icon

As noted earlier this week, GelTech Solutions (OTCBB: GLTC) started making some noise late last year when the company's novel, water-enhancing firefighting product, FireIce, received key regulatory approvals to potentially be used in large-scale firefighting efforts globally. 

The company also launched a new website in preparation for a year that could turn into one of significant growth as brand awareness and increased distribution channels for FireIce turns into sales revenue.

Also in preparation for the predicted spurt in sales and distribution growth, GelTech announced a continued agreement with Lincoln Park Capital Fund LLC, a Chicago-based institutional investor, that would potentially supply GLTC with five million dollars of funding, if needed. 

According to the terms of the agreement, "Lincoln invested $100,000 in GelTech as an initial purchase under the agreement at $0.60 per share. GelTech also has the right under the agreement at its discretion to sell to Lincoln up to an additional $4.9 million of its common stock over a 30-month period. GelTech will have the right, but no obligation, to sell stock to Lincoln in amounts up to $500,000 depending on certain conditions as set forth in the purchase agreement."

In other terms of the deal, any future sale cannot take place for less than thirty five cents per share and GLTC will control the timing and amount of any sales of shares to Lincoln. The agreement can also be terminated by GelTech at any time, without any cost or penalty.

The deal may have been perceived as a positive one that offers the company increased flexibility for the future, and justifiably so in my opinion, given that the announcement had no effect on the share price, which increased by five cents on the news with volume that was well above the daily norm.

With a year of projected growth ahead, having this five million in the back pocket enables GelTech to keep the supply lines rolling, should the expected demand for FireIce materialize.  Not a bad deal for a small company that might be on the verge of revolutionizing firefighting as we know it.

Disclosure:  No Position.

icon

Add a Comment