Conolog (CNLG) Soars; Is a Stock Offering In the Works?

Shares of Conolog (Nasdaq: CNLG) have more than doubled today after the company received advance orders for its PDR systems and other communication equipment valued at over $1,900,000, with deliveries to be scheduled over the next fiscal year. Today's move to $4.23/share is on the back of a 64% jump on Jan 27th after a successful test of its "GlowWorm" fiber optic detector that may be used in any fiber optic line or network without the need to cut the cable.

With the jump in the stock price, and the company's limited cash of $466,000 at October 31, 2009, some are speculating that the company will use the pop to raise money by selling stock.

Some traders are also cautious after a reoffer prospectus this morning relating to 780,000 shares that were issued pursuant to a 2009 Stock Incentive Plan. The company will not receive any proceeds from the sale of the shares. For a company with only 3,619,874 shares outstanding the 780,000 extra shares would significantly dilute current shareholders, but it appears the shares are already factored into the number of shares outstanding --- with 3.62 million shares before and after the registered shares. While these shares will not dilute shareholders, selling of the shares on the open market could impact the stock price.

To address its cash position, a fresh stock offering, with the company receiving the proceeds, may be an option. No one at the company was available to comment on if such a move is planned.

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