Bod Science Limited's Quarterly Activities Report - Q4 FY2024
BOD (BOD) Share Update July 2024 Monday 22nd
Bod Science Limited Enters Deed of Company Arrangement with Biortica
Bod Science Limited (ASX: BOD), a cannabis-focused drug development and product innovation company, has entered a Deed of Company Arrangement (DOCA) with Biortica Agrimed Limited. This significant development marks a crucial step in the company's efforts to navigate through financial challenges and restructure its operations.
Instant Summary:
- Bod Science Limited enters DOCA with Biortica Agrimed Limited.
- DOCA executed on 24 April 2024.
- Net cash from operating activities of $269k.
- Quarterly receipts from customers were $54k.
- Receipt of FY23 overseas R&D tax incentive of $364k.
Operational Overview
The second meeting of creditors under the Voluntary Administration process was held on 8 April 2024, where creditors of Bod resolved to approve the DOCA proposal from Biortica Agrimed Limited. The DOCA was subsequently executed on 24 April 2024, appointing Andrew Barnden as the Deed Administrator. Bod will remain in suspension throughout the deed administration process.
As part of the DOCA, Biortica has agreed to contribute $380,000 to a deed fund. Additionally, Bod will acquire the issued capital in Biortica in consideration for the issue of shares in Bod to Biortica's shareholders and noteholders, effectively a backdoor listing. This process is subject to several conditions, including a share purchase agreement with Biortica's ordinary shareholders, ASX confirmation of Biortica's suitability for listing, and Bod meeting re-compliance requirements with the ASX Listing Rules.
Financial Overview
For the quarter ended 30 June 2024, Bod reported net cash from operating activities of $269k, a significant increase from $3k in Q3 FY2024. This improvement was primarily due to the receipt of the FY23 overseas R&D tax incentive of $364k. However, quarterly receipts from customers decreased to $54k, down 59% from the previous quarter and 87% from the same period last year. This decline was attributed to the company's exit from its legacy Bioeffect business.
Other receipts from operating activities amounted to $506k, representing funding from Biortica to cover Bod's operating expenses. Payments to related parties totaled $35k, representing director remuneration.
Outlook
The company is finalizing a binding share purchase agreement with Biortica's ordinary shareholders. This agreement, along with the effectuation of the DOCA and compliance with ASX Listing Rules, will be subject to shareholder approval. A notice of meeting is expected to be sent to shareholders in August or September 2024 to vote on the resolutions detailed in Biortica's DOCA proposal.
The execution of the DOCA with Biortica is a significant step for Bod Science Limited. It provides a pathway for financial restructuring and potential growth through the backdoor listing. However, the company's financial performance, particularly the decline in customer receipts, indicates ongoing challenges. Investors should closely monitor the shareholder meeting outcomes and the company's ability to meet ASX re-compliance requirements.
Investor Reaction:
Analysts have expressed cautious optimism about the DOCA, noting that it provides a structured approach to resolving Bod's financial issues. However, the significant drop in customer receipts has raised concerns about the company's operational stability. Investors are advised to stay informed about the upcoming shareholder meeting and subsequent developments.
Conclusion:
Investors should keep a close eye on Bod Science Limited's progress in finalizing the share purchase agreement and meeting ASX requirements. The upcoming shareholder meeting will be a critical event, and the company's ability to navigate through these changes will be essential for maintaining investor confidence.