The math and the market make little sense to me, and I picked up some more shares yesterday.
Here is the math....Tuesday, with about 34 million shares outstanding, the company had a market cap of about $45 million, and an enterprise value (less cash) of about $35 million.
Post finacning, as of the close of the market yesterday and based on 39 million shares outstanding, the company had a market cap under $42 million, and an enterprise value of less than $27 million.
I don't love the terms of the financing either, but I trust management that these were the best terms they could get, and they need the money.
But with the positive implications that they didn't raise more money and that the FDA submission is continuing, and the uncertainty of a financing now behind us, I see no reason why the market's reaction was not postivie, never mind so negative.
So going back to the math, with the positive implications of yesterday's announcement, the intrinsic value of the company dropped by $8 million. I think that is preposterous.
Let's also remember, the warrants (as with all of the warrants issued to date, and all of management's options at this point as well) are not truly dilutive until they are in the money. The warrants issued yesterday would raise Cortex another $5 million when the stock appreciates by roughly 55%. Again, until then, the transaction is not dilutive.
This is the worst performing investment I have every made. And against all discipline, I am adding to my position at these levels. The numbers just make me believe the market is wrong on this one....
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