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Yup. These types of guys look for hot markets, build a targeted website then suck out consulting fees with little accountability by offering small minicaps access to financing or decision makers. Greiper is a case in point. He is now both an expert on homeland security through SSG and suddenly an expert on marijuana through Viridian Capital. I wonder if anyone ever really walks away happy paying for all the smoke and mirrors.
.05 and beyond....
As an FYI about boards of directors I was told last year and never posted that Pineau got the boot, not because of anything he did wrong but because he chose the wrong board. The recent ouster of the CEO of IMSC and the Liscouski announcement brought this to mind since the companies share a similar financing history.
It went something like this. In 2011 Viscount wanted to raise cash and hired the Secure Strategy Group to do the deal. Scott Greiper (who had been doing Viscount IR until recently) and Bob Liscouski were the partners at SSG. SSG tells Viscount they need a more impressive board to help raise money.
So Liscouski gets a seat on the Viscount Board. The other new members become Raefield, Goldenberg, and Brisgone.
A check on the SSG website shows that Brisgone, Raefield and the new board guy Siegel are all SSG advisors. So including Liscouski that's basically the board, so Pineau handed over the company to SSG and if things don't work out any better than they are currently shame on him.
As for IMSC, they hired SSG to raise money a few years ago so Liscouski and Howard Safir (SSG guys) ended up on the IMSC board. The long standing CEO of IMSC just got the boot so he must have been as naive as Pineau.
The guy who is not on the SSG team Paul Goldenberg runs a company called Cardinal Point Strategies. But their advisors include Brisgone and Liscouski so this seems to be all a cosy club.
Basically, Pineau, for good intentions, set himself up for ouster since at some point he apparently had a disagreement with SSG so out he went. Hopefully this ultimately works out for us but this board seems to be more of a clique than independent and SSG related people seem to run the show even though none of these guys seem to own any real shares. IMO
You must have misunderstood my post because I have no problem with him and am sure he's good to have on the board. What I said was that I'd respect him more if he convinced the board to acknowledge their disaster of last Feb and bring in someone new. The point I would also make is that most board members sit in on the odd meeting but do little to advance the company. IHUB posters often get excited about the resumes of new board members but most of the time it's all for show or to impress potential investment funds. For Viscount for example there is no evidence that any board member has ever brought a closed deal to the table. From what I've heard Raefield, for all his supposedly impressive resume as an access control expert has not brought anything to the table from his rolodex either as a board member or as CEO. I could be wrong but the Viscount news releases say otherwise.
So, unless they become operational like Liskouski at IMSC they don't bring in business like some investors think. I also took at look at the IMSC board and read that he was also paid extra for some of his efforts which makes sense.
I agree I'm negative. It reflects the share price. I've gotten tainted over the years. VSYS is undervalued regardless of whatever the annual report brings. Someone posted about Liscouski. He's on the board of IMSC. That company has similar size and prospects, disastrous debt and a market cap about 10x vsys. We should be so lucky...
Normally, I believe Q4's get lumped into the annual report so companies issue 3 quarterly reports + the annual. So for vsys the Q4 numbers won't come out until late March as part of the annual but not separately. You normally do some subtraction to figure out what the actual Q4 numbers are. BUT! if the Q4 numbers are great they'll pull them out of the total for the news release. If they suck they'll focus on any positive for the whole year and ignore Q4.
In terms of volume it seems there are lots of sellers but not at .05 and very few buyers who are just cherry picking. Not the formula for much of a market.
ps. I don't mean to imply that Liscouski has no value. Perhaps if he and the board objectively reviewed the list of the CEO's promises since last year he could come to some obvious conclusions. Here is a short list:
1. He does not anticipate having to raise any more money.
2. He has only increased the burn rate by $10K/month
3. He will have $1M in the bank at year end
4. He will be profitable by Q4
5. He will receive USCIS contracts worth ~$6M-$8M over the next year and a half.
6. He will be doing a major IR push starting in January.
7. He will hire more staff and setup new HR policies
8. He will renovate the test and tech areas
9. He will rebuild some office desks and buy more computers
From reviewing their financials and news releases it appears that he has only accomplished 3 of these 9. Can anyone guess which ones?
