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  • survtech10 survtech10 Feb 26, 2013 1:37 PM Flag

    Proxy Effect on Stock Price

    I know it's a bit premature but at this rate (-11%), they'll have to RS closer to 1:50 than 1:10.

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    • I stand by my prediction that, by the time the reverse split is implemented...even 1:50 will not be enough to meet listing requirements. They say that's why they're doing it...but the real reason is to [slyly] increase the value of the company's authorized pool of shares for future dilution. If the outstanding stock reverses 50-fold...but the authorized only reverses 10-fold....then their pool of shares has just increased in value 40-fold.

      • 3 Replies to space_things
      • jackgotney and mullet -- the exchanges between you have been very helpful and reflects my view that the company has no alternative. The subject of revenue is strange though. This is a clinical stage company... pre-commercial. There is nothing to sell (other than itself of course) and the value is future oriented... the value of the drug and drugs in the pipeline... the only potential revenue currently and in the immediate future is the sale of stock. As has been often stated on this message board, if you are looking for a quick ROI or turnaround ... biotech is not the place... at least not at this stage in a company's life.. But this is also the time when you can get a great deal....

        Sentiment: Hold

      • I agree they will have to do more than 1 for 10 on the reverse split to effect their plan while only doing 1 for 10 on the issuable will give them more ability to raise money through future stock offerings. A reverse split is not evil in itself. Whether or not it benefits us depends completely on how they spend the cash raised. But even at 1 for 33 they will still have a lot of remaining stock issuable. Using their numbers, goals, assumptions, which are 25,000,000 issuable, and doing a reverse split on the stock to achieve a price of $5.00, and their initial PPS of .155 (based on the price suggested in the proxy which is on their website and dated 2/22/13), I would be targeting a 33 for 1 split. This would leave the number of shares outstanding at about 3.2 million. Then to raise the 25 million they would offer 5 million at $5 which would leave us with an outstanding of about 8 million shares and the company would have their 25,000,000 cash. They would still have about 17 million shares additional issuable. Doing 1 for 50 doesn't buy them a lot, but if the price necessitates it that is another issue, hopefully not. But regardless, the million dollar question is then, "will this be enough to carry the company to the point where it can survive off its revenue and grow organically". Will they maximize the return on this cash by investing it only in projects with reasonable return and reasonable risk and payback periods that are within our lifetimes. Will they strive to contain costs? One thing certain to expect with a lower outstanding, losses will be higher per share, but on the other hand, when they become profitable, the EPS and growth when positive, will be a lot higher per share than with a large number of shares out. Given all that, the price of this stock is much more likely to rise after the financing to higher levels than if it was not done. It is better than borrowing so it is their best option. Will be glad? This all depends again on how effectively the cash and the technology is managed toward building a viable business model (with top and bottom line growth, and I stress, 'including positive cash flow').

      • 1 important piece of the puzzle you are missing. This company needs to be recapitalized. They need to raise AT MINIMUM $18.5M. They dont currently have enough available shares to raise enough funds at this price, hence the R/S and increase in aurthorized shares. Without this, they go BK. So, IMO, they are doing the only thing they can to survive.

        What would you do if you were in their shoes?

0.00(0.00%)Aug 27 2:56 PMEDT