Calyx, Not Your Usual Turnaround

The junior markets have been nearly impossible to navigate these last few years, many investors have simply fled to greener pastures or re acquired the dreaded day job.  For those that survive the decision to place capital in a given venture has become increasingly difficult, until now.  It is definitely a buyers market but if you look closely a few companies that have survived are re structuring and re inventing themselves  with new capable management teams ready to begin anew, at the very bottom of the market.

I have had the great pleasure of meeting and speaking with Roger Forde, the new CEO of Calyx Bio CYX-V.  One of the first questions I asked is “when is the name change coming”?  His response was at first surprising, then refreshing.  “It isn’t” he replied.   The usual rinse wash and repeat will not be happening with Calyx.  There is no rollback, the re-structure has happened in the board room.  As a long time shareholder I’m very pleased.

As a vehicle CYX is very attractive, its share count isnt overblown, shareholder base is loyal and more sophisticated than average with a large insider ownership and the balance sheet has been repaired with the sale of the Agrisoma asset. At $49 a barrel it will be a long time before most if any bio fuel outfits are viable never mind profitable.  The timing of the pivot from bio fuel to Agri software has given CYX an advantage.

Calyx completed its acquisition of Cannigistics Agri Solutions in December of last year.  It was billed as a software supplier to the MMPR business in Canada.  Akin to supplying the gold rush with picks and timber.  I very much supported the choice to not go down the lengthy and very capital intense road to producer status but realized what kind of business can you build with a customer universe consisting of 13  licensed producers?

Luckily Roger thinks a little bigger than I do.  We are not restricted to software expressly focussed on the MMPR space.  Mid March of this year CYX announced a memorandum of understanding with a third party with respect to the implementation of a clinical trials software platform.  The customer universe just exploded,  no one noticed.

I recently read a quote from a poster kidl on SI that exemplifies market sentiment these days

“…the same applies to microcaps. First show me what you can actually do. Then tell me what you think you might be able to do in the near future. Most MC’s reverse this sequence. We all know what the results look like most of the time.”

basically saying “show me the money!” a la Jerry Mcguire.

Roger has been working behind the scenes getting ducks in a row and working with the two MOU’s to do exactly that.  It has been several months since the clinical MOU was announced and several more since the first announcement with a well-financed Canadian company in the advanced stages  for a MMPR licence from Health Canada.

Looking at the trading over 9.3 million shares have traded under a nickel since October 2014.  Friday close was .05, this leads me to believe many of those shares have gone to savy investors that are willing to wait and see what Cannigistics can do!

The fact that we are at rock bottom in this market with a company that has been working hard behind the scenes for most of this last year with no one noticing gives me some excitement that when news hits the market will re adjust upwards fairly quickly.