It has been noted in the past that I'm a bit negative at times so for 2015 I think I'll give up on the stock price and financial targets and give Raefield credit for the things he seems to be really good at. Some key milestones I'd love to see announced by the AGM would include:
- bathroom renovations (and perhaps switch from Scott to Charmin)
- buy a new letter opener for the receptionist
- hire a PR firm to convince the world that the S in Viscount is silent
- fixed the "squeaky sound" in Raefield's office chair
Then we'll be happ'ning and damn the .05 stock
This guy has been on both boards for quite a while. Seems the companies are running in parallel. All in all he was part of the decision and vision that brought in a CEO who managed to burn through about $2M in less than a year. So, he could be an asset or simply another talking head who likes to suck investors dry. I haven't seen any evidence that he has done anything positive for vsys in the 3 years he's been involved. The only thing we know for sure is that the stock of both companies is down 50% since last year.
When people buy private placements the stock is issued directly by the company so he just gets a brand new certificate and they get the cash. While I'd like to see the shares bought on the open market to boost the price, when companies need money they do it this way. His downside is that he's an insider so can't even think about selling for six months and after that only piecemeal.
Since each time a company issues new shares it dilutes ownership so this theoretically depresses the stock price in the long run but not the short run.
The daily trading volume for Jan in vsys is down over 80% compared to last year so I assume we're still waiting for the big IR push promised by the CEO during the Q3 call.
Just to add confusion they filed a Form 4 today for $193K US. I guess that may be for the same financing but converted to US? Or is it different and they are issuing shares in US$$v again?
I agree we can never know and all's well that ends well. Perhaps I should have just listed 3 options and left out my opinion about which was the long shot. Viscount is usually pretty timely so it could be that they just got sloppy. They actually didn't file an 8K when they were supposed to and then filed it late with the answers to the questions that were apparently posed. That's why it looks fishy. If the 8K was filed on day 1 we wouldn't be having the discussion - which is why 8k"s should be filed timely. Could also be that they had tacit approval of the Class A's but the legal was late so that made it late. But in that case it makes it sound like they needed money fast. If we see any more working capital raises in the next few months we'll know that they didn't have adequate cash when they told the investors they did... but as long as they keep the doors open then we're ok I guess.
I still don't get the gobbledygoop about the .08 CDN and future fair market valuations on warrants.
lol lol lol... It is no surprise that this news release was issued subsequent to the initial raise and more pointedly subsequent to representations being made directly to the company that if the anti-dilution or ratchet provisions were in force this deal could be taken as a breach of fiduciary duty by the new director.
Simply put, either the company was caught with someone's hand in the cookie jar and they had to back off or Raefield made a stupid deal without thinking of the consequences and the company had to cover its tracks. Or, a long shot would be that everything was up and up and they simply took their time to release the info.
I'm still not sure about the CDN issue as it relates to warrants.
But, it's good that we were watching. IMO
I was on the Q3 conference call and my #1 takeaway was that a big IR push with a new outside IR firm was happening in January. I just checked my charts and the volume in the stock is averaging about 17k/day - around $1000 so I assume they haven't done Nothing? Perhaps the $250k they raised from the new director wasn't a rescue as some people alluded to but for this IR campaign? Hoping.
I honestly know no more than the other guy except what's published as news although I have a pretty good shennanigans radar after having been burnt on the OTC more than once. The issue with the Class A shares was discussed when it happened and I expressed concerns.
As an FYI I know several people in this deal and we asked one of them to email the IR guy about this deal. Apparently he got a reply that they basically refuse to reply. So much for transparency and disclosure.
Re: "I have lost all faith in Viscount's board of mis-directors.. They appear to be filling their pockets and to hell with the poor shareholders."
