By Relmor Demitrius

Sirius XM enters this week with a lot of uncertainty in the air regarding its status on a potential reverse split, and what are exactly the dates of interest for them in determining their listing requirements.  This article will try to help answer some of those questions.   As is usually the case in the investment world, private investors are left to their own devices in determining facts and processing comments from management on these touchy investment issues.  Getting a straight answer out of a company on a highly volatile issue is a lesson in futility.  Sirius XM can only of course give the legal answer, the guarded response, or in most cases even the obvious answer.  There is potential in this situation for hints or motives of intent in regards to these issues.  We know the facts of the process of getting an exception and we know Sirius XM’s stated intent and opinion on the subject.

On the issue of the reverse split to stay delisting from the Nasdaq Global Market, Mel Karmazin, CEO of Sirius XM Radio (Nasdaq:SIRI), has been very vocal.  Regardless of the debate that a reverse stock split is good or bad for the company, let’s just focus on the rules and dates and comments from Mel in regards to this issue. 

Mel Karmazin has stated time and time again, with absolutely no variance in his opinion, that Sirius XM will issue a reverse split,(the stockholders have voted management the authority to enact a reverse split to remain listed on the Nasdaq Global Market at any time prior to June 30^th), only to avoid delisting.  It has been Sirius XM’s position they the company did not want to do one.

Mel has stated that he has been working with the SEC and the NASDAQ on a possible exception. 

According to NASDAQ current bid price rules, Sirius XM can have up to 7 calendar days to file a request for a hearing to seek an exception, after March 15^th passes.  As Mel has stated he is trying for an “extension”(it’s actually called an exception according to NASDAQ diction, of up to another 180 days from the expiration of the original non compliance period of 180 days that ends on March 15^th(no one gets an exception indefinitely).  Since Mel has stated he intends to fight a forced reverse split I would expect the following to occur.  That gives a total of 360 days from September 17^th to get the price over $1, if successful in their hearing.

As you cannot file for a hearing until a Staff Delisting Notification is given, Sirius will do nothing until March 15^th, and then has up to 7 calendar days after that to file for a request for a hearing. 

This statement below is pulled directly from Nasdaq.com.

      “The company must request a hearing within seven calendar days of the date of NASDAQ’s delisting determination letter. If a request for a hearing is made within seven days, no delisting action will be taken until the company has had its hearing and the Hearing Panel has issued a written decision.”

These hearings are automatic, and will immediately stay the delisting until the hearing process is resolved.  As we will see later in this article, this process can take a great deal of time.  As have been reported or speculated, this would involve nothing to do with dropping down the the Nasdaq Capital Markets.  No, they will absolutely NOT be force to enter the NASDAQ Capital Markets to do so.  Doing this does give them an automatic 180 day extension from March 15^th   date, but I don’t not believe Mel Karmazin will choose this option.  This platform my offer less volume, and in general is a risky move.  He also has never hinted at this course of action either, nor is it logical in anyway they would choose this direction. 

So back to the process in question.

It can take 30 to 45 days to get a hearing, and another up to 45 days to receive a verdict.  At that time, a positive verdict would grant Sirius XM another 180 days from March 15^th to comply. 

Again, directly from Nasdaq.com.

     “If the Panel determines that the company has presented a definitive plan that will likely enable it to achieve and sustain long-term compliance, it may grant the company a conditional listing, known as an exception. Exceptions are of limited duration and often incorporate milestones measuring the company’s progress in regaining compliance. A Panel has discretion to grant an exception not to exceed 180 days from the date of the Staff delisting notification.”

This means things like financial strength, historically trading well over $1, and other factors can work favorable for their situation, including their large market value.

One of the conditions must be present to consider an exception is a reverse split plan in place, and is why Sirius XM has the power already pre approved well in advance for this review process.  This can EASILY be extended by a simple vote as well, and would be without a question approved by stockholders.  Very little uncertainty here. 

An independent panel will decide the outcome, and NASDAQ can issue papers to this panel with their opinions to the outcome.  No company can receive more than 360 days from the date of non compliance, which is September 17^th, 2009.  Unless Nasdaq is seeking to change these rules too, which we do not have any proof of at this time, we must assume these are the rules and options available right now.

According to Sirius XM IR department, and hints from Mel Karmazin himself, and for obvious reasons that Sirius XM is a high volume trader, with a huge market cap, NASDAQ is apparently on their side.  As it is not NASDAQ’s decision, they cannot give them the exception without going through this process.

