The last few days have been nuts. The VIX briefly over 50, the DOW down 1,600 points intraday, XIV crashing from over $100 to single digits. The funny thing is, all of this volatility had almost no effect on the hundreds of OTC stocks I watch. They’re in a different universe.
Let me introduce you to Cord Blood America (ticker: CBAI). The company “provides cord blood and cord tissue stem cell services.” I’ve owned it for a bit. I originally bought it because its operations are marginally profitable and the valuation was pretty cheap. Today, I got a nice surprise: the company announced the sale of substantially all of its assets for $15.5 million (excluding cash and “certain other excluded assets”). The sale is subject to approval by shareholders; Red Oak Partners, which owns 30% of CBAI, is going to vote in favor. If the sale closes, CBAI wants to distribute a portion of the sales proceeds, but cautions that “total proceeds paid out to shareholders are expected to be significantly less than the gross purchase price.”
As of September 30, 2017 (most recent info), there were 1,272,066,146 shares outstanding, so $15.5 million is approximately $0.012 per share. The current stock price is $0.00398. The September 30th financial statements show cash of $959,534 and liabilities of $1,687,468. The assets in the sale were on the books for far less than $15.5 million, so the tax liability here will be significant.
Do your own math – with tiny companies, it can be hard to estimate how much cash they’re going to burn through after a sale like this – but I think this might be an interesting play.
Disclosure: Long CBAI