At the beginning of the week, the long-lasting downtrend of Generex Biotechnology Corp. (OTC:GNBT
, GNBT message board
) stock resulted in a new bottom for the share price. Although GNBT recovered the losses yesterday, it looks like the company fails to meet investor expectations recently, and keeps silent on certain important for shareholders issues.
Yesterday's session closed at $0.118 after GNBT kept climbing up the whole day, the total gain over the previous close being 12.38% and the trading volume being below the average. On Monday, the session looked quite differently as GNBT share price fell to a new low for the past 52 weeks, namely to $0.10 for a share. The general trend is clear though: from over $0.30 at the beginning of the year, GNBT is barely worth one third of that value as of yesterday.
One reason could be found in GNBT latest 10-Q. In May this year, the former CFO of the company filed a lawsuit against the company, certain of its Directors and its President and CEO. In the notice of application submitted to the Court, the former CFO claims that her interest as a shareholder, officer and Director of the company have been prejudiced. The claim concerns also the preparation of certain financial reports.
According to the 10-Q, the hearing to this proceeding was expected to take place at the end of June, yet there is no news on that issue whatsoever. Additional negative impact on the stock must have also had the increased dilution risks to which the company exposes its shareholders.
At the beginning of July, Generex entered into a securities purchase agreement with certain investors for the sale of 2,575 shares of GNBT Series A 9% Convertible Preferred Stock, as well as warrants to purchase a total of 100% of the common shares issuable upon conversion. The total amount to be raised from the offering is $2.575 million, while a total of 34.33 million shares of common stock are issuable upon conversion of the preferred stock. The effective conversion price is initially set at $0.15, but is subject to adjustments in certain cases.