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Not necessarily. You can reverse just the outstanding.
Biotech has lots of blue sky potential… it’s just really slow… and high risk.
Uplisting.
Unless my math is off, the price should be north of $10 per share. The stock’s lost quite a bit of value post split.
Up on rumor, down on fact.
Biotech takes time. I thought the 10K was an improvement. The business plan seems sound. It just takes time to go through the FDA process. If they get past phase II, I think this thing lights up. If they partner with a pharmaceutical company before then, that also bodes well. I don’t think it’s going to move like a Cannabis company. I suspect it’ll trade more like biotech, but I could be wrong...
Reverse splits very rarely work. The shares don’t retain value and it screams desperation.
Reverses rarely work. They usually lose value instead of holding it. When companies do it to stay/get on a larger board with a minimum listing requirement, they’re just begging to be shorted. Also, for a pre-revenue company, you don’t mind being at these levels because that’s where you find investors willing to take the risk. At higher levels, investors are looking for something else, like revenue. So, you could reverse split a pre-revenue deal and then find yourself priced out of your own market. The CNBX float is still pretty small, all things considered... a reverse split would also make the market more volatile. Organic growth based on strong fundamentals is the way to go here.
There’s the TSX and the TSX-V, plus the CSE. Those are the main Canadian stock exchanges. The TSX-Venture is the small cap sister of the TSX, like the NYSE American is to the NYSE.
BigFred, I apologize, I responded too quickly. They realized a gain on paper from their investment in SEEDO that resulted in a $0.065 EPS. But they are still operating at a loss, albeit at a declining loss quarter to quarter. They won’t be truly profitable until they have a net gain from operations.
That’s revenue, not profitability. They’re still incurring a net loss each quarter.
I hope they don’t go down that road. Reverse splits rarely work. The stock usually falls back to a price that results in a net loss for investors, except that post split its more difficult for those investors to make a gain. A reverse split is a desperate moves, in my opinion, and when you have an early stage company such as CNBX, it would be foolish to even consider it.
They’re all different, but if you track their general performance against CNBX over the last year or so, you see a pretty good correlation, which suggests that this is more of a sector dynamic than something specific to CNBX. My personal opinion is that as investors became more circumspect, CNBX has traded more as a biotech play and less as a cannabis company. I would love to see the stock jump, but they’ll need news that can significantly affect their valuation for that to happen. In the meantime, I’m sure their past volatility has attracted shorters, so they’ll have some headwinds to break $1.00. If they can generate significant revenue, or if they announce something that will add significant net value, the shorters will move on to easier pickings.
I think you’re looking at the wrong exchange. If anything, CNBX would be looking at the TSX Venture Exchange, which has lower listing and maintenance requirements, but is still nervous about US cannabis and is significantly more expensive than the CSE. Thanks to all the companies listing on the CSE, coverage is almost as good now as it is for the Venture.
CNBX isn’t profitable. It’s still operating at a net loss. It’s earning revenue, which is a start, but it’s not profitable yet.
I believe those reports only carry stocks at $1.00 and above.
I would be surprised if they went to the TSX at this stage. The CSE is more likely. That’s where most Cannabis deals list in Canada. The cost is relatively low and there’s effectively no minimum price. The TSX is still a bit finicky about any companies that engage in any Cannabis related activities in the U.S., which includes licensing I.P., whereas the CSE is happy to take the business.
I don’t think they’re ready for a big board. They need really solid revenue to make that work. Many companies jump for the big board too soon and end up crashing. Plus, the big boards are expensive (not just their fees, but legal, accounting and internal compliance costs are dramatically higher), which would be a drain on their resources, which I would rather they use for product development, so they can earn that revenue that will eventually put them on the big boards.
About the stock price, aside from GW Pharma, all the cannabis biotech deals seem to be moving the same way. The $7.00 share price spike was likely due to automated trading algorithms running amok (I’ve seen that before). I’m sure there’s active shorting against CNBX, but that will go away once the Company gets some significant revenue under its belt. Biotech takes time to develop, so it requires patience. I think some investors have simply moved on to other deals because there’s more action on those stocks. Again, CNBX isn’t the only company in the space to be having these issues. That’s my two cents, anyway.
