Spherix (SPEX) Stock Is One To Watch After Shareholder Update

Spherix Inc (NASDAQ: SPEX) issued a shareholder update this morning, announcing a potential special dividend, updating investors with regard to a potential acquisition and reminding investors of a vote that will take place on September 5, 2019. Here’s what’s going on:

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SPEX Issues Shareholder Update

As mentioned above, Spherix issued a press release early this morning, announcing a shareholder update. In the release, the company reminded investors that it will be holding a Special Meeting on September 5th, and provided additional pre-meeting developments. 

One of the big factors on the docket here has to do with the potential acquisition of CBM pharmaceutical assets. The goal here is simple, with a large amount of liquid assets on its balance sheet, the company is looking to acquire pharmaceutical assets with the goal of transitioning into a cutting edge pharmaceutical company. 

In the issued release, SPEX also pointed to its investment it made in Hoth about two years ago, an investment that is now worth more than $10 million. In an effort to reward its investors, the company is looking forward to proposing a dividend of One Hundred Thousand shares of Hoth stock, which works out to be more than $500,00 in value. 

There’s a bit of a kicker here. The dividend is only going to take place should the transaction with CBM come to fruition. In fact, the company said that the special dividend will be paid upon the consummation of a transaction with CBM to shareholders of record on the date of such consummation.

Once the acquisition of these assets takes place, the company will focus the vast majority of its efforts on growing and developing its portfolio.  

Important Information To Consider Here

On June 19, 2019, Spherix announced its intention to acquire pharmaceutical assets from CBM. Importantly, the company previously announced that it had taken a 20% stake in the company. This is key to understanding the value of the acquisition of CBM assets. 

If shareholders approve the transaction, SPEX will pay about $7 million in stock, plus cash, for the acquisition of the pharmaceutical assets. However, there’s a caveat. Due to the fact that Spherix owns 20% of CBM, if and when CBM decides to sell shares associated with this deal, about 20% of the proceeds, or little more than $1 million, would come directly back to Spherix. That’s important as it means that a large portion of this deal will be completely self-funded

There’s also a question that I’d like to ask you. When was the last time you saw a Nasdaq-listed company, trading with a market cap of around $5 million, declare a dividend. Chances are that you can’t remember a time, and for good reason. This type of move is unheard of. However, Anthony Hayes, CEO at SPEX has made it clear that he intends on returning value to his investors, and this potential dividend goes to show that he also intends on putting his money where his mouth is. 

The Bottom Line

The bottom line here is simple, Spherix is quickly transitioning from a company that makes money through investments and the licensing of IP to a company that is focused on pharmaceutical development. This is a smart move. At the end of the day, the company trades well below book value and has the financial capability of advancing clinical opportunities. Moreover, through the advancement of potential treatments, SPEX has the potential to become an overwhelmingly valuable play in the long run. While this type of transition generally takes a bit of time, those that get in early have a lot to look forward to, especially considering the fact that the company is run by a CEO that believes in giving back to and supporting his shareholders. All in all, this is a stock that’s well worth paying attention to. 

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CNA Finance, parent company to Alpha Stock News, has a monetary relationship with Spherix.

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