The other day I posted a cryptic message and thought I should follow up as it relates to your post since the recent small financing may have ramifications that are much more serious than issuing options and a probable breach of fiduciary duty. I never followed up the post because I didn't want to throw out unwarranted red flags and I can't be sure. Yet other people who own more shares than me who worry about the Class A deal Raefield put together to get his 9M options.
So get this and I may be wrong but it appears that by selling 2.9M shares of stock at .08 CDN to the new director who represents the Class A shareholders, the deal may have invoked the anti-dilution clauses of the same Class A shareholders and perhaps other shareholders? Simply put, Raefield appoints a Class A director. The Class A director buys 2.9M shares at a discount. Then the Class A shareholders get the equivalent of around 2.9M shares for free for doing absolutely NOTHING because the financing was below the anti-dilution price, all at a time that Raefield says the company does not need cash.
This appears to be self-dealing at it's worst and appears to be a payoff from Raefield to the Class A guys. I can't say for sure this is true but my math seems to say so. If VSYS was a large issuer large common shareholders would be talking to their lawyers.
Now, I believe if the Board did do such a small transaction that triggers the Class A anti-dilution provisions they may have gotten the Class A shareholders to do a waiver. But in that case they would probably have to file an 8K and they haven't. At the same time if they Class A shareholders did win the Raefield lottery this would seem very material and they should also file an 8K and they haven't. So, I'm simply confused.
If anyone knows more please fill me in. Or I can simply wait to see the next few rounds of Class A dividends and then know for sure whether this stunt was pulled.
The only action on the stock seems to be board members issuing themselves more options for a job well done.
Would it bother anyone if this small financing has serious shareholder consequnes and that the Cdn massage was designed to possibly mislead us all
Would it bother anyone if this small financing has serious shareholder consequnes and that the Cdn massage was designed to possibly mislead us all
I have a great idea. Viscount can report their 10k finances in CdN. That way they'll grow an extra 20% and the investors will be Super happy
I'm still on the fence about Mr. Raefield being a straight shooter and honest but here we go again. I just noticed something about this financing that would lead me to believe that the company CEO thinks we're all stupid.
It goes like this. Viscount is traded on the OTCBB in US funds. On the day the transaction closed Viscount was trading just under .08 and the deal was for .08 so it seems like a fair deal.
However, the Form 4 says that the stock, which trades in US dollars, was sold to Mr. Arens in Canadian dollars. Like huh? In other words he bought the stock at about .067 US, not .08, about a 20% discount to market.
Does anyone else see this as shady or sneaky and why wouldn't they just do the discount and be candid?
I am actually quite upset if they did this due to being cash strapped based on his lots o'cash speech on the Q call. It could also be the new director wanted to buy a stake but I doubt it. I'll read the Year end cash number when the 10 K comes out and then will know if someone spoke with a forked tongue. Raefield is lucky this isn't a major company since the analysts and shareholders would be oh so unhappy and the company could even have a lawsuit on its hands.
Could it be that Raefield lied to the investors during the Q3 call and they didn't have a years cash reserves. Very sketchy
I keep hoping I'm wrong and that this story ends differently. Ultimately, they only need about $3M in extra revenues to cover the bloat. I suspect that if this Q doesn't rock the board will make some senior heads roll maybe even the founder of the feast. Then I'd be back to being an optimist especially if they hire a bunch of hungry young guns for sales. The average age of their senior management is probably around 60.
I'm actually a bit more optimistic since they added the Class A director.
Hi Ted. If you follow my vsys posts you'll notice that I actually could care less who the CEO is and if the new guy had done a good job I'd be the first one to pat him on the back here. The stock is trading at about 50% of last year's high and that's the only grade that matters. In addition I believe he was stretching things about all the cash he has because the financials tell a different story and the burn is scary. The new board appointment points to my concerns being quite accurate but as I noted this may be good for investors.
I've never posted anything here that wasn't public knowledge. I recall that the post about Immigration was simply that vsys had released the client name initially and the the IR guy ( I called the CEO on occasion and it may have been him and not the IR guy) told me that Immigration called and requested not to continue naming them until officially approved higher up.
