Re US listing ... a strategic investor shouldn't need a US listing. Also need to bear in mind that splitting liquidity is rarely a good idea as traders will typically move shares back to the liquid market. And buyers will focus on the more liquid market. Splitting liquidity also results in less liquidity which results in less activity. Remember, this company has a market cap of A$35m (US$23m). It's a minnow!
CEO also mentions US listing important for:
- Communicating with Shareholders - BUT we live in a digital era where communication happens instantaneously across the globe!
- Facilitating M&A - BUT cross border M&A happens every day without the need for multiple listings! If anything, the cost burden and poor share price will just make M&A more difficult as CDX won't have the currency to do anything!
- Rewarding staff - BUT people work all over the world and are paid in stock without an offshore listing. Do you think US based staff of offshore banks are paid in US listed ADRs? Of course not.
- Enhancing visibility - BUT a US listing doesn't do this. Rather the sales & marketing, Media & IR teams and brokers do this. And if CDX cant get meaningful research coverage in Australia, what makes you think they'll get more in the US with even less relevance and free float? If anything, negative cashflow and poor share price may give the wrong signal to offshore customers.
CDX has already sunk close to $1m into a US listing, and there are ongoing ANNUAL costs with exorbitant US lawyers, accountants, US reporting, listing, IR fees etc etc. Can CDX really afford these costs at this stage of its journey?
I wonder if the CEO didn't live in the US whether this folly would even be considered? And why isn't the CEO's office with his team? ... more unnecessary costs?
Re the revenue and profit opportunity, I understand the areas of opportunity, but they will come at a build out cost. And I assume they'll need 3rd party distribution so that will take a quarter to half the gross margin on the product sales. So the real scalability seems to be in trials and SaaS revenues. Such little detail released makes me sceptical of a management team that is more about throwing around buzz words and phrases that the market will like. I remember this during the tech wreck... so many loss making companies that used buzz words yet couldn't scale profitably.
Re FDA approval, the internet is full with information on the time it takes to get FDA approval. Typically 6 months, quick approval in 3 months, or 9 months for complicated and invasive products. We've heard from management that this uses existing tech and is not invasive, so why is it taking so long. Tuesday next week will be 9 months! ... what are shareholders not being told?
CDX needs capital but the market is getting tired and the market is no longer accommodating. Shareholders should be concerned when the CEO tweets (2 Feb 23) that in "early recessions (jitters) stocks always fall" and "that period is now over". No it isn't. Historically poor yield curve is telling us things will get worse so caution and contingency required - otherwise he'll be playing chicken with capital markets again and that wont end well.
Some pressure required with this Board which lacks the necessary checks and balances ... let's not be boiling frogs. I hope I'm wrong ...
