I am in general agreement with your concepts;however I think it is a little more complicated then this.
1) note the huge % increase in the short postion taken in the last month as the stock moved up. i think, unfortunaly in hind sight, at 7 it was ahead of itself. I would guess some of the Big Mo players got on and ran the stock up and the bailed out.
2) The handleing of the press releases was a DISASTER!!! Who ever was in charge should be summarily fired!No questiones asked, no appeal. On the positve side perhaps if we, the remaining investors are correct in our more positve view of the results, then the stock may have moved to stronger hands and this will be positive in the longer run.
3) While the recent financing is postive in that it helps to fund research and meet net worht requirements, it is still troubling to me. I am having a harder time in understanding why the company did this deal, Why they used the financing source that they did and why they were not senstive to how the street would view this deal .
The deal is NOT a strong deal for existing shareholders because it lacts a floor on conversion price . If for example the stock were to crash for whatever reason to $1.00 they could convert at $1.00 and get somwhere around 6,000,000 shares or put another way we would suffer 25% dilution (6mm/25mm shares o/s). This raises troubling questions as to why do this now if a corp. partner is a few months away? Why raise only $6 million particularly on what COULD turn out to be unfavorable terms. Why when the company needs Wall Street support not use a name firm to raise more money and on better terms. Lastly the failure to address the issue that this could be viewd as a reg. S offering where the stock would likely be dumped on the market in 40 days is also troubling. The offering IS a reg D offering and the company did not have to make any annoucement , I think, Why would they unless they thought it was a positve. And if they thought it was postive why not better explain it.
I am hanging wiht the stock for know but I will be looking to address some of these concerns over the coming days and weeks. |