Other than that I know little more than the next guy but I never invest in OTC stocks unless I at least know someone who knows someone, usually pre-ipo seed stock. My someone got me to buy stock in vsys quite a few years ago when it was in the dumps. This wasn't because I had faith in the CEO but because the company was trading way below liquidity value at the time. The market cap had dropped to under $750k. My buys averaged around .03 so since I've been in the money I kept a chunk of my vsys as one of those potential homerun deals.
Hopefully this Q will be the belated big Q. The old CEO told the same story at times but I did have faith that they kept overhead low and wanted to expand through growth. This new approach of hiring in order to expand is not necessarily wrong but I think they should be hiring at the bottom not the top. Having a stable of VP's has been shown over and over to be dangerous and when they first started I assumed they had the contracts in the bag to finance this and it doesn't appear to be the case = ugly cash burn.
I post under different names for different stock since I don't like trollers
Hey Boogins,
I'm not sure how cynics can be right much of the time yet get left behind and the cynic in me has made me most of my OTC money over the years. A cynic is someone who mistrusts other peoples motives and that is healthy in dealing with the OTC. While I tend to be a cynic I am also an optimist and the two are not mutually exclusive.
Which brings me to my cynical comment regarding your post. Over the holidays I ran into someone who knows the company well. This is only hearsay but he told me that apparently Michael Pilato, who was the VP of Sales and Marketing did not work out as you mentioned. But, rather than getting rid of him he is now simply the VP of Marketing. After all he is an old friend of the CEO, cynical me. So add another VP to the org chart.
So I am left an optimist about the revenue prospects of the company. Yet as a cynic I am left with one huge problem. When Raefield took charge he put himself out as some sort of operational genius. If you recall your first ever vsys post:
"the other thing they did to improve the company was give Dennis total control. The founder, a really really talented engineer but pretty hopeless at executing a rational business plan, had to go and now that he is out of the way I expect this company to ramp quickly."
To his credit Raefield hasn't screwed up the on the government contracts that started coming in 2013. But here's the thing; we got a huge ramp up on staffing but not revenue. The old CEO put all the technology together and got the company into the government space. He did all this and had revenues only nominally smaller than now but he did this without a VP of Sales, a VP of Marketing, a VP of Engineering, a bunch of other senior hires and support staff etc, and he took a salary package about 1/3 of what Raefield is making.
So if Viscount was your $5M company and you had to hire a CEO, would you honestly a. hire Mr. Big Bucks with his stable of VP's and managers or B. hire Mr. reasonable who could perform this functions with a little help but keep an extra $1.5-$2M in your pocket. For me it would be a simply business decision... but after all I'm one of the cynics on the board.
I first bought into vsys because they had a business model that was focused on product design and keeping costs down until the contracts came. They could have been profitable this year except for the foolishness. Now the company looks just like a lot of other bloated little OTC stocks that run their course. I'll hang around until the end of the Q and then who knows.
I don't think Dendara Capital has much to do with anything. I reread the news release and noticed Geoffrey Arens was appointed to the board by the Class A shareholders, One East Capital. Raefield had no choice in the matter.
If you go through the VSYS filings I remember reading this: http://www.sec.gov/Archives/edgar/data/1158387/000106299314001586/exhibit4-1.htm
Basically Raefield made a deal that on the one hand upped the stock options pool to 32.5 M shares ( to allow Raefield to get his 8-9M options and juice up the other board members). This size of pool borders on the absurd but i don't think they've all be issued. In exchange the Class A share holders received the right to allow them to appoint up to 2 board members. I'm not a lawyer but the wording seems to point to an agreement that they gave Raefield what he wanted but that they'd stack the board if he screwed up.
From my experience funds like One East Capital prefer to stay in the background since corporate involvement can make them reporting shareholders so they must have had good reason or serious concerns to do this. Perhaps the Class A holders saw that the company is burning way too much cash and don't like seeing their investments lose money as the share price falls.
I'd love to know their exact reasons to make this appointment but I can guess it wasn't because as Raefield noted in his news release "I am happy to add another investor-oriented Board member to the team".
