Nw-La – cygx has been in money crunches before and survived – but at the time had a fast talking stock selling officer who had a knack for pulling money out of thin air. Without a stock hawker, more shares outstanding, and selling into a decline, I think it will be harder this time. On the plus side, they have a real product and some, albeit small and secretive, sales. Having a saleable product is something business people understand and if they can make a decent business case with reasonable market penetration estimates they can probably get some folks interested. The biggest deterrent right now is their own record – it’s bad. Malcolm needs to get an outside opinion on what's best for the company and turn it over to someone who can plan and execute. More successes would have made it easier to get cash – results matter.
For the odds. If they can get a year or more of operating capital, new management, and more customers in the next month and a half – it’s a safe bet they won’t go belly up right away – and if they get enough money to actually kick off some INDs they should be able to keep things running for a few more years. Obviously if they don’t get money the place will fold by the end of the year. But, keeping the doors open and being a winner are two different things. Ultimately the long-term success will be based on just how competitive their products turn out to be in actual use. I’d say there’s a better than 50% chance they’ll find the money to keep going for a year – although it will likely be very dilutive as many have pointed out – and after that the same viability questions should be raised based on their product progress in addition to cash flow. The odds for long-term success will continue to go down until some human trial data comes in. Because they have no official human data, this is still a very risky stock and priced accordingly. This is part of the risk reward formula.
If you've bet more than you're comfortable losing - you may want to take some off the table.
In terms of Malcolm being in the same boat and therefore doing the right thing – don’t count on it. It is a logical thought but he has never demonstrated a sense of urgency. He may very well be doing the best that he can – but if you look at the record it is clear that his best is not good enough to keep this company going. Time to let the Peter principle run it’s course.
AI
