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Resonant 4Q19 preliminary results & stock offering -5

02:04 07-Feb-20


Resonant has priced the sale of at least 16.6M, and potentially over 19M, shares at $1.50 each.  This will raise at least $25M in capital, which should get the company through 2020, but as implied below, something seems amiss.  Unless this turns out to be a scheme for Murata or some insider to get more of a stake on the cheap, this disqualifies my prior price range.  Even if it is such a scheme, the manner in which it was done indicates management that is not aligned with ordinary shareholder interests.

On 2/6/20 5:36 PM, Esekla wrote:
In conjunction with a public offering of common stock, Resonant has filed an 8-K announcing preliminary results for its fourth quarter:
  • a net loss of $7.7-8.0M equates to a loss of 32 cents per share, by my calculation, missing by 5 cents
  • from $400-500K in revenue, which beats by $208K at the mid-pont, after estimates were lowered in conjunction with guidance from the last report.
My loss per share calculation is based on current 32.5M shares outstanding.  Of those, 10M are non-floating and could be sold so as to only dilute the balance sheet, rather than shareholders directly.  The company also had $10.7M of cash on the balance sheet at year end, and over $8M in operating expenses from increased development.  So, this was needed within the quarter. 

However, I still have to wonder about the manner in which this is being done.  The unspecified public sale offering has predictably sunk RESN by over 20% after hours, to $1.72 and there is no mention of the preliminary results, which actually do point to the revenue ramp that I was looking for.  It's easy to believe that management doesn't care about shareholders, but unless there is already some plan waiting int wings, they should care about capital, and this doesn't seem like the best way to raise it.  We'll see what the terms are soon enough, and whether or not the initial market reaction holds.  Most of all, we need to hear that the relationship with Murata is intact.