Kinda like when you leave your 14 yr old home for the first time and he has a party, empties your bar, then claims he is really happy that from now on he'll have a babysitter.
Of course they spun the story ok. Better than announcing that One East Capital has appointed a babysitter for the CEO?
IMO
Regarding my previous post I guess that makes me more cynical than pessimistic. The new board member runs some type of minnow fund but might have a good Rolodex to help raise cash.... but Raefield says they have cash galore for at least a year so could be a waste of company money. I'll go back to my previous thought that the company may have been forced to bring him aboard.
I agree to a point but sometimes whether to be an optimist or pessimist boils down to facts. For example, this week they announced the appointment of another Board member. The optimist in me sees this as another experienced professional helping to guide the rudder. The pessimist says we have another piggy at the trough since the company has gone from a board of 2 ( a bit small) to a board of 7 ( a bit bit much and way more costly).
On the other hand I recall that one of the VSYS financings allowed the investors to start appointing board members if things were not going well. Perhaps it is these investors who are the pessimists and appointed this new guy. Could it be that the pessimists on IHUB board are not the only ones who are concerned that Raefield is burning too much cash and hiring too many Chiefs?
The optimist in me actually hopes this to be the case since perhaps he needs some serious oversight.
And so we end the year with more exciting news? This year the company issued about 40 news releases. In terms of sales related releases there were about a dozen and most of them were for US Citizenship and Immigration. The rest were hirings, duplicate product releases, an award, investor presentations, approvals etc.
I was particularly excited to learn in their June release that the board bought around $9,000 in stock as a group.
The strangest one was the one from September announcing Freedom was now ready for commercial applications. I say strange because they had been announcing commercial and other projects for close to 2 years at schools, prisons, industrial plants etc. I was hoping the new management would ramp up sales and we'd see a flood of more of these types of projects this year but there have been none and this concerns me. In there defense they may be getting quite a few smaller projects that aren't were releasing.
They've burned money like crazy and yet except for their one US Gov't client that is fortunately driving some growth they've really released nothing despite the world's largest stable of VP's and senior management for a company this size.
The CEO said during the Q3 call that he feels about one Q behind the big commericial stuff so if he can be believed we will finally see a flood of contracts in Jan/Feb.
You are probably right but these guys need sales people not a bunch of veeps.
Back when Raefield became CEO I mentioned I hoped this wouldn't end up in court but as far as this lawsuit is concerned it seems to fit Raefield's pattern? At Mace he was welcomed on the Board as a retired elder statesman and somehow ended up being CEO just like at Viscount. A lawsuit with the ex CEO followed in which he won like $4M including defamation. After losing the suit Raefield's contract as CEO was not renewed. I think I read it cost Mace around another $1M in legal or something like that. The judgement said that the Reafield and the board set the guy up by forcing the CEO to do some irrational cost cutting then fired him for refusing to do the impossible.
"The Arbitration Panel found that Mr. Paolino was correct – the cost cuts Mr. Paolino “said were impossible could not be achieved”. The Arbitration Panel further found that the Company’s new Chief Executive Officer, Dennis Raefield and its Board “were unable to cut costs without damaging the Company’s revenue and profits”"
http://www.prlog.org/10663263-former-ceo-of-mace-security-international-inc-wins-over-4-million-in-wrongful-termination-lawsuit.html
That said, I hope for the investors sake that Raefield is right because he may be poking a sleeping dog. I didn't see anything in their financials that showed they ever settled with the guy and the article says he hasn't filed a defence or countersuit. It would suck if the EX CEO counters with the type of wrongful dismissal suit that Mace was faced with. In that case Raefield is risking losing BIG$$ while being distracted for the next 2 years for the sake of trying to win small $$ all the while draining cash for legal fees. These things can go sideways and get ugly. Among other things there are financial repercussions for the company, not the least of which is that a large counter suit hanging over VSYS could affect the share price and the ability of the company to raise money.
Maybe he'd be better off concentrating on growing VSYS.
