BioPigs Lining Up at Trough

The state of California hasn’t started handing out money from the $3 billion stem cell bond issue, but companies are getting ready to put that public money to work:

CITY OF INDUSTRY, CA –(www.FinancialNewsUSA.com)– 01/07/2005 – U.S. BioDefense is pleased to announce today that it has adopted a resolution to seek stockholder approval for authority to implement a forward split. The forward split exchange ratio that the board of directors approved and deemed advisable and for which it is seeking stockholder approval is three post-split shares for each one pre-split share, with the forward split to occur as of January 31, 2005.

According to CEO, David Chin, “We are positioning to leverage our new Stem Cell technology transfer focus in response to the potential of California’s $3 Billion Stem Cell Research Fund and a Department of Defense BioDefense Grant available related to Embryonic Stem Cell technology commercialization. The board of directors believes that the lower share price could help generate further interest in our operations from relationships with Universities, Research Labs, and Wall Street thereby adding more fundamental value and creating a more liquid market for our shareholders. A white paper analyzing California University Stem Cell technology resources and industry participants Stem Cells, Inc. (Nasdaq: STEM), Geron Corp (Nasdaq: GERN), and Aastrom Biosciences (Nasdaq: ASTM) will be released in coming weeks.”

THREE-for-one stock split? These guys must be pretty confident. I wonder why?

Who is U.S. BioDefense? Let’s see: Their website reveals that CEO David Chin–who is also listed as the contact person on the press release–holds over 9 million of the company’s 10.1 million shares of common stock.

I’m pretty sure the stockholders will approve that three-for-one split.

So what exactly is USBD all about?

We were incorporated in the State of Utah on June 29, 1983, under the name Teal Eye, Inc. We merged with Terzon Corporation and changed our name to Terzon Corporation in 1984. We subsequently changed our name to Candy Stripers Candy Corporation. We were engaged in the business of manufacturing and selling candy and gift items to hospital gift shops across the country. (Wha–? From hospital candy to biodefense?)

In 1986 we ceased the candy manufacturing operations and filed for Chapter 11 Bankruptcy protection. After emerging from Bankruptcy in 1993, we remained dormant until January 1998, when we changed our name to Piedmont, Inc. On May 13, 2003, we filed an amendment to our Articles of Incorporation to change our name from Piedmont, Inc. to US Biodefense, Inc.

O-kay. And what are the company’s prospects?

We have cash on hand of $45,508 as of August 31, 2004, and may be unable to continue operations for the next at least 12 months if we are unable to generate significantly greater revenues or obtain capital infusions by issuing equity or debt securities in exchange for cash. If we are unable to obtain capital through issuances of equity or debt, David Chin, a shareholder and President of our company, has verbally agreed to loan us cash, which shall bear no interest and be due upon demand. As of August 31, 2004, Mr. Chin has loaned us $3,894 to cover our daily operations. The loan bears no interest and is due upon demand. We have no formal written agreement with Mr. Chin for such loans, and we cannot guarantee you that we will be able to enforce this agreement. Notwithstanding this, there can be no assurance that we will be able to secure additional funds in the future to stay in business. Our principal accountants have expressed substantial doubt about our ability to continue as a going concern because we have limited operations and have not commenced planned principal operations.

Well, it appears that stem cell bond issue in November turned things right around for U.S. BioDefense. Sounds like a just-in-time “cash infusion”.

Now, here is another Very Odd Thing: The closing price for USBD stock today was $23 a share. Maybe it’s because I’m not an investment expert, but I just can’t figure out how a company that borrows four grand from its CEO to keep the office open builds a market cap of over $21 million.

How many other companies like this are lining up for a ride on the taxpayer gravy train?

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