I'm quite happy with this deal. Compared to the scenarios where a PIPE would be priced at 7 cents or something like that per share (and thus $1.5 million would have required issuing 21 million shares), this is so much more benign.
Conversion cannot occur for three months. So what might be expected at that point onward? Since Cortex was priced at 10 cents per share at a time that all known cash on hand estimates had them as insolvent and at risk of closing the doors, having $1.5 million on hand should in itself benefit the share price--particularly since, in contrast to the PIPE, Cortex now has the opportunity to attenuate the amount of eventual dilution.
If they do sign that elusive partnership, the share price effect will of course depend on the identity of the partner and the terms. But with some cash and a partner (SA is at best a wild card for the time being) Cortex's valuation should still be substantially better than it has been when it was in fiscal extremis.
On the back of my envelope, assuming conversion and exercising in mid April, this is what I get for shares issued and cash in, and the cost per share (plus whatever interest has to be paid at 6%):
30 cents per share:
Total shares out 8.4 million
Cash in: $2.35 million
Price per share paid by Samyang: 28 cents
50 cents per share:
Cash in: $2.16 million
Total shares out 3.9 million
Price per share paid by Samyang: 54 cents
Obviously, the projections change based on whatever the share price is in April--and Cortex will have to execute in order to make any upside scenarios eventuate. If there is no partnership, it becomes much more expensive, but still cheaper than any PIPE they could have had. Samyang gets the company if Cortex can't pay them the $1.5 million plus interest next January. If they can't do that by then, it won't matter.
There are others on this Board who are better with these kinds of calculations than am I, if there's an error, let me know. But based on the back of my envelope, Cortex did a much better job with raising money than any of us had anticipated.
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