Happy Holidays to you to. This being a religious season I guess if we recognize that Jesus turned water into wine and multiplied fish and bread I guess we can also believe that Dennis can start Q4 with $600k in the bank , burn the same $600K he's burned every Q ( or more with the new hires) and still have $600k left every Q. As I mentioned they better have a $2M Q4 or this makes no sense.
As an aside I noticed that Scott Sieracki is the new VP Sales so perhaps you are right about the sales hires since in April they also hired Michael Pilato as VP of Sales. To have 2 VP's of sales for a $4.5M company means they must have hired a ton of sales people to keep 2 VP's busy.
Yet, I did call my friend who knows the company more than me and he said he thinks that Raefield has hired around 6 VP's or senior management for sales, engineering, marketing, production, and tech support. There were a bunch of mid level and admin hires as well. He guessed that they have only added one direct sales position.
So perhaps the old CEO may have been "incompetent" but at the same time he must have been some type of dynamo to have designed all this technology and managed the whole operation without an addition $100k/month in overhead.
I hate to say it but I was being facetious about the new hire and know nothing about him. I'm sure he's a nice guy. I shouldn't post here since I'm a bit too real but from the get go I was concerned that Raefield would decide to build an empire for himself and not a company.
There is a standard formula for disaster that's been repeated hundreds/thousands of times. A small company does a financing and the offices fill up with administration and senior management based on the premise that they will hit their goals and a CEO who needs to fell important. These positions do little to help hit the goals and they are non revenue producing.
I've followed the news for the year and the thing that stands out is that the company seems to be living by the US Gov't contracts that were already coming into place. There have been no other real revenue based news releases. Yet, to execute nominally larger revenues Raefield has hired himself umpteen senior managers and VP's. From there financials it appears they've almost doubled their labor overhead but with maybe 1 or 2 sales hirings.
Based on their old cash burn the $2.5m should have given them room to grow to profitability with room to spare. Raefield's contention that they have $$ for a year runs contrary to their financials so unless they have huge US Gov't contracts in the bank that have not been released their cash burn rate indicates they are in trouble by the end of Q1.
Oops maybe I talked toi soin.
Omg. They have nabbed Scott Sierecki. Our prayers are answered in time for xmas. Let's see vsys go for a ride.
I did a search on this Greiper guy and found that he is involved in security but seems just as involved in the marijuana business through a company called Viridian. Hopefully one his clients will sponsor the next AGM and hand out some samples. Might help the turnout and keep the investors patient.
I agree the Q3 loss was positive and they have some growth. However if they hadn't gone on an orgy of hiring and capital improvements they possibly could have been profitable for the last 2 Qs. Raefield keeps mentioning that the new people aren't performing and that the US Government systems are driving growth so if he had simply stayed the course and not decided to "hire to grow" rather that "hire as you grow" they'd be better off.
I don't doubt that the old CEO has sold some shares, that his friends have as well and that we are see some tax loss selling. I would also think that the private placement buyers from the past few financing that were done around .06 took some profit. Yet, the CEO really blew an opportunity to promote this stock based on the positive financials, patents and US gov't progress. The insiders are not buying at that these prices and I would guess that the board including the CEO have the lowest ownership % of any company I've ever seen. So, there is no liquidity and not many buyers and that's a shame and falls on the lap of management.
That said the stock is trading lower than a year ago, lower than when the CEO took over and around 60% lower than earlier this year. For small stake holders perhaps more patience is in order but VSYS does have some large stock holders and I can't imagine that the people who bought over $2M in .09 shares earlier this year are calling the CEO to wish him holiday wishes on a job well done. To real money the price of a stock is really all that matters.
I think he's listed as the IR for Viscount simply because they don't have an inside IR person but don't think he does much real IR. I believe he is mainly their investment banker and has rounded up the investors for the last few financings. There was a news item about this a few years ago.
Looks like a huge award. In particular the article notes That Scott Greiper who's listed on their news as Viscount IR contact sat as one of the judges. Would have been embarrassing if their paid IR Guy didn't come through.