$ENZC NASDAQ Is Finally Within ReachWith a mission to provide effective and affordable treatments for infectious diseases, Enzolytics Inc. (OTC: ENZC) has risen to prominence during the pandemic. ENZC stock has witnessed unprecedented interest from investors thanks to its ambitious mission to treat HIV and its unique AI technology. Currently, the company is looking to advance its collection of patents, however, that process requires a lot of cash which it does not have at the moment.
That said, the company could achieve its goal soon as its anticipated SPAC merger with Sagaliam Acquisition Corp. (NASDAQ: SAGA) appears to be only a matter of time after both companies signed the business combination agreement and are currently in the de-SPAC process. Considering the share dividend its shareholders will receive after the consummation of the deal, ENZC stock appears to be a bargain at current levels.
ENZC Fundamentals
Back in April, ENZC and SAGA entered into an agreement where the latter would acquire the company’s subsidiaries Biogenysis, Inc. (BGEN) and Virogentics, Inc. (VIRO), in addition to adopting SAGA Scientific Holdings Corp. as its corporate name. In exchange, ENZC shareholders will own the combined company since SAGA will issue 45 million shares to the company’s shareholders. Out of these 45 million shares, 9 million shares will be issued to the company’s insiders, leaving 36 million shares to the rest of shareholders.
Currently, ENZC has an OS of more than 3 billion. This means that ordinary shareholders are set to receive the equivalent of $.1167 per share considering the SPAC’s PPS of $10. Since ENZC stock is currently trading at $.449, taking a long position in the stock could be a no-brainer as shareholders are entitled to receive the $.1167 per share even if SAGA’s share price drops below $10 after the de-SPAC process.
The reason behind this is that the SPAC agreement includes a make-whole provision which means that SAGA would issue more than 45 million shares to ENZC shareholders if its share price drops below the $10 mark to ensure that they receive $450 million. At the same time, ENZC shareholders will continue owning their ENZC shares after the consummation of the deal.
That said, it is likely that the company could enter into a reverse merger since it would have minimal to no assets or operations as its main subsidiaries would be under SAGA’s umbrella. In this way, ENZC stock could add more value to its shareholders if it secures a profitable reverse merger. However, this remains speculation as the only known fact is that ENZC will remain an active ticker after the merger.
As is, it could be a matter of weeks until the merger is finalized. Currently, ENZC and SAGA are in the first phase of the de-SPAC process where both companies file an S-4 proxy statement with the SEC. This phase usually takes between 2-4 weeks to complete as the SEC sometimes asks the merging companies to clarify certain information in the S-4.
Once the S-4 is active, the merging companies determine a date for shareholders to vote on the merger. To facilitate this, a proxy solicitor is hired to contact the SPAC’s shareholders to inform them of the upcoming vote and to encourage them to participate in the vote. This process usually takes an additional 2 weeks to complete.
The third and final stage of the process takes around 2 weeks and the merging company – ENZC in that case – holds a roadshow to meet with the SPAC’s shareholders to persuade them to approve the merger. If the deal is approved, the merging companies would release an 8-K announcing the conclusion of the deal – signaling the beginning of the combined company’s NASDAQ listing.
Based on this timeline, the deal can be estimated to be complete by late October or mid-November which could see ENZC stock run throughout that period as more investors look to secure the dividend. However, investors should note that the de-SPAC process could take up to several more months depending on the length of the SEC’s review of the required filings.
Technical Analysis
ENZC stock is in a neutral trend with the stock trading in a sideways channel between $.0405 and $.0511. Looking at the indicators, the stock is trading above the 200 MA which is a bullish sign, however, it is below the 50 and 21 MAs which is a bearish sign. Meanwhile, the RSI is neutral at 48 and the MACD is approaching a bullish crossover.
As for the fundamentals, the S-4 filing with the SEC becoming active will act as a major catalyst for ENZC stock since this phase takes the most time compared to the rest of the de-SPAC phases. Considering that shareholders are set to receive a $.1167 dividend per share, going long on the stock at current levels may provide a lot of upside.
ENZC Forecast
ENZC’s NASDAQ listing is now a matter of time after the company signed the business combination agreement with SAGA. As is, the deal could be closed in 6 – 8 weeks which could allow the company to access the funding it needs to advance its patented treatments to pre-clinical studies. At the same time, the deal would add substantial value to the company’s shareholders since they are set to receive a dividend worth $.1167 per share, whereas its share price is currently at $.0449. Based on this, going long on ENZC stock at current levels may prove to be a profitable decision.
