Aisystems, Inc. (fka ASYI)

[FORTY-8]

Things are getting MUCH clearer here now….

On August 14th, I was completely baffled as to why ASYI would voluntarily elect to lose its OTCQB trading tier status. And why would a prospective merger partner like GCS permit such a loss to happen since it (GCS) was going to take over that particular trading tier once the T/R/M was consummated? It just didn’t make sense, especially in light of all the drama that was involved in ASYI filing its first quarterly 10-Q at the very last moment in time back on May 21st. Back then, Andrew Wells told a poster here that he (Wells) was “glad” that the May 21st filing had been made on time. And yet, in the case of GCS, we’ve heard absolutely nothing about such a concern. Indeed, we’ve also not heard any concern on its part at the fact that MKHD hasn’t made a filing in over a year, and has a trading tier status identical to that of ASYI.

Looking back now, it’s clear that the KoolTel ruse could not have effectively continued without the filing of that May 21st 10-Q, which even stated that ASYI’s “future” depended upon the merger with KoolTel. That was a very powerful statement to make, and it riveted our attention to the long and meandering course of that transaction … like any good RED HERRING should have done.

So then, ASYI’s August 14th failure to file the 2nd quarterly 10-Q was a final warning to all of the utter demise of the KoolTel deal. But did it ALSO sink the prospects of the T/R/M?

I and many others here always assumed that ASYI’s OTCQB trading tier status was considered to be something of VALUE for a potential merger partner. But that assumption was only true if the merger partner was your typical struggling company that wanted to use ASYI solely to gain access to a PIPE financing. THAT IS CERTAINLY NOT THE CASE WITH GCS, AS IT’S THE NOLs THAT HAVE GREAT VALUE. The NOLs and the path that GCS has already committed itself to take immediately after it has possession of those assets … a RACE to the Nasdaq.

If you carefully re-read the very EXCELLENT article that was posted here by Keetch, you’ll be immediately struck by the fact that GCS intends to uplist to the NASDAQ as quickly as possible in order to gain direct access to the capital markets to underwrite GCS’s rapid growth and expansion, as well as enhanced visibility by the telecommunications carriers that it seeks to obtain as clients. Neither of those goals can be achieved while GCS is trading as an OTC Limited Pink.

When the T/R/M is consummated, GCS will begin its publicly-traded life as a lowly OTC Limited Pink … and it could care less about that problem because it will have already put into place the PIPE financing that it alluded to in its June 21st PR announcing the MKHD/GCS LOI. But most importantly, GCS will have already sat it sights on a rapid up-list to the NASDAQ, and therefore, ASYI’s particular tier status is of no importance whatsoever to GCS. Nor for that matter is MKHD’s status, as it will be liquidated as soon as the T/R/M is consummated.

AND NOW, IT GETS VERY, VERY GOOD AS TO WHAT IS LIKELY TO HAPPEN HERE … AND WHEN:

In order to apply for an up-list to the Nasdaq, it is required (among other things) that (1) the company’s stock trade for one year; and (2) the company file an annual report (i.e., a 10-K).

Now please also remember two very important items that are required to be contained in any ‘Super 8-K’ that a merger partner like GCS must file: (1) at least two prior years of audited financial statements, and (2) unaudited financial statements for the most recent portion of the year in which the merger takes place. Thereafter, all required filings must be made when they become due.

So then, if GCS has its sights clearly set on an up-list to the Nasdaq as quickly as possible, then it MUST consummate the T/R/M no later than December 31st, because if it waits until AFTER December 31st then its Super 8-K will have to contain audited financials for years 2011 and 2012 (as opposed to a 10-K for 2012). And because it did not file a 10-K for 2012, it will have to wait until the first quarter of 2013, when it does finally file a 10-K, in order to then apply for an up-list to the Nasdaq.

So, by virtue of consummating the T/R/M as early as possible, in this the 4th quarter of 2012, GCS could eliminate approximately 6 months of time that it would take to obtain an up-list to the Nasdaq. Indeed, if it filed its ‘Super 8K’ this very week, then it could apply for that up-list one year from now … as opposed to having to wait 1 ½ years, should it miss the opportunity to file a 10K for the year 2012.

So then … let’s just see how badly Neal Axelrad wants his company to trade on the Nasdaq, with all the other big dogs of telecommunications. If he wants to be there by 2013 he’s got 90 more days in which to file that Super 8K and then prepare for the filing of his first 10-K. If he misses the 90-day deadline, then he’ll have to wait until the year 2014. If “time is money” then that’s a lot to blow!

P.S.: A further very important inducement for Alexrad to uplist to the Nasdaq as soon as possible is a new rule change to the requirements. The share price requirement has been recently reduced from $4.00 to $3.00, which means that there is a very real chance of a company being able to up-list WITHOUT having to engage in a reverse split and suffer at the hands of short-sellers. That being the case, it would put added pressure on Axelrad to consummate the T/R/M as quickly as possible and start to work on getting his company’s PPS within striking distance of that $3.00 target. With the introduction of new products and the retention of new clients – all during the course of the next one year period – such a target is certainly achievable.

The link to the new rule change is here, and you can BET that GCS and its investment banking advisor have read and re-read it in great detail:

http://seekingalpha.com/instablog/478544-redchip/619791-sec-approves-alternative-nasdaq-listing-requirements

“On April 18, 2012, the Securities and Exchange Commission approved an alternative to the $4 initial listing bid price requirement for the NasdaqCM. The rule change is meant to level the playing field between the NASDAQ Stock Market and its main competitor, the NYSE Amex. Prior to the rule change, the NYSE Amex required companies to have a minimum share price of $2 to $3, while the NasdaqCM required a share price of $4. As a result, numerous small-cap stocks trading between $2 and $4 were shut out of the NasdaqCM. According to the NASDAQ Stock Market's proposal, filed in January, "A number of companies have indicated a preference to initially list on the Capital Market instead of NYSE Amex and have expressed frustration at their inability to do so without reverse splitting their stock."

“Under the new NasdaqCM requirements, a stock can qualify for listing if it closes at $3 or above for at least five consecutive business days prior to approval. The five-day requirement is in place to reduce the risk of price manipulation aimed at allowing a security to qualify for listing.”