RE: Circular12 Jul 2019 00:14
The Company estimates that the annual operating cash expenses of the Group for the financial year ended 31 December 2019 will be approximately US$8.77 million (or approximately HK$68.41 million). As shown in the Company’s audited final results announcement for the year ended 31 December 2018, the Group had cash and bank balances and listed securities of approximately US$6.52 million (or approximately HK$50.86 million) and liabilities of US$4.49 million (or approximately HK$35.02 million), excluding non-cash deferred tax liabilities. It is also noted that, from the announcement issued on 18 March 2019, that the Group had agreed a settlement of its Australian taxation litigation of A$9.5 million (or approximately US$6.73 million or HK$52.49 million), which will become due and payable (as extended, as announced on 27 May 2019) by 1 August 2019.
In view of the Company’s net tangible liabilities of US$10.5 million as at 31 December 2018, its loss-making position of US$31 million for the financial year ended 31 December 2018 and its limited cash resources, the Group has an imminent need to arrange a sizeable fund-raising exercise in order to strengthen the financial position of the Group. It is the Company’s intention to utilise the net proceeds of the New Funds under the Subscription of approximately US$11.90 million (or approximately HK$92.82 million), together with existing resources available to the Company, towards: (a) facilitating funding of the settlement of Australian taxation litigation in the amount of A$9.5 million (or approximately US$6.73 million or HK$52.49 million) on or before 1 August 2019; (b) completing the ongoing clinical study of Fortacin?? in the United States for the purposes of submitting an application for obtaining a New Drug Approval with the Food and Drug Administration of the United States, which is estimated to cost approximately US$3.5 million (or approximately HK$27.3 million) over the course of the next 12 months; and in respect of utilising the balance of approximately US$1.67 million (or approximately HK$13.03 million); (c) for (i) pursuing already identified and significantly diligenced acquisition and investment opportunities, including Yooya (the possible acquisition of which was announced on 29 May 2019); (ii) meeting its general corporate purposes; and (iii) working capital, in each case for the remainder of 2019. In respect of the items listed under (c) above, these items (which include anticipated acquisition and investment costs) are expected to amount to approximately US$7.4 million (or approximately HK$57.72 million) over the remainder of 2019 and will be funded through the net proceeds of the New Funds under the Subscription in respect of US1.67 million (or approximately HK$13.03 million), together with existing resources available to the Group in respect of the balance. The Directors consider that such application of funds will be in the interests of the Company and its Shareholders as a whole.
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