It’ll come back. The stock took a hit from the financing, but I get the feeling there will be plenty of announcements to come. Play the long ball.
The Annual Report is next. It’s not due until November 29th.
The Annual Report is next. It’s not due until November 29th.
Probably not while the US legal situation is uncertain.
Yoyo is right about the test for materiality.
The second lawsuit is a material legal proceeding that must be (and was) disclosed under Item 103 of Regulation S-K.
As I've mentioned before, there was no obligation to disclose the lawsuit in an 8-K, nor was there an obligation to put out a press release UNLESS TTCM had reason to believe someone was trading on the information.
TTCM disclosed the lawsuit at the appropriate time.
I don't know if BH Trucking is a shell or not. I suppose that if someone wanted to do something with the company, they would probably want to get the judgment vacated, if possible. I suppose also, that even if BH Trucking were a shell and didn't have the resources to defend, then Tautachrome would be entitled to pay for the Rule 60 motion simply because of the successor liability and fraudulent transfer claims. TTCM doesn't need a "behind the scenes" interest because the second lawsuit gives it a direct interest in having that default judgment set aside.
You're supposed to bring a Rule 60(b) motion as soon as practicable, but no later than 6 months after the judgment. Pushing the timeline isn't wise, in my view.
I think BH Trucking may not have fully appreciated the ramifications of default when they let it happen. I think they got some colossally bad legal advice. The matter could have been disposed of quite easily (and early) if it was handled correctly. Sometimes lawyers are more interested in the hourly billing than a swift resolution.
I think the issue was the competence of Morgan's lawyer. I was saying that anyone can (and obviously does) obtain default judgment.
The res judicata thing may work against Morgan on the successor liability claim. I'll be interested to see what the court says about that with respect to the motion to dismiss.
There's still the possibility for a Rule 60(b) motion, so I wouldn't count my chickens just yet.
Yes, the BH Trucking matter should have been defended... That wasn't TTCM's call, though, because it wasn't a party to that proceeding.
They aren't one and the same. They have separate legal personality. Finding one responsible for the actions of another is an exception to the rule, as you well know.
You're correct that it's distinct from an appeal, but if I wrote "relief from a judgment or order," members of this board would be on me about the difference between that an an appeal, etc. So, just to avoid even more confusion, I just lumped it into "appeals." The point I was making is that the default judgment may yet be set aside. From what I've seen, they certainly seem to have grounds for it.
By my calendar, BH Trucking has until June 15th or 16th in order to bring the motion, though I wish they wouldn't push the limits of the Rule. The Rule 60(b) motion would be brought by BH Trucking, not TTCM, so taking a crack at "TTCM's skilled lawyer" is just uninformed. If BH Trucking doesn't bring the motion, since TTCM isn't a party to that proceeding, there's nothing that TTCM can do to force it.
The landscape changes irrevocably after June 16th. If no Rule 60(b) motion is brought by then, the default against BH Trucking will be untouchable.
My understanding is that the defendant filed an answer and then ultimately decided not to defend. So, no, that's not a standard default, but it's still a default. At the end of the day, plaintiff's attorney appeared at the default hearing and argued for default in the absence of the defendant. So, there was no one to argue against the motion, and plaintiff's attorney was able to say whatever he liked, unopposed, subject only to the obligation to be candid and forthright with the court (a standard that is even higher when an application is unopposed). I'm not sure that counsel did that. Any first year lawyer can obtain a default judgment.
Actually, there's an appeal period that hasn't expired. Under Rule 60 of the Arizona Rules of Civil Procedure, the defendant has six months from the date of a judgment to have it set aside if any of several grounds are satisfied. The relevant part of Rule 60 is as follows:
"(b) Grounds for Relief from a Final Judgment, Order, or Proceeding.
"On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
"(1) mistake, inadvertence, surprise, or excusable neglect;
"(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b)(1);
"(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or other misconduct of an opposing party;
"(4) the judgment is void;
"(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
"(6) any other reason justifying relief.
"(c) Timing and Effect of the Motion.
"(1) Timing. A motion under Rule 60(b) must be made within a reasonable time--and for reasons (1), (2), and (3), no more than 6 months after the entry of the judgment or order or date of the proceeding, whichever is later. This deadline may not be extended by stipulation or court order, except as allowed by Rule 6(b)(2)."
