Insite Vision Inc. (OTC:INSV) announced an agreement for approximately $22.2 million. The transaction is scheduled to occur on or about July 18, and INSV will issue approximately 37 million shares of its common stock and warrants for the purchase of 14.8 million more.
The press release was issued early yesterday morning and was the most probable reason for the 5.97% drop. INSV closed at $0.63 with a volume of 191 thousand shares.
INSV has been losing value for nearly three months now, and an equity financing is met with a negative market reaction more often than not. The warrants to be issued will be exercisable for five years at $0.75 per share.[BANNER]
The current lower price would probably discourage the investors, including those from the management and Board of Directors of INSV, to exercise the warrants.
Even without the financing, the balance sheet of INSV didn’t look too bad. Apparently, however, $11 million working capital wasn’t enough. INSV reported $2.4 million net loss for the first quarter of 2011, but on the bright side, the company recorded a $124 thousand income from operations.
All in all, it is too early to say where INSV is headed in the long run, but for now the company may need some positive developments, that would at least hint to when it may turn profitable.
