Cytocore: More Management by Hype and Distortion

It is one thing for a speculative company low on cash to get more money in a PIPE at a discount to the stock’s market price. But, it is quite another for such a company to give that opportunity to insiders, and then to shamelessly announce in a press release, that it was good news. Yet, this is exactly what Cytocore (CYOE.OB) just did.

Daniel Burns (a director), and Robert McCullogh (CFO and CEO) each purchased a large number of shares from the company for $2 per share on January 22. This was an 18% discount to the stock’s close on that day. And still the fools who “invest” in the company’s stock rejoiced by pushing the share price up 51% in the three weeks since this happened.

At the end of the quarter ended September 30, 2007, Cytocore had under $1 million in cash, and a negative cash flow from operations of about $1.5 million per quarter. So despite what the press release said, this was not an investment to "assist in the scale up" of the company's manufacturing, but rather a necessary investment to keep the company up and running.

I have written about Cytocore’s travails before, and I received some kind comments in response to my previous article.

Disclosure: I have no position in CYOE.OB.

Comments

[herefortheride:]

Good...good...let your article bring the stock price down a bit more so I can buy more. No, not a sucker...I've done thorough homework on their product line and have asked women what they think about the concept behnd the soft in Cytocore's softpap. Seems none of them like their cervix's scraped and brushed as is done currently...very uncomfortable it seems.

2008 Feb 16 09:42 PM

[Michael Goode:]

Hey, I hope you are right and the product is good and the company can capitalize on it. If so, the world will be a better place. I will certainly not be investing, though.

2008 Feb 16 11:53 PM

[Michael Goode:]

Also, please note the following correction: the $1.5 million is not the cash burn but the negative cash flow from operations; the company's cash did not decline over the last year, but only because it issued shares and certain investors exercised warrants. So while the company is not closer to bankruptcy than it was a year ago, it is financially weak and it will need to continue to issue shares to survive. I still believe that management's buying of shares is not nearly as positive an event as the press release made it seem.

A corrected version appears on my blog. I apologize for any errors.
www.goodevalue.com/200.../

2008 Feb 16 11:58 PM

[Michael Goode:]

The correction mentioned in my above comment has been made to the article now.

2008 Feb 24 06:32 PM

[PRVBWealth:]

Hey Nerd Ball Michael K Goode here is a good article for you to read tonight before you go beddy by:

www.andrewtobias.com/b...

Best take heed to what it says or you may be sleeping in them streets over there in St Louis.

2008 Mar 19 12:59 PM

[PRVBWealth:]

justonce: Goode is on public record as saying he is not shorting CYOE. If he can't put his money where his mouth is, then he's just tagging on a bathroom wall. Let him spray paint all he wants.

Look, you've seen my writing skills. I believe I can be as engaging, as provacative, and as funny as any professional out there. I believe talents on loan from God should be used for the betterment of the planet. Is Goode a benevolant errant knight bent on protecting us from ourselves? I doubt it. He IS an outstandingly gifted writer, to be sure. Funny as hell, right up my alley, but one with a bone to pick (very similiar, in fact, to me). I think that, for the most part, Wall Street goons are the greasiest creatures to ever slither across the earth. Not CCI, however. I admire their mission, missteps aside.

We're just fine. Relax.

2008 Mar 19 10:07 PM