LookSmart Ltd. (NASDAQ:LOOK) Could Tank as Still No Details on Its Spin-Off

[[tagnumber 0]]LookSmart Ltd. (NASDAQ:LOOK) stock rallied out of the trading range yesterday, almost reaching the highs from April when the company announced its planned merger with a maritime transportation entity and a spin off of the current business. The new spin–off company filed a registration statement for its shares this week, yet it is still no known when the deal should be finished, and respectively, when the reverse stock split should take place.[[tagnumber 1]] [[tagnumber 0]][[tagnumber 3]][[tagnumber 1]] [[tagnumber 0]]LOOK closed with a nearly 33% gain at $1.34 for a share on Wednesday while the trading volume almost tripled to reach 3.3 million traded shares. After the spike out of the trading range, it looks now the stock is more likely to pull back down as technically the rally looks exhausted. Technical indicators are starting to reverse after crossing critical levels.[[tagnumber 1]] [[tagnumber 0]]In April, LOOK announced an agreement to merge with Pyxis Tankers, Inc. Under the agreement, LOOK will become a subsidiary of the transportation company while all its current business, assets and liabilities will be transferred to its own subsidiary named LookSmart Group, Inc. which will then become a separate public company through a spin–off.[[tagnumber 1]] [[tagnumber 0]][[tagnumber 10]][[tagnumber 1]] [[tagnumber 0]]Before completion of the deal, LOOK has taken the obligation to conduct a reverse stock split at a yet unknown ratio somewhere between one–for–two and one–for–ten. As after the merger the currently private Pyxis will become public, shareholders of LOOK will also have the right to receive certain number of Pyxis shares.[[tagnumber 1]] [[tagnumber 0]]On the other hand, the new company LookSmart Group filed a registration statement earlier this week. According to it, shareholders of LOOK will receive one share of the new company for each share of LOOK they own. Though the reverse split ratio is unknown, nor the total number of shares the new company will issue, it looks like shareholders could be diluted and see the value of their shares deteriorate. After the second quarter, LOOK had a huge working capital deficit, no profitability and outstanding debt.[[tagnumber 1]] [[tagnumber 16]] [[tagnumber 1]]