Now that we have some facts to work with, there are some rumors I would like to address.

This Friday, February 12^th has significance. 

No it does not, as explained.  The decision to file for the hearing has already been implied by Mel everytime he talks in disfavor of being forced to do a reverse split to simply save being delisted.  If Sirius XM intends to seek an exception, this date has zero relevance.

March 1^st.  Day Sirius XM must warn stockholders of their intent to do a reverse split, giving the appropriate 15 days notice.

No relevance.  Sirius XM has already stated they are seeking an exception. 

March 15^th.  Day they will receive the Staff Delisting Notification.

It is significant, but this is neither the day they would be delisted, nor the day Sirius XM has to do or announce a reverse split by.

As we can see, there is a much longer time frame they are working with here.

Recent notice of adaptation of Minimum Bid Price rules being applied to Market Value rules by the SEC somehow affects this stock.

Absolutely not.  Sirius XM was never in violation of the market value listing requirement, but the minimum bid price requirement.  A notice from the SEC circulating about SEC approving new NASDAQ listing rule requirements for market value, doesn’t have any relevance to Sirius XM situation, as they were never in violation of the market cap listing requirement.  Now, this could strengthen their case when going forward with this process, definitely, but that would be entirely speculation at that point.

Attempts are being made by NASDAQ to make the market cap and minimum bid price listing requirements and procedures uniform and consistent.  This however does not change any existing rules that Sirius XM is working with at this time.

Although there is clear evidence to support a time frame longer than March 15^th for this process, keep in mind Sirius XM has in their power to announce a reverse split at anytime they feel it is in the “best interest” of stockholders.  Mel’s position is that doing a reverse split just to do one is not something Sirius XM wants to do.  So as you can see they have options, if this is indeed the case. As Sirius XM is trading so close to $1 even before earnings right now, there is definite optimism abound that Sirius XM will indeed avoid the need to enact a reverse slip or even have the need to ask for a hearing, at this time.  Any additional time would probably seal the deal on under $1 trading, and with plenty of time still in play, all these factors could simply be irrelevant anyway by achieving a rise over $1 and holding for 10 trading days well before March 15^th, in which case no Delisting Letter would be forthcoming.

By Steve Garcia

Sirius XM (NSDQ: SIRI) continues to improve their standing as a viable company. The release of the Blackberry application PR from the company is just another tell tale sign that the company is marching forward and looking to the future in many directions: http://investor.sirius.com/releasedetail.cfm?ReleaseID=443007  The stock has seen a recent increase in daily volume and value despite some recent fear and bearishness from people worrying about a possible reverse split due to listing requirements for NASDAQ. To that end, CEO Mel Karmazin appears to be executing a plan to ensure the company stays listed on the NASDAQ Global Market. Some have even theorized that the company should r/s now to mitigate manipulation due to such a large share count. This would be a bad move in my humble opinion and I believe it is not the intent of Sirius XM or Mel Karmazin to let that happen now. Too many positives have been and continue to be achieved.

As several of us here at King of All Trades have stated of Sirius XM over the last few months, the combined company is presenting and executing a different business model than in previous years as separate companies. They have grown revenue and increased cash flow in one of the most challenging economies of our lifetimes, as well as stemmed the flow of subscriber losses with many consumers having much less discretionary income. The company has also stayed on point with improving costs through merger synergies and with continued improvements quarter over quarter in operating expenses. The fundamentals continue to move forward in positive fashion. Early press for the upcoming conference call is positive….so…try to think about why you invested in this company in the first place. The short term price swings are not important in the big picture; they are merely scenes in a play. You are not supposed to get in on opportunities like this, many try to shake your confidence in hope of getting your shares…and forcing you to buy higher…taking your hard earned profits, so know the risks, formulate a plan if you do not have one already and stick to it. The rest will sort itself out.

Sirius XM has yet to report on Used Car program numbers and their impact to the bottom line subscriber numbers, or the full impact of the new Skydock to retail subscriber numbers. The company continues to assert itself as a force to be reckoned with in Media and Content distribution. Liberty Medias (NSDQ: LCAPA) investment in Sirius XM last February has reaped a lot of fruit to date, and according to Greg Maffei of Liberty, Sirius is on track to continue to improve so much, that it will use up its NOLS far sooner than anticipated. As a side note, LCAPA stock just received an upgrade recently, as did Sirius XMs debt. Companies get debt upgrades when their balance sheets look more favorable.

