CBAI .0044 Think this is a great arbitrage opportunity. They just closed on the sale of substantially all assets to third party for $15.5 million and retained $1.2 million in cash. $3 million is in escrow for two years to cover contingent claims that might arise although there are no disclosed lawsuits pending nor did plaintiff lawyers contest the asset sale so seems clean so far.
There are 1.273 billion shares outstanding so including the escrow money they're holding .013 per share in cash. They'll have some transaction costs for the asset sale and some wind up costs for closing the company down. They'll also pay tax on the asset sale proceeds although they have some applicable tax loss carry forwards. I don't know their tax basis in the assets or the applicable tax rate (20%?).
They've already announced an initial special dividend of between .0025 and .0035 within the next 90 days. Assuming a purchase of shares at .0045 and a .0030 initial special dividend, you have .0015 per share at risk after the dividend and the prospect of receiving at least another .0075 in dividends before it winds up after the escrow period expires in two years.
CBAI is controlled by 30% owner Red Oak, an SEC registered investment advisor who took their position and control of the Board as a white knight a few years ago. They have been very straight up throughout their entire involvement, so I think the risk of fraud etc. is very small. Seems like low risk with the prospect of a high return for patient money. The risk is that some unknown (and, as yet, undisclosed) claim/lawsuit/contingency etc. ends up draining cash and lowering the cash return.
