In the same announcement, CloudTag said it intended to raise £4m by issuing convertible notes to "an overseas Institutional Investor." In contrast to Sirius's conventional convertibles issue - in which conversion is based on a fixed price - CloudTag's is based on a fluctuating market price. On 7 November, CloudTag announced that "no firm purchase orders have as yet been received from Second Chance or otherwise" and that the minimum $5.2m of orders by year-end "is now unlikely to be achieved". In early June, CloudTag said Second Chance "is now concluding initial product delivery requirements" with 11 retailers - unnamed but in most cases readily identifiable: for example, "the largest employee-owned UK department store" (John Lewis) and "Europe's largest retailer for consumer electronics, with over 700 Stores in 14 countries" (Media Markt). Wearable technology firm CloudTag (LSE: CTAG) started 2016 with a bang, announcing the launch of its first product (a fitness tracker) and a commercial contract with distributor Second Chance that would "guarantee" minimum sales of $5.2m by year-end. As such, I continue to believe the stock is an attractive buy. However, risk has reduced through securing the Stage 1 funding, Stage 2 is expected to be via senior debt and a valuation of 0.5 times projected annual revenues offers some protection against any unexpected further equity dilution before first production in 2021. So, the funding has been somewhat more generous to the new investors than I envisaged. Taking all this into account, the prospective diluted market cap is about £1.2bn at a current share price of 21p.
![cloudtag share price cloudtag share price](https://thumbs.dreamstime.com/z/ecology-tags-cloud-17750676.jpg)
But there's also a future $50m share issue at 20p (part of a $300m royalty financing deal with Australian mining magnate Gina Rinehart) and a $400m convertible bond issue with a conversion price of 25p.
![cloudtag share price cloudtag share price](https://www.learnstockmarket.in/wp-content/uploads/2020/07/MRF-Share-Price-Chart.png)
The equity component has turned out to be £370m via a placing and open offer at 20p.
![cloudtag share price cloudtag share price](https://www.livemint.com/rf/Image-621x414/LiveMint/Period2/2018/01/25/Photos/Processed/g_m2m_TCS_web-U205730966665HG--621x414@LiveMint.jpg)
I rated the stock a speculative buy based on the £1bn valuation and projected annual revenues of $3bn (£2.4bn). Sirius is set to begin construction of its North Yorkshire potash mine having announced comprehensive funding for Stage 1 of its two-stage funding requirement.īack in the summer, at a share price of 26.5p and market cap of £611m, I reckoned the equity component of the funding would be around £400m, giving a prospective market cap of just over £1bn. But with their shares currently trading well below previous highs, is now the time for canny investors to buy a slice of these two businesses? Popular AIM stocks Sirius Minerals (LSE: SXX) and CloudTag (LSE: CTAG) have both announced financing deals this month.