Corgenix Medical Corp. (OTCMKTS:CONX) Fails to Run

At the start of yesterday’s trading it seemed that the stock of Corgenix Medical Corp. (OTCMKTS:CONX) would be heading into one extremely positive session. The ticker opened with a gap up at $0.30 and in a matter of minutes managed to climb even higher almost touching 32 cents per share. The impressive run was cut short though and the stock fell down equally as fast, remained flat for the rest of the session and closed the day with a gain of only 3.4% at $0.274.

A few weeks ago CONX made another attempt to move up to higher price ranges but the outcome was the same – all the gains were incinerated in just two sessions.

It is obvious that the Ebola rapid diagnostic test being developed by the company is attracting investors’ attention. Earlier this year CONX were awarded a new $2.9 million three-year grant by the National Institutes of Health. Recently the company has also enjoyed increased media exposure which further boosted interest in the stock. Despite all the positive signs though there are two major factors that are preventing it from surging.

Just two days ago CONX issued a PR in which they announced the preliminary financial results for the first quarter of their fiscal 2015. The official report is expected around November 7 but still the numbers revealed so far are not that encouraging. Apparently demand for their products declined and as a result revenues slumped down to $2.2 million from $2.9 million generated during the same period last year. Furthermore the company finished the quarter with a net loss of $770 thousand compared to net income of $84 million at the end of September 30, 2013. But more worryingly around $600 thousand of the incurred expenses were described as “associated with its review of strategic alternatives and definitive agreement to be acquired by Orgentec Diagnostika.”

This leads us to the main reason why investors are reluctant to jump into the stock. At the end of August CONX announced the aforementioned definitive agreement which allows Orgentec to acquire the company by paying $0.27 for each share. The price may seem quite reasonable for a pennystock but Corgenix closed the session prior to the announcement at $0.35 per share while at the start of August it posted its new 52-week high of 56 cents.Understandably investors were not happy with the merger price. A law firm stated that they will begin an investigation for potential claims against the Board of Directors. On September 4 a class action complaint was filed in the Second Judicial District Court of the State of Nevada.

In the latest Schedule 14A statement CONX informed its shareholders that the voting on the merger proposal will take place on November 20 during a special meeting. Many investors are hoping that the deal won’t be approved but for now nothing is certain. 

Until the outcome of the vote is known CONX is unlikely to stray far from the 27 cent per share mark. It remains to be seen if that will change after the meeting. 

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