At the end of the week, BakBone Software Incorporated (OTC:BKBO
, BKBO message board
) aimed the top of the chart and it still climbs up
progressively. Yesterday, the stock soared 24.44% on the market and its volume hit approximately 7 million shares traded.
The most reasonable explanation standing behind the gain appears to be yesterday's news that Quest Software has signed a definitive agreement to acquire BakBone. According to the announcement, "Quest expects to pay approximately $55 million, including the payment of certain debt obligations and net of anticipated cash on hand" and "BakBone shareholders will receive $0.33 per common share and $1.29 per preferred share following the closing of the acquisition".
Obviously, this was the particular reason that has intrigued investors and they started to buy BKBO shares, inspired by the profitable projections. The only thing left is the Proxy Statement, which BKBO is to file with the SEC and the Canadian securities commission and which has all details regarding the proposed acquisition.
BakBone Software is a provider of data protection, retention and availability technologies that reduce storage management complexity. At the beginning of the year, the company traded much higher, while presently its trading range varies between $0.31 - $0.32 per share.
According to its quarterly report, revenues of BKBO have decreased and the company's liabilities are about 4 times higher than its total assets. As of June 30, BakBone had $4.9 million of cash and cash equivalents and $40.6 million in negative working capital. As the company has incurred substantial net losses since inception, the management is afraid that, "we may not be able to achieve or maintain profitability or positive cash flow".
The team believes the existing cash and anticipated net cash flows will be sufficient to meet its capital requirements for at least the next 12 months, however, if BakBone doesn't get profitable in the future, this would have a material adverse effect on its business.