By Ian Gilson, PhD, CFA
First Choice Healthcare Solutions (OTC:FCHS) has announced that $1.4 million of its line of credit with CT Capital has been converted to 1.866667 million shares of common stock (at a cost to CT Capital of $0.75 a share).
In June, 2013 FCHS had agreed with CT Capital for a line of credit of up to $1.5 million at a 12% rate of interest. In Nov. 2013 the rate was changed to 6% for the period from Nov. 2013 to Nov. 2015.
The agreement was amended in June 2015 to a $2.0 million line and in Dec. 2015 this was increased to $2.5 million.
As of Sept. 30, 2016 (the last available financials) the outstanding balance was $2.5 million, the maximum under the agreement. The cost of this would be $12,500 a month. The reduction by $1.4 million reduces this to $5,500 a month. The additional shares increases the basic share count from 24.4 million at the end of 3Q16 to approximately 26.3 million and fully diluted share count becomes 30 million for 2017.
We assume that the prior credit limit and interest rate still holds, which gives the company an increased flexibility for expanding operations in 2017.
Adjusting our estimates for future years, the non-GAAP EBITDA margin remains at 20.28%, in line with company guidance. Our 2017 EPS increases by $0.01 from $0.12 to $0.13.
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