Yes Mark, you read between the lines correctly, that there is a big risk of potential dilution in 2014, especially 1H. Knowing APRI's past history and what's required to execute the plan, especially in 1H:
* vitaros mfg ramp up to support multiple EU launches,
* femprox development,
* staff increases to support vitaros partners and launches, and femprox development,
* current liabilities and pending lawsuit outcomes,
* cash cushion to execute from strength and with operational flexibility.
We can't take them for their stated word, since this same management (BOD + Martin + Cox) had stated sufficient cash for 1.5 years out in early 2012 and 2013, and yet they did secondary offerings in both years, which were very expensive for us investors - approx. 25% shareholder dilution in both cases. (Note: some here don't get the relationship between pps, amount of outstanding shares and intrinsic value, so they view issuing shares or buying companies with shares, as no harm no foul!)
A lot of their cash flow is going to start coming in 2H from sales milestones and royalties, and so with upcoming launches in 1H, the vulture investment banks will be making sales pitches to the BOD to take advantage of pps increases from launch announcements and get the secondary offering completed. Therefore, I have been voicing my views to APRI and here that they should prioritize and only get deals done that provide HIGHER upfront cash payments (others can come later.) Higher cash now to get to a $35M+ balance by end of Q1, will likely avoid the potential secondary dilution. And also in the event that secondary is required, the management needs to go all out NOW in its execution, prior to the launches, so that the pps is well above $5 to minimize the amount of dilution impact for investors and raise much higher cash amount. Remember last dilution earlier this year, where they dropped pps approx. 35%-40% to get the secondary completed at around $2.85.
So monitor the cash and management execution closely as we move into Q1.
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