Indiva Limited (TSXV: NDVA) announced after the bell today that the firm had exchanged shares for debt with certain consultants. While minute in nature, the transaction highlights the financial conundrum the firm has found itself within.
In total, two different consultants of Indiva are to be issued shares in share for debt transactions. The first is to cover $84,750 in debt by issuing 177,041 shares at a price of $0.4787 per share. The second is an agreement for shares to be issued for consulting work that is occurring on an ongoing basis. All shares will also be subject to a mandatory four month hold period.
The amount of dilution relative to the current capital structure of the firm is rather small, however the transaction highlights the current cash crunch that the firm is experiencing. The Deep Dive identified such issues at the time of the firms last earnings, wherein we examined the liquidity criss that Indiva is about to face.
The largest issue currently faced by Indiva, by far, is its cash position. Over the three month period, the firm saw its cash deplete by $4.28 million – a figure larger than what is currently in the bank. While some of it was attributable to investing activities, the firm saw negative cash flow of $1.78 million during the three month period. When this negative cash flow is combined with current payables, very little is left on the table.
Time is running out for the firm to raise capital, as its cash position is likely on fumes at this point in time. Compounded by convertible debentures to the tune of $5.15 million that are due in December, the issuer has little time remaining to attempt to come up with the cash to pay off its debts. With a conversion feature at a price of $0.75 per share, the remaining debt will likely need to be paid off.
Indiva Limited closed today’s session at a price of $0.28 per share.
Information for this briefing was found via Sedar and Indiva Limited. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.