About 2 hours before the open, Medisafe 1 Technologies Corp. (OTC:MFTH) issued a press release saying it would be starting a buyback program.
Supposedly, MFTH will be buying back shares over the next one to three months. The company intends to repurchase up to 10 million shares of common stock for up to $0.10 per share.
The press release also says the purpose of this program is to allow MFTH to use the shares in future acquisition of technologies. Additionally, Jacob Elhadad, CEO, said there will be news about acquisitions in the forthcoming weeks.[BANNER]
The news seems exciting, and MFTH opened at $0.0111, but at the time of this writing the stock is trading around $0.0087. So far more than 7 million shares have changed hands.
Assuming it’s the company buying the shares, the volume so far would satisfy more than 70% of the intended buyback volume. Why would anyone sell at these levels, if the company is ready to pay up to $0.10 per shares, is a bit of a mystery.
Perhaps, some traders have noticed that the company shouldn’t have the money for such a significant repurchase. As of March 31, 2012 MFTH had just $2 thousand in cash and cash equivalents. The company hasn’t announced any financing after that date, nor has it reported revenues.
At this point a number of questions remain unanswered. How did MFTH intend to finance the buyback? Why are people selling at 10% of the price announced by the company? If the company has enough money to buy back the shares, why wouldn’t MFTH use it for the acquisitions, mentioned in the press release?
Maybe the promised announcements will shed some light on those matters.
