This is a very important part of my thoughts on the dilution, it's not just the significant percentage of new shares being added to the float, but more importantly the lack of liquidity to absorb them. There is so little liquidity / interest that these new shares have to be unloaded over a period of years to avoid cratering the stock completely. Which sets up shareholders for a long series of disappointments as otherwise positive catalysts are actually negative as any event that generates liquidity generates selling pressure regardless of whether it was good or bad.
In terms of new selling pressure, one thing to look out for soon is new insider sales. Last year there were quite a few insider sales in June that took the price down substantially. The company explained that the cause of these sales was that their executives are "underpaid" and that selling shares is part of their ordinary income and they can be expected to sell shares periodically.
Here is where they sold their shares last time:
And the historical prices and volume levels during that time period:
One more random thing... they actually calculated the number of shares incorrectly during this time by making a basic clerical error and typing in the wrong number to subtract the sold shares from resulting in incorrect information being filed. I let them know about it and they never fixed it.
Of course I can't say for sure whether there will actually be sales or not, but in order to assuage concerns from insider sales previously Jim Nelson essentially said you can expect insider sales from time to time. This guy is an absolute marketing master when it comes to convincing shareholders that bad things are actually good things, I will give him credit for that.
Here he is in his own words:
Now there are a couple of items that I want to address upfront before I hand the call over to Tracy to have them talk to you specifically about some of our specific financial performance. First of all let me talk about insider selling.
The founders and owners of Solar3D and the companies that we have purchased are purchasing -- they believe strongly in the company we are building. In fact, the evidence for that is the fact that they take stocking compensation instead of cash and so our whole acquisition module is to give more equity than cash when we buy a company.
And as a result these founders and owners and the companies that we buy and our key management sometimes need to liquid some of these shares for a variety of different reasons.
For example, they may have to pay taxes or they have a new house to buy or something like that. From time to time members of the team may sell some stock. The reasons are in innumerable that they might.
But that doesn't mean that anybody is nervous about how the company is doing or its stock. According to SEC guidelines for insiders, there are very strict rules for how they sell and when they can sell.
Furthermore, we have a real strong insider training policy as well designed to minimize any impact of insider selling on shareholder value. It is the right of the companies especially the people whose companies we buy and give stocking compensation to sell some of their stock from time to time.
But anytime they sell any of their stock it is simply a small percentage of the holdings that they have and only for specific reasons other than trying to cash out or to pump and dump and none of those are reasons that we look to do that.
It's important that we all have our goals of building shareholder value and then we are aligned. We believe strongly that Management newly acquired companies should be incentivized with a equity base performance.
So their objectives and their success and wellbeing are all based on the success of Solar3D. And as Solar3D succeeds that success can only benefit all of our shareholders. In this we're all one in participating in this success of 3D all of our shareholders and all of our management.
We want our shareholders see that everyone on our team is behind the company and the stock and we want see all the greatest value for all of our shareholders.