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By Tom Winnifrith, The Sheriff of AIM | Wednesday 22 February 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Serial misleader and worthless bag of AIM listed shite Advanced Oncotherapy (AVO) today announced that it has secured death spiral financing for £13-26 million from the lowest of the low DS funders, Bracknor. That is bad enough and will see the shares forward sold to buggery, as I will outline in a separate piece. What is worse is that it exposes Advanced for again misleading investors.
On 30 September it raised £10 million and announced that a £24 million loan from Metric to build out its Harley Street site would be drawn down if it raised at least £15 million of "non dilutive" funding and it said that it would do so by the New Year. Today the deal was announced and since Bracknor can- and will convert all its loan notes into shares which it can dump with forward selling so guaranteeing a massive profit this is surely dilutive?
Of course since the company's entire $150 million order book has disappeared since September 30th as China's Sinophi walked away on grounds of non delivery, Advanced could say that circumstances had changed and the only funding it could get was mega dilutive death spiral funding. In stead it says that a non dilutive option remains on the table:
Further to the update from Advanced Oncotherapy on 23 January 2017 on a non-dilutive financing plan, the Company can confirm that this option remains in consideration, as does the Metric Capital financing. The Company will update shareholders on further developments at the appropriate time.
Hang on Henry! Does that mean that the Metric capital £24 million loan still cannot be drawn down? In which case Advanced will not have enough cash to build out Harley Street and pay its bloated PLC costs. If the non dilitive option remains "under consideration" why go for the most dilutive financing possible?
The reality is that Advanced is within days of having negative net current assets and thus trading whilst insolvent. It has thus out of sheer desperation gone for a refinancing which is bound to be mega dilutive and will crash the share price.
It is pretending that it is still considering better options but the reality is that it can consider what it wants no one will lend it cash in a non dilutive manner while it has no orders at all and has been shown to be a serial misleader of both investors and potential customers for a product that has still not yet been shown to work. On that basis Metric will not take an equity risk for advancing debt so that facility is also on oce.
This is another disastrous admission by Advanced. Another disastrous failure. It is now living from hand to mouth on drip drip death spiral funding. Given its numerous other problems ( lack of product, history of telling porkies etc, etc) that makes the shares a slam dunk sell. The shares have slumped to 54p-60p in early trade. By the time Bracknor starts getting underway with its death spiral that will seem like the good old days.
Sell. Target price unchanged at 0p.
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