CD International Enterprises Inc (OTCMKTS:CDII) Wants To Do A Reverse Split
For over two weeks the stock of CD International Inc (OTCMKTS:CDII) was wiping more and more of its value in one devastating downtrend. Last Friday, however, the ticker reversed its direction and bounced back up by exactly 200%, closing at $0.0006 per share. The 259 million shares that changed hands during the trading day were nearly 4 time higher than the monthly average for the stock.
It is clear that some investors are still excited about CDII. What they might not have anticipated when buying the stock on Friday, though, is that just a couple of hours after the end of the session the company submitted a filing announcing the approval of a reverse split. According to the Schedule 14C Information statement the reverse split have a ratio of 1-for-200 and will be performed at some point in June.
In our articles we have been warning you about the monstrous dilution of CDII‘s common stock – during the quarter ended December 30, 2015, the number of outstanding shares grew from around 100 million to over 500 million. As of March 8, 2016, the O/S had surpassed 700 million while in the filing for the reverse split the company reported that it now had nearly 1.5 BILLION shares. After the split has been implemented CDII expect to have around 7.2 million outstanding shares.
Apart from bringing their O/S down CDII might have decided to resort to a reverse split in an attempt to more easily acquire some much needed outside financing. According to the financial report for the quarter ended December 31, 2015, back then CDII had:
• $150 thousand cash
• $184 thousand total current assets
• $17.4 million total current liabilities
• $34 thousand revenues
• $12.5 million net loss
So far the results from CDII‘s operations do not inspire much confidence but things might be about to change. The company did receive two 2-year purchase orders with a combined value of around $550 million and according to the PR from May 3 the management team is “confident” that deliveries under these purchase order will start in the coming months.
Will this indeed be the case, though, and will it offset the multitude of glaring red flags? Ultimately, it is up to you to decide.
