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NovaDel Pharma Inc. Resolves Contingent Liabilities Related to its Sale of ZolpiMist Assets

It has been well over a year since NovaDel Pharma Inc. (OTC Pink: NVDL) announced the sale of its ZolpiMist assets to Amherst Pharmaceuticals, LLC.  Compensation for the deal basically consisted Amherst assuming all of NovaDel’s FDA liabilities associated with ZolpiMist which at the time totaled approximately $2.2 million.  In addition, Amherst agreed to pay NovaDel a 10% royalty on the sales of ZolpiMist up to an aggregated maximum of $500,000 with an annual minimum payment of $150,000.  Now over a year later, Amherst has struck a payment deal with the FDA and has assumed these liabilities from NovaDel finally completing this chapter in the company’s history.

The question is where does NovaDel go from here?  According to management, the company has approximately $1.7 million in net assets which is mainly cash and a potentially valuable $60 million in Federal Net Operating Loss Carryforwards (NOLS).  Management has stated it will evaluate it options over the next few months and take appropriate action by the middle of 2016.  Appropriate action is likely one of two scenarios.

First, would be to liquidate the company and lose the value of any NOLs.  This would give investors safe return of their capital.  At last count on October 25, 2011, there was approximately 134,890,615 which would value its net assets at approximately $0.0126 per share.  There were also approximately 76,869,369 outstanding warrants, but all with exercise prices substantially above the current market value and some have theoretically expired.  The warrants did have down-round provisions, but since the company has not reported since 2011, it is unclear how this impacted the outstanding warrants.  According to the 10-Q, these down-round provisions would only be triggered if the company either issues equity shares for a price that is lower than the exercise price of those instruments, or issues new warrants or convertible instruments that have a lower exercise price.  It is not believed this occurred, but again, the company has been dark since 2011. 

The second and potentially offering the highest return for shareholders, may be to preserve the value of the NOLs by acquiring another profitable company that could take advantage of this asset.  Of course this only works for investors if they are not significantly diluted and a change in control is avoided as it can negate the NOLs. 

In either case, there could be an opportunity in NovaDel going forward, however investors should proceed with extreme caution as current financial information is not available.

Disclosure: The author owned shares in NVDL at the time this article was published.

Wilshire Enterprises gets Superior Offer from Bond Purchase, L.L.C.

On December 18, 2015, Wilshire Enterprises, Inc. (OTC Pink: WLSE) announced it entered a definitive agreement with J&J Brothers Holdings Inc. (J&J)  The principal owner of J&J, Sherry Wilzig Izak, is also the Chairman and CEO of Wilshire.  Ms. Izak owns approximately 71% of Wilshire.  The agreement essentially offered to acquire the remaining outstanding shares not affiliated with Ms. Izak for $1.50 per share which was a substantial premium to the last trading price.  However, the agreement left the door slightly cracked for a superior offer. 

After the market closed yesterday Wilshire announced it had received a letter from Bond Purchase, L.L.C. stating its desire to purchase 20% or greater of the issued and outstanding common stock of Wilshire for $2.00 per share in an all cash transaction.  This is superior to the J&J offer by roughly 33%.  It is important to note, that Wilshire’s own financial adviser hired to issue a fairness opinion valued the company as high as $2.85 per share.

Disclosure: The author owned shares of WLSE at the time this article was published.

 

 

The Stephan Co. Confirms Another Dividend Payment of $0.075

On July 15, 2015 The Stephan Co. (OTC Pink: SPCO) announced it planned to initiate a regular dividend payment of $0.075 to paid on a semi-annual basis for an annualized payment of  $0.15.  In the same announcement the company noted  its barber distribution division was currently on target to generate approximately $0.20 per share in annual free cash flow.  This number excluded corporate overhead, but gave investors confidence the company may be able to cover the $0.15 per share annualized dividend payment.

On August 24, 2015 the company made good on the first half of its promise and announced the first dividend payment in the amount of $0.075 would be paid on August 31, 2015.  Last Friday, the company came through and announced its second dividend payment in the amount of $0.075 would be paid on February 29, 2016 to shareholders of record on February 10, 2016.  The annualized rate of $0.15 gives this micro cap company a yield of approximately 14.5%.   At the end of last year the company announced it had completed the sale of its Tampa, Florida property for net proceeds of $1.0 million which should give investors confidence it has the cash to maintain the dividend for at least the remainder of the year and ongoing as long as operations deliver the necessary free cash flow. 

Disclosure: The author owned shares of SPCO at the time this article was published.

Battered Hong Kong Based Agria Corporation Receives Offer

Like many stocks, it has been a rough start to the year for Agria Corporation (NYSE: GRO).  However, this morning things are looking up… A little.  The company announced it received an offer for $1.20 per ADS which is a 10% premium to yesterday’s closing price.  However this is still 13% below where the company’s share price started the year and nearly 37% under the shares 52-week high.

There is probably a little upside in the shares on the open, unless traders believe this possibly perceived low ball offer will be followed by higher offers in the future.  I have not personally looked at the fundamentals of this company and cannot comment as to whether or not this is a fair price.

Disclosure: The author did not own shares of GRO at the time this article was published.

Verso Corporation Strikes Deal with Creditors a Day after Filing for Bankruptcy

A day after Verso Corporation (OTC Pink: VRSZ) announced it had voluntarily filed for Chapter 11 protection, the company announced it has struck a deal with creditors holding a substantial amount of its debt.  Of course as part of the deal, current shareholders will be wiped out and the creditors will take over the company.  The new Verso will come out of the restructuring with approximately $2.4 billion in debt being eliminated. 

In a press release yesterday announcing the bankruptcy, management indicated the company’s untimely acquisition of NewPage Holdings Inc. a year ago along with declining demand and a strong dollar increasing imports as the primary reasons for its slide into bankruptcy.

While the current shares now trading under the symbol VRSZQ are essentially worthless, keep an eye out for the new equity which will likely trade on the OTC Markets initially.  It will likely be very illiquid, but could provide an interesting investment opportunity if the new found breathing room and be translated into a successful turnaround of the company.  However, I would probably take a wait and see approach until there is more clarity. 

Disclosure:  The author did not own shares of VRSZ at the time this article was published.