If the attorney for Morgan made a misrepresentation in order to obtain default judgment, then the order could be set aside. What would be a misrepresentation? Well, if the court asked if Click Evidence received a financing through the RTO that Morgan allegedly arranged, and the attorney led the court to believe that it did, that would be a fundamental misrepresentation. Misrepresenting when stock could be sold, would also be potentially problematic. Then, there's an order that incorrectly describes the defendant as a subsidiary of Tautachrome, which would, on its face, be wrong, and therefore subject to being set aside.
Default judgment in the original proceeding was entered on December 16, 2016. By my math, that means BH Trucking has until June 16, 2017, in order to bring a Rule 60 motion to have the default set aside.
I'm not saying that a motion under Rule 60 would succeed, but I certainly hope that BH Trucking gives it a shot. In the meantime, you might want to stop sounding off about how no appeal is possible, because it is. This is a long way from being over.
Have we heard anything about the motion to dismiss? Has the court come back with its decision?
To be fair, Dick's lawyers obtained judgment by default. It doesn't take much skill to do that. From what I've read, there's a very real argument that they mislead the court in obtaining that judgment, though I'm sure they didn't mean to. Still, if they had to varnish the truth to get even a default judgment, that doesn't say much for them or the case, does it?
Oh absolutely! Just sign a requisition and send it to all the shareholders. I look forward to receiving it.
That's not true. With respect to fraudulent transfer, which is what I assume you are referring to, whether the transferee (the recipient of the asset) was recently incorporated or had been in existence for a much longer period is a relevant fact for the court to consider under the accepted test.
There is no bright line test, as yoyo seems to be suggesting. It's not a clear cut case of when the transfer took place and who had knowledge of what. The AZ act provides a non-exclusive list of factors the court may consider, in addition to any others that may exist under the common law, in order to determine whether a fraudulent transfer has taken place. All of these factors are evidence of the intent necessary for a fraudulent transfer to take place. The court can infer intent if one or more (usually a combination) of these factors is present.
Of course, as I've mentioned before, fraudulent transfer allows Tautachrome (the public company) to argue the merits of the original action (no damages, unenforceable contract, etc.). I would be surprised if Morgan succeeds on the fraudulent transfer claim.
Keep in mind, the foregoing has nothing to do with successor liability, which is an entirely separate claim by Morgan. I'm pretty sure that he should have raised successor liability in the original action. If so, that part of his claim in the second action should be dismissed.
Yup. I can't argue with that. There WAS a judgment and the Company has recorded it as a court judgment liability. Those are the facts by which we are constrained, and even I must admit that.
Can the financials be restated? Yes.
Could the judgment against BH Trucking be overturned? Possibly, though I'm not an expert on AZ law.
Is it possible that the Company incorrectly reported the judgment, and then the auditor missed it? Most definitely.
And still, the judgment remains on the books.
Except there hasn't been any such judgment yet.
Sorry, with regard to your hypothetical, Morgan would need to obtain an order for specific performance for that to happen. As far as I know, and without looking at the order, the judge simply awarded money damages based on the value of the stock that he claimed he would have received. So, I don't think there would be any "enforcement" action compelling the issuance of shares. Again, courts don't usually order specific performance (the issuance of shares) when money damages will do.
The calculation of damages is a farce, because the valuation is wildly overstated, even if Morgan were right about a financing having taken place. But because there was no one to argue for BH Trucking, he pretty much got whatever he wanted, whether he was entitled to it or not.
See, that's interesting, because there was no contractual relationship between Morgan and Tautachrome. The "shares" he was to receive were in shares of "the Company." The agreement defined the Comapany as Click Evidence Inc., so those shares are actually shares of BH Trucking that he's entitled to, not Tautachrome. Sure, there was a share exchange, but as far as I know, there's no principle of law that would compel Tautachrome to issue its shares to Morgan. You don't usually get specific performance when money damages would do, and there's an obligation to mitigate your loss as soon as you realize there's been a breach.
There were so many holes in the original action, it's too bad BH Trucking didn't defend.
I don't disagree. I suspect they were hoping to dispose of the Morgan matter before the 10-K came out. Obviously, that didn't happen.