There is a lot of opinion about crede and the financing offer. It strikes me that whilst we can all have opinions on whether the deal is good or bad we should not forget the alternative. That is to run out of money and cease trading. APDN as seen in a accounts has lost $167 million thus far. As investors we all know about this figure and given the bio tech market all appreciate the costs involved to get this far. I guess if we didn't agree with this viewpoint we should not invest.
The company currently clearly spends more than it receives and has to obtain outside finance. I think reading the 8k carefully in the circumstances I don't think Dr Hayward did a bad job. Yes Crede clearly are in it for themselves but the Dr has put in some levers of protection.
Reading the 8k it is clear that if APDN require further outside finance within the next 180 days he has to involve Crede unless certain special circumstances come into play. This does not sound likely to me as our bargaining position will be even weaker. That said the Dr is clearly confident that the PPS will remain higher (than .186) and indeed if it remains 25% above the .226 price he can force Crede to buy more. I have to put my trust in Dr Hayward as he knows his business better than I do. He has even put in a forced buy out of warrants b and c which could in certain circumstances protect the share structure.
The truth of this business is that it has to be sales led. Revenues increase cash flow improves and the need for external funding negates. I agree with bigfish and AG that this is simply a necessary evil of a company that hasn't yet made a recorded profit. They are close and in fiscal 2013 will obviously make a good profit when you appreciate the contracts awarded and the turnover expected for Q4 and the new fiscal year.
Let us not forget this investment was not only to fund cashflow but more specifically to finance numerous contracts which create more revenue. Speculate to accumulate kind of philosophy if you will.
Personally I would be much happier if APDN were financially self sufficient but to me I believe that's where we are heading anyway. Reading the 8k to me suggests this is the last outside investment they might need and if that is the case then hopefully the PPS will start to settle down and will hopefully be less influenced by the likes of Crede if they are selling. And again we don't know if they are. By selling blocks in volume they push the PPS down. They know more about the financials and it may be they are looking for even better returns than they could have enjoyed on Friday, we just don't know. One thing we do know is if the PPS drops below the trigger number set they cannot be forced to invest further funds but that may not be an issue anyway as when the trigger is activated they make a potential 25% plus profit anyway.
As for this week and hopefully the financials I hope the board here share my confidence that the numbers have to be a marked improvement on Q 3 otherwise Crede would not have invested and the good Dr would not have been entitled to his additional benefits.
We now have many more followers who now own this stock. Volume has been fantastic and I hope that the trust they have shown will be rewarded if the markets reacts well to a minimum of 100% turnover increase from Q3 to Q 4.
Will be interesting next week for sure good luck to all and as usual thanks for the posts. The information gleaned from this board gives me great comfort that better days are around the corner.
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