GREAT BASIN SCIENT COM USD0.0001(POST REV SPLT (OTCMKTS:GBSND) is a tough one. It’s one we’ve looked at on a number of occasions in the past, and on each of these occasions, we’ve said pretty much the same thing – that its core product, and the science and technology that underpins said product, is extremely valuable. Additionally, however, we’ve also noted that said technology has fallen foul to what basically amounts to incompetent management, and that this has done nothing but harm valuation.

A great product is one thing, and an important part of the puzzle, but you need good (not great, just good will do) management to give any great product a chance at success. We hate to say it, but Great Basin doesn’t even have good management (or at least, that is, management that appears to be doing anything to maximize shareholder value).

So this raises the question, how can anyone justify a position in Great Basin at this stage? The company split earlier this month, but post split, it has steadily declined to current price in and around the $1.35 mark. Suffice to say, management hasn’t really got what it wanted out of the split, and yet again, shareholders are unhappy.

None of this is good news.

That said, it’s not all bad.

On April 17, management put out a press release detailing the restructuring of some convertible notes. This restructuring, while not really game changing in terms of capital structure, does serve to alleviate some potential dilutive pressure, and at least points to the fact that management is finally doing something to clean up the balance sheet. A couple of days later, we got an 8K submission, and there’s a line tucked away right at the end that has far more of an impact, but that it seems wider markets have – as yet – failed to notice. If not failed to notice, then at least failed to interpret and respond to:

“Accordingly, the principal amount of the remaining Series B Notes was reduced from $6.2 million to $3.2 million.”

This is, when all’s said and done, great news. These notes have weighed on sentiment considerably over the past twelve months, to the extent that they’ve likely been the deciding factor in many potential buyers failing to pull the trigger, and that the principal associated with them has essentially been halved is a real step forward.

Again, it’s not indicative of the company being out of the woods. We don’t say this often, but there’s a strong argument for the bringing in of a fresh management team altogether, and we wouldn’t be surprised to see such an action if any entity acquires a controlling interest (which is far from unrealistic, given the technology on offer and the company’s current price).

If the current team stays in place, however, there’s also an argument for some strength. The stool test that we discussed in our previous coverage has since picked up a European regulatory green light, and an FDA thumbs up should follow near term. We’ve seen the stock can move when it reports these sorts of FDA approvals, and the upcoming one will be no exception.

So in a nutshell, here’s what we’re looking for: management to continue addressing shareholder concerns surrounding dilution and capital structure, an FDA approval and, ideally, but also as a bit of a long shot, some indication that the company might be fielding offers for a buyout.

The current clean up efforts may signal that management is dressing up for a buyout, but who knows.

Risk remains, of course. While it would likely be a coffin nail, there’s every chance we’ll see some more dilutive action (and we’re basing this on past strategy) near term.

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Disclosure: We have no position in GBSND and have not been compensated for this article.