equity conversion to settle a liability does have some risks and a few s questions to me:
1. Debt-to-Equity Conversion
The decision to settle a $4.94M liability owed to PyroGenesis by issuing HPQ shares and warrants indicates to me /IMO HPQ’s inability to pay in cash. This approach suggests financial constraints on HPQ’s side and could have implications for PyroGenesis:
Risks:
• Value Risk: PyroGenesis assumes the risk that HPQ shares may depreciate. If HPQ’s stock price falls below $0.275 or fails to perform, the settlement value will shrink, eroding PyroGenesis’s ability to recover the debt meaningfully.
• Illiquidity: The issued shares are subject to a mandatory hold period of four months and one day, preventing PyroGenesis from liquidating them immediately.As noted there is a need for cash as balances have dwindled to precarious levels
• Dependence on Market Performance: The value of the warrants (exercisable at $0.285) depends on HPQ’s market performance, which could be uncertain given its lack of operational cash flow or revenue.
2. PyroGenesis’s Relationship with HPQ
The history of transactions and collaborations between PYR and HPQ raises,again IMO, red flags about governance, financial transparency, and potential conflicts of interest.
This was highlighted in the mariner, short report that had been previously posted by another poster previously, but basically, as I understand it and do read the report to clarify, there are what appear to be Circular Transactions like the $2.4M PYR invested in HPQ being booked as $2.4M in revenue through IP sales, suggest a circular funding structure. This could misrepresent the nature of the revenue and inflate PYR’s financial results and raises questions in this whole deal -TO ME.
So basically not sure on how to interpret this deal, but to me, it’s not a positive given the liquidity issues, declining revenue, and negative working capital not to mention question about ability to scale revenue
Here the link for you to dyodd and research this yourself
https://seekingalpha.com/article/4421674-pyrogenesis-business-governance-and-internal-controls-present-significant-risk-price-target
All imo
Fwiw(and some here will say it’s not much)
Not to invest in-just for education(again some say I have a ways to go in my journey) and fun(I am anyone else)
Always check with a pro before investing