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Strategies & Market Trends : The Rational Analyst

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To: Scott H. Davis who wrote (1085)	6/7/1998 8:16:00 AM
From: sandbag	Read Replies (1) of 1720

Scott I wonder if you can answer a business question regarding a company I currently am invested in. Some background: Name:CDIC Cardiodynamics Financial health:low assets, good product, long term funds available to support marketing. Previous: company came out of bankruptcy in 1992, received FDA 501 clearances on 3 new products in 1997 and 1998 with real revenue yet to be realized. I believe the current quarter will show a substantial increase in revenue , if not finally break even eps. My Question(finnaly) is on July 23 the stockholders have to vote on an 18mil preferred share authorization. Currently there are 50mil shares of common stock, of which 32mil are outstanding. It is being presented as a "poison pill". Do such authorizations typically hurt a company's financial profile and lead to a decline in stock price? I understand there is no dilution in eps unless they are issued. Note: both the CEO who joined the company in 1997 Q4 and at least one of the board are both from the same company that were bought out and I believe CDIC is an easy buyout candidate. Thanks for any help Sandbag

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