Replies to post #181533 on Enzolytics Inc (ENZC)

[foxi]

I don't know the answer to that, but your analysis does raise an interesting thought.

SAGA pre-purchase OS = 4,346,337
SAGA post-purchase OS = 49,346,337 (4,346,337 + 45M new shares div'd to ENZC Shareholders)

Those 45 million new shares can't be traded for at least 6 months, because ENZC is promising to give them all to its shareholders as a dividend. So I assume the 45M shares would be a part of SAGA O/S, would be listed as Restricted, and would contribute to the market cap calculation. I'd think they'd also remain Restricted for 1-2 years after dividend date since dividend shares often come with lock-up periods.

If the share price becomes $4 within six months, those 45M shares will only be worth $180M, not $450M. If there's a make-whole provision, additional new shares would be issued at $4 apiece to make up the difference. In our example, that means in six months barring no other share issuance:

450M - 180M = $270M of new shares worth $4 each = 67.5M new shares.

SAGA six-months-future OS = 116,846,337 (49,346,337 + 67.5M new make-whole shares div'd to ENZC Shareholders)

EDIT: I overlooked that the Make-Whole provision as described wouldn't allow for unlimited new shares, just 45 million. So we'll need to adjust math accordingly. But no more time to edit this post. :o)

If that dilution in turn also pulls down price per share, the company might be at risk of delisting from Nasdaq due to minimum share price under $4. It could possibly go back to OTC while people are stuck unable to sell due to lock-up period. The success of the investment depends on the value Biogenysis and Virogentics can create in the meantime.


Another important possibility is the shares could be issued as SAGA Class B Common, which aren't traded on Nasdaq. That wouldn't eliminate the problem of all dividend shares hitting float simultaneously at some future date, but that might play more favorably with SAGA market cap calculation, etc.

[Dyno89]

You’re most likely somewhere in the ballpark of coming reality yet again. The more this sinks in, the more disgusting this deal feels. They really did shaft all us longs. I’ve been trying to find some positives and brainstorm some strategy here to still have this come out beneficial to those of us with 2020 enzc long shares, but those possibilities just don’t seem to be there. Maybe this won’t be a total disaster at some point but it’s sure looking that way now for any of us that got in super early with a massive amount of cheap shares. There’s absolutely no other way to look at this other than it’s a shifty way of doing a reverse split without the negativity of actually having to call it one.

It might actually be a bonus if saga drop to $3-5 like you hypothesize. Then through the make whole clause, we’d get double the saga shares than if it stays at $10. I’d rather that scenario bc then we just have to hope saga has a big run on company progress down the line. Nasdaq stocks can move fast on real news and will have less manipulation, so $3-$5 vs $10 where we start out won’t matter that much in the end. So I’d much rather see saga drop so they have to issue us 2x the dividend shares rather than the current figures that have been put out.

The best thing we can hope for at this point short term is that enzc has another run in it when people realize this deal is in fact happening and rush to get in for the dividend. It’s absurd that people are lining up to get in this right now. It may be a bad deal for us longs but it’s not for noobs that can basically get 2 for 1 for their money right now with the dividend. Prob a final unrealistic dream enzc dream, but if it could hit .15-.25 somehow and hold into the dividend, we’d at least have some room to make some good one last time profits on enzc before it eventually bleeds way down on “no assets and no operations”. If this stays were it is going into the dividend, 2020 longs are seriously screwed.