If you ever want to annihilate a company, take notes on what has happened to HIEnergy (OTCBB: HIET) in the last month.
A few months ago I heard about HiEnergy’s technology and was highly intrigued. I was so interested that I flew to Irvine at my own cost to check out the technology and the company (http://www.stockhouse.com/shfn/article.asp?edtID=16541).
As I mentioned in the article following my return, my visit left me feeling that the stock could do very well, or it could be worth next to nothing within the year, all dependant on a number of events that could possibly occur in the near term. It was certainly a gamble, but that is at the heart of Paradigm Trader, trying to assess the odds in the micro and small cap markets where others dare to tread.
Since then, the company has been pounded by shorters and negative pseudo-press coverage. It began with a Dow Jones article which I attached in the February 24th edition of Paradigm Trader. As I stated at the time, the article certainly wasn’t good news for the company, but upon reading it in detail it had mostly circumstantial information that really did not have much merit in terms of HiEnergy, the company, having done anything wrong. It mostly tried to tie past owners of the shell within which HiEnergy did an RTO to the current company.
Since then there has been a massive amount of shorting, and selling, driving the stock from the low $2 level to a low near $0.50.
This has apparently led the scientific leader of HiEnergy, Dr. Bogdan Maglich, to try to clean house at his company. Although not publicly stated yet, I have heard that he has fired the CEO and let go of some of the board members in an attempt to clear HiEnergy of any individuals who may have any negative ties in their past.
When HiEnergy was trading very actively above $2 the company’s future looked quite bright. With numerous government contracts and grants being awarded to them it appeared that they would likely do a financing at the $2+ level and bring the company closer to becoming a real player in the security industry.
However, with the stock pounded down to $0.80, and with shorts continuing to circle like sharks, the company’s once potentially bright future now looks bleak.
My first concern with the company is that it is currently without a business leader. With the firing of Tom Pascoe, it currently leaves Dr. Maglich to lead the company. As I stated in my previous article, I have met Dr. Maglich and he seems like a nice older guy who seems to have impeccable scientific qualifications, but I have no faith in his ability to lead the company from a business standpoint.
Secondly, the company had less than one year’s worth of cash as I stated previously. This wasn’t a concern when the stock was trading at much higher levels, but with the stock down below $1 any financing would be much more dilutive. This makes the odds of HiEnergy emerging from venture status to becoming a solid company worse.
While I am still highly interested in the technology that HiEnergy has developed, I can’t say the same for the company itself. The pressure that the company came under following the Dow Jones article in late February has snowballed now to the point where the company will have to rebuild significantly, and given their low cash and low stock price, it will be very difficult to do so without doing a cheap financing which will further stack the odds against them.
I will likely continue to follow HIET, but now it is for different reasons than in the past. I will be watching now to see if Dr. Maglich can somehow manage to scrap his way back against the shorters who look like they may have damaged this company irreparably. If he can somehow manage to secure some government contracts in the next few months it is possible he could squeeze the shorts and put the company back on track. If he cannot, the chances of long term survival will be difficult.
Thus is the nature of the OTC micro cap technology sector. It must smack of great unjustice to Dr. Maglich to know that the potential for this amazing, potentially world-changing technology may have been squashed because a small shareholder in the company who used to own part of a company with which HiEnergy did an RTO in the past, dated the mother of a man who was convicted of money laundering in the mid 90’s.
HIET hat mir gut gefallen, aber ob das noch was wird?
|aus der Diskussion:||HiEnergy, How to Kill a Company in 30 Days or Less|
|Autor (Datum des Eintrages):||morchel (19.03.03 07:04:05)|
|Beitrag:||1 von 3 (ID:8924072)|
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