Shares of Imaging3 Inc (OTCMKTS:IGNG) are surging on reports the company is an acquisition target. The company has already signed a non-binding letter of intent that paves the way for a Los Angeles based company to complete a reverse merger.
Share Price Analysis
The acquisition charter comes on the heels of Imaging3 completing a critical transition in leadership as well as establishing strategic partnerships as it eyes an FDA market clearance. The acquisition, however, remains the main catalyst behind the 600% spike in share price and market value. Completion of the reverse acquisition is set to expand the company’s operations into the multibillion-cannabis industry.
Price action activity indicates the stock is staring at the $0.15 mark, a critical resistance level. A violation of the critical resistance level should affirm the emerging uptrend, bringing to an end a bearish trend that had threatened the stock’s long-term prospects. Below the $0.15 mark, the stock remains susceptible to further drops, as was the case last year.
Imaging3 casts itself as a development stage company focused on the development of disruptive technology in the medical imaging industry. The company boasts of patented medical imaging technology, dubbed Dominion SmartScan used for the delivery of 3D X-ray images in real time.
Reverse Merger Push
Imaging3 upside action in the market appears to have received a boost on the confirmation that the company is a reverse acquisition target for a Los Angeles-based company. According to the Chief Executive Officer, John Hollister, the acquisition should go a long way in strengthening the developmental and commercialization of the company’s Dominion 3D X-ray imaging technology.
“We believe that the proposed Acquisition announced today will help us to resolve these obligations more easily, thereby allowing the Dominion to devote a substantially larger percentage of the anticipated $3M funding to future endeavors as opposed to existing obligations. Conducting the Dominion enterprise in a new private entity will also eliminate the not insignificant costs of being a public entity,” said Mr. Hollister.
The Chief Executive officer also expects the merger to provide a perfect avenue for Imaging3 to expand its footprint into the cannabis sector. The Acquirer has already positioned itself strategically to become a market leader in the multi-billion industry.
The reverse acquisition should also be of great help to the Acquirer, as it stands to gain access to the public equity markets. Exposure to the equity market would accord the company an opportunity to access either debt or equity financing, crucial to maximizing value in the combined company.
The company that is acquiring Imaging3 holds licenses in the state of California that allows it to engage in the production and distribution of cannabis products in the state. Having commenced operations in 2018, the company has gone on to generate revenues of more than $550,000 from its operations.
A merger with a company with a big financial base is what Imaging3 needs as it pursues marketing clearance from the FDA for its Dominion SmartScan system. The company is in the process of accruing the necessary finances needed to accelerate and complete the process of achieving 510k submission.
“We continue to anticipate that the 510(k) submission should follow approximately two quarters after completion of this key financing event. With 2019 at our doorstep, our prime focus remains fixed on securing this enabling financing as soon as possible. We are confident that we now have in place the leadership team needed to guide our execution of instrument development, clearance and commercialization plans, upon successful financing,” Hollister in a statement.
Late last year, the company announced plans to carry out a fund-raising drive as part of an effort of pursuing a listing in a major stock exchange.
What Next For IGNG
Imaging3 has achieved significant milestones as it continues to push for an FDA market clearance for its Dominion SmartScan system. A reverse merger with a privately held company is a development poised to have a positive impact as the company seeks to reinvigorate its prospects in the medical imaging space.
Expansion into the cannabis sector thanks to the Acquirer’s core business is another development that continues to affirm the company’s long-term prospects. In line with recent developments, 2019 is slowly turning out to be a break out year for Imaging3, after a long period of underperformance.
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Disclosure: We have no position in IGNG and have not been compensated for this article.