Alloy Steel Inc. (fka AYSI)

[Swick984]

Not sure what to think to be honest... I see both positives and negatives. Obvious negative is the reduction in the net cash cushion by ~$10 million USD...

The purchase price is roughly 7x the trailing earnings stream associated with the royalty, which seems like a reasonable multiple for a lower volatility earnings stream, given that its tied to revenue vs earnings.

Certainly further improves the cash flow generating ability of the company going forward and is a much friendlier situation for a potential buyer to have the IP owned and in-house if the Kostecki's decide to sell.

Its hard to make evaluations in this environment. If this transaction happened 2 months ago, I would have thought it was a great idea. In today's environment, its harder to say.