What happens on the first trade after the bell rings on the 23rd is anyone’s guess—possibly total chaos---my best guess though is that total boredom is going to set in.
The future of the stock and whether we will get a decent return on our investment down the road depends mainly on the motive behind Ronn deciding to do the reverse split in the first place. Here is an unprofessional stab at why he did it.
Please bare with me because I am going to ramble some (maybe a lot) and most important I do not want to put words in Ronn’s mouth so lets be clear here everything I am about to say is my impression from conversations and e-mails with Ronn, and not fact coming directly from him. This is what I believe or suspect:
1. After spending years at the command of this outfit CTYX and dropping a ton of time, effort and some of his close friends and his own money--Ronn firmly believes that finally the company is at the cusp of great success and possibly surging ahead with growth at a fantastic rate if only--if only he can get his much desired financing right now when the iron is hot so to speak or else the company is doomed to the ordinary slow mundane growth completely and totally dependent on increasing revenues from quarter to quarter. And, he believes with financing NOW he can absolutely lock up a huge, even massive percentage of the market—again, while the iron is still hot so to speak---and without financing he feels he will loss a huge percentage of the market simply because he did not have enough money to expand fast enough.
2. I am also sure that Ronn does not understand the dilution concept. No reflection on his intelligence, he just doesn’t get it. He has told me numerous times that out of all the questions and complaints he gets from people--dilution was at the top of the list. I get this strange feeling since the number of authorized shares were not increased that Ronn thinks he did not hurt anyone’s position with the reverse split. He is a business man and by judging the last couple of quarterly reports, he seems to be a pretty darn good business man—BUT, lets face it he sucks when it comes to understanding markets and his minority investors. Only time and education will turn him around…exposure to us minority shareholders through e-mails and calls will help.
3. I believe in the past Ronn has always viewed investors that buy on the open market as a group of young punk kids or old geezers that are soulless day traders with hearts of stone and they get whatever they deserve—and they certainly do not deserve any of his time. A lot of pink sheets CEOS think this way and unfortunately sometimes for good reason. Part of the reason he was able to be so cruel is he does not look at us the same way he looks at investors that invest directly with his company. I am making no excuses for the man.....just trying to show his train of thought.
4. I believe that if a couple dozen of us had been e-mailing and calling all along over the last couple of months that maybe Ronn or someone in his “in group” would have said during a meeting, “you know things have changed in the last couple of years and we have a real live group of minority shareholders now that we ought to think twice about before we do another one of these speed shareholder meetings to rubber stamp whatever Ronn wants to do.” Which is what happened with the reverse split. If you are a shareholder and are against the reverse split you need to e-mail them and make your concerns known.
5. Okay..back on track. The only thing that makes sense to me for Ronn to do this horrible thing to us is that he has his much sought after financing locked up with some institutions, pension fund people or something big like that. The financing must be big enough for him to need large blocks of shares because I see no other reason for him to take the drastic action of the reverse split unless he is down right stupid or needs the large blocks of shares to placate the new money coming in. I vote for him needing large blocks of shares for the new money coming in.
6. I do not think CTYX has a MDFI problem in which MDFI investors have to wonder every year if the A/S is going to be raised another billion or so…I get the sense that this reverse split because it is such a drastic move will succeed on bringing in all the new money needed and the company will never be in another situation (at least soon) where the subject of A/S is even thought about on a yearly bases.
7. What does this THEORY mean time wise for the price of the stock? My guess again is that Ronn wants and is after that money NOW!---so if I am close to being right we should be hearing some great financing type news or institutional buying news within the next sixty days or sticking my neck out here-maybe even sooner.
8. If the financing is successful and market share increases then I would expect CTYX to steadily and continually rise in price from quarterly report to quarterly report. If revenues do continue to increase and expenses do continue to decline and the A/S remains at 1.1 billion and no bouts of reverse split insanity strikes Ronn again then I see no reason for the stock not to be trading in the three to five dollar area within a short few years, because if it is not---then that means the financing was a total flop, the reverse split completely unnecessary and any hope for CTYX is gone. If you do not see a start to a steady and continuous rise in stock price after the release of the next three quarterly reports---then bail. And if no real substantial news comes out about financing or institution buying in the next couple of months then I would bail immediately and forget waiting for the three quarters to pass—after all if the reverse split is not all about financing and financing in a big hurry then what in God’s name was the reverse split all about anyway?
Sorry about the rambling on and on and on when I could have probably said everything pertinent in just three sentences.
