Why would threatening to dilute the number of shares outstanding represent a 'threat' to a potential suitor? Cortex is saying, "either partner with us, because, if not, we will dilute massively, doubling the shares outstanding at a nickel a share...."
How does that work as a threat? or message to a potential suitor. So, according to Varney's logic, a pharma/biotech/speciality company says to this announcement:
"We better sign the deal now before Cortex dilutes from 100 million to 200 million shares outstanding at a nickel or dime a share."
I fail to see the logic. Plan B is Plan B for management. It is not a threat or message to anyone but to shareholders.
"They would be loathe to dilute shareholders further, but need the A/S increased as a back-up should negotiations draw out. Other companies realize Cortex's small cash position, increase in A/S at least buys some time/leverage, though they are doing everything they can not to dilute, but rather strike some licensing deals."
I'm not sure these words I quoted from you, emrald, are the exact words from Varney, but he has said the same thing, to many others, which I have heard from folks who never post here, and from those who do. How does diluting the share base create leverage? It produces a few extra months of salary, it adds a finite time... four to six months, but, is inking an RD deal for 4-5 million dollars in upfront monies, worth diluting the shareholder base to 200 million shares at a nickel to dime per share at most worth it?????? That seems to me the crucial point.
How about selling off companies' assets? How about auctioning off the company? by piece or whole.
One more thing. What is the danger here of selling off the company? Finding a buyer? Again, I think the very thing that hampers Cortex in inking a deal... lack of a viable strategic fallback, dwindling cash position, could alter the playing field in a sale of the company. Would LLY really allow(or Merk) Cortex' ampakines fall into the hands of Pfizer or Shire for 5 to 10 million? or less? If we cannot surpass 10 million dollars(about our current market cap)through a sale/auction, then perhaps the intrinsic value of the platform is less than we(I) think/thought. I don't think that is the case. I also think there might be more than two interested pharmas in a sale. Of course, management might lose out with lose of job, salary, and out-of-the money options, but I would definately agree to reprice their options to make a sale worthwhile to them....
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