Disclosure: Long SIRI

By Steve Garcia

TASER International Inc. (NASDAQ:TASR), http://www.taser.com/pages/default.aspx a market leader in technologies that protect life recently showed why it is in my opinion, a good stock to look to for future growth and speculation. TASER International was founded in September 1993 and has remained committed to providing solutions to violent confrontation by developing products that enable people to protect themselves.  Taser and its employees are committed to protecting life by providing innovative, high quality products and services that always exceed customer expectations.  TASER International’s products protect human life, providing advanced Electronic Control Devices (ECDs) for use in the law enforcement, medical, military, correctional, professional security, and personal protection markets.  TASER devices use proprietary technology to incapacitate dangerous, combative, violent, enemy or high-risk subjects who pose a risk to law enforcement/correctional officers, military,  innocent civilians, or themselves in a manner that is generally recognized as a safer alternative to other uses of force which are many times deadly.  TASER technology protects life, and the use of TASER devices dramatically reduces injury rates for law enforcement officers and suspects. Taser is committed to producing high quality equipment which reduces risk of violence, or use of deadly force.

In taking a look at Taser for the first nine months of 2009, adjusted revenues were $73.2 million, an increase of $6.8 million or 10.0% over the first nine months of 2008. Adjusted revenues excluded the impact of a $3.5 million revenue deferral related to the X26 to X3 trade-in credit program, the balance of which is expected to be recognized as revenue when the trade-in occurs or the offer expires at December 31, 2009. The impact of this deferral should be reported in the upcoming Quarterly conference call.

TASR recently announced that it received and shipped three significant orders in December 2009. The first order for 2,250 ADVANCED TASER M26 Electronic Control Devices (ECDs) and related accessories was for the Brazilian Ministry of Justice. The second order was for the Philadelphia Police, PA, for 1,000 TASER X26 ECDs and related accessories. The third order was for the Chicago Police Department, IL, for 386 TASER X26 ECDs and related accessories.

As non lethal weapons begin to play a more important role in the application of law enforcement as well as in the Military weapons realm, it would appear that Taser will be reaping the rewards of this new trend. Additionally, Taser has announced a new product. TASER International Inc. (Nasdaq:TASR), a market leader in technologies that protect life, introduced a groundbreaking new family safety platform called PROTECTOR(TM) during the International Consumer Electronics Show (CES) that ran from January 7 to 10 in Las Vegas, Nevada.

PROTECTOR is a revolutionary tool set that gives parents the ability to supervise their children’s mobile phone usage and driving behaviors. Parents can manage the contact lists and content of their child’s mobile phone, including calls, texts, emails, photos and video, and can automatically limit phone functionality to prevent dangerous distractions while driving. PROTECTOR uses integrated GPS, allowing parents to track their child’s location, monitor driving habits, and release vital records to the authorities in emergency situations.

“Our mission at TASER International is to protect life. PROTECTOR is our latest technology breakthrough to further our mission by empowering families to protect the most precious of lives: our children,” says Rick Smith, CEO and founder of TASER International. “Auto accidents are the leading cause of death among American teenagers, and distracted driving is becoming a major factor in these accidents. PROTECTOR will play a significant role in addressing this national tragedy.”

Read the full press release here: http://phx.corporate-ir.net/phoenix.zhtml?c=129937&p=irol-newsArticle&ID=1371281&highlight=

PROTECTOR is anticipated to launch as a subscription service in mid 2010. More information is available at www.PROTECTOR.com.  Taser is strategically poised to benefit with these technologies in a meaningful and profitable way. The company has a Market Cap of about 365million dollars currently with shares outstanding of 62 million and a float of 59 million shares. Taser shares closed Friday at 5.64 on the NASDAQ. Having come off their most recent highs above 6 dollars.

Disclosure: Long TASR

By Relmor Demitrius

S&P credit rating agency raised Sirius XM’s (Nasdaq:SIRI)  corporate credit rating from B- to B today.  They also are maintaining their Postive Outlook on the company, which means future upgrades are possible.  The news comes off of a press release from Sirius XM earlier this month citing continued subscriber growth, and meeting free cash flow guidance for the year.  For the entire year of 2009, Sirius XM Radio achieved positive FCF of over 100 million dollars.  This is almost a 600 million dollar reversal from 2008. 

S&P also cites high leverage debt and weak auto sales as potential future concerns.

More news on this issue later.

Please visit www.kingofalltrades.com/forum for up to the minute stock conversation and analysis.