Chris.....
I looked over my Proxy materials from MDIX. This Proxy, poorly written in my opinion, has lead to, also in my opinion, a rather steep decline in the stock price from the $.625 level. Two weeks ago, when I received my Proxy, I called the company and discussed the reverse split proposal. One other poster has explained this previously, but here is my attempt.
1) The reverse split will pass shareholder vote. They always do.
2) The shareholder's meeting (not a Board meeting) on the 29th, is a formality.
3) The management has no authority to fine tune the split. They have to do exactly as the Proxy proposes, or....
4) The Board in their sole authority can ABANDON the split.
I was pretty sure, given the positive Cymedix news I was hearing (ADRX lawsuit, etc.), that when the stock was trading between $.625 to $.75 and even when it traded in the 9/16 range, that the Board would role the dice and abandon the split. I was positive that if the stock traded in excess of $1.00 the split would be abandoned, even though the Proxy called for a 1:2 reverse split.
However, all this being said... It appears that the company has been focused, during this whole period, on the NASDAQ tangible asset requirement and not the stock price. Therefore, the sale of the money losing staffing business to Banyan. I believe that management felt that if the stock split proposal were in place, it would only be used as a last resort. Solve the working capital and net capital requirements and the stock price would take care of itself.
Why? Because, in my opinion, management believed that whatever bad news a "last resort" reverse split would cause, the company would still be receiving $9 million in cash, thereby placing a foundation under the stock.
Was this a good move? Time will tell. If the Banyan deal is revised next week to provide MDIX it's cash faster, say during the current 10Q reporting period, the NASDAQ meeting becomes moot. I can see the stock rally on news of this faster payout. I can see the rally proceeding when the ADRX suit is made more public, and if the company discloses it is going to do a stock buyback, then I can see the stock pop above $1.00 negating the need for the reverse split.
Is any of this going to happen? Is there going to be more selling when the stock opens Tuesday? Ask musicguy.... |
