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Question
Am I correct in my interpretation that CHIF obtained the options and intended to exercise them if Sosa won its lawsuit against Spotify and obtained a monetary reward? Why else would they issue notes in such a large amount (with an implied valuation of over $850mm for Sosa and PMR combined)?
Seems to me that CHIF was smart to structure the investment as an option contingent on a potentially lucrative outcome. It didn't pan out, so they walked away as they should.
In my view, Noch has no argument, but he's probably trying to angle for some shares so that he goes away. I hope the company fights this and gets a quick judgment in its favor.
Moving forward with acquisitions and investments
In my view, clear indication that the lawsuit is baseless and not going to impede further business development. Perhaps an overhang for some traders, but holders should be fine.
He's basically a kid
I think you give him a lot of credit for being savvy. There's plenty of unscrupulous counsel out there to go along with plans like this.
I think the company, probably with Silverback's help, will put out a proper rebuttal, likely in PR form, shortly. Responding quickly via Twitter, would have been inappropriate IMO (even though the claims probably didn't merit anything more substantive).
Blame management
They basically said nothing to look forward to until the end of April. They haven't given ANY reason for a long to have confidence, but there was a glimmer of hope in the last update. That's not enough for the catalyst/short-term traders, but the believers, whether in the company or the end markets (I side more with the latter at this point), probably stick around at least at this price.
They should have had a response to the reverse split issue by now.
What are you referring to?
Can you elaborate?
Probably true
But they do care about the stock price (have seen comments from Stephenson that show he cares about that). At this point, the RS, as currently proposed, doesn't get them above listing requirements, so it's silly to proceed as planned.
I imagine a reduction in the ratio is in the works.
Mildly optimistic update
Not a lot of substance, but perhaps they will make some changes to appease shareholders. Lot of work to be done to regain trust.
The child running their social media
Needs to be replaced as part of a complete overhaul of their corporate communication.
It's unfortunate that they refuse to accept and act on constructive criticism.
Avoid reading our only source of information from the company?
That makes no sense.
The better answer is to push for the company to communicate clearly.
What news?
I don't see any release yet.
I hear you
The social media manager doesn't even update anymore with pertinent information. Spends more time battling with shareholders than doing her job.
Agreed
TDS' approach was sub-optimal (frankly disastrous) for all stakeholders. Ownership requirements could have been better satisfied in other ways (no point in rehashing that).
Lot of work to be done to rebuild shareholder trust and interest in the stock. First step would be to take Twitter communication away from the overly sensitive and immature social media manager and give it to a grown up.
We'll see if there's an NFT angle here too
The NFT stocks have obviously been trading very well too. There's a natural connection between esports and NFTs (avatars, utility tokens for games, virtual goods).
Relative valuations
Esports entertainment (G-MBL): Shares outstanding- 17.3mm, $315.4mm
market cap
Super League Gaming (S-LGG): 21.6mm shares outstanding, $204mm market cap
Let's ignore the possible share cancellation and assume CHIF has ~19mm shares outstanding. At an average market cap of the comps, CHIF would have a market cap of ~$260mm. That equates to a target stock price of ~$13.68.
Sets up for a very nice risk/reward particularly given the digital asset angle that the company has alluded to.
His objectives aren't aligned with CLHI shareholders
He wants to uplist and has a "plan" in place (see how many times they mention that on Twitter). The shell shareholders don't matter to him. He was advised that they need a certain price to uplist and he wants to be a Nasdaq-listed company.
The problem now is that after the RS, the stock price is barely above listing requirements. There's little float left and he will have a hard time doing another R/S because I doubt his private shareholders will stand for it.
It was a terrible plan particularly given the company isn't even close to being ready to uplist (where are the audited fins?).
Best case scenario is that he lowers the R/S ratio.
Thanks for sharing
Miss social media manager was apparently too preoccupied with mocking shareholders to retweet yesterday.
We'll see if that works
The examples cited in that article were of companies whose management were subject to some form of litigation. If Stephenson falls into that category, there might be a case, but it would be a pyrrhic victory IMO.
So yes, Finra may decide not to process a reverse split if there is some legal issue surrounding Stephenson.
I think focusing on this train of thought is foolish. It's a done deal IMO (as much I wish otherwise).
Finra doesn't approve it
Just to be clear, they just process it. Stephenson already approved it unilaterally (and in an underhanded fashion).
Point well taken, the stock likely oscillates in the range you suggested. They have little sympathy for shareholders and have their plan.
Got ugly on Twitter again
I think debating with Tommy (I believe it's actually Astha Ghai, a marketing manager they hired last summer) is pointless. I admire the effort, but they have their "plan".
Couldn't agree more
I feel terrible for those that are unnecessarily underwater due to management's misguided actions. I certainly hope there's a pump at some point to get people back to profitable prices, but it didn't have to be this way.
The Nomadbullstreet guy..
Did a terrible disservice to other shareholders by condoning corporate actions. He gave management an out and now they justify their actions by saying "you'll do fine in the long run" and "there are certain shareholders that agree with the RS".
Am I reading it right?
They are saying another 1-3 months until they can say something substantive?
I can't understand Tommy. Very confusing.
Solid effort on Twitter Mike
No real answers, but solid effort on your part to get to the truth.
I've shifted my focus to shareholder friendly companies. This company is about as rigid as it gets. Not advocating anyone buy or sell this one. Just wait and see.
Another tweet about Korean exchanges
Certainly seems like hints leading to a particular outcome...we shall see.
I'm the last one (well maybe not the last one)..
To defend management, but post RS and the issuance of shares, Stephenson will have to answer to private investors that put capital into the company last summer. He may not care about public shareholders, but he has to be mindful of the private investors that backed his company. I think that dramatically reduces the risk of frivolous dilution.
Just wanted to add some balance to the discussion. That said, the onus is on management to regain badly damaged investor trust.
Let's hope soon my friend
Hope the big reveal is next week, but it does take time to iron out details when negotiating acquisitions.
I'd rather be discussing the fundamentals of the acquired companies, but we're in speculation mode for now.
Interesting comp
AP-QT recently announced an acquisition tied to blockchain. I can't for the life of me figure out exactly what the acquired company does, but it's had an enormously beneficial impact on that stock price. AP-QT now has a market cap of $250mm (wide bid ask spread and very thin despite having 525mm shares outstanding and a float of over 92mm shares).
At this point, if CHIF announces just one decent acquisition (let alone the multiple we're talking about), it's hard to not envision the market cap going over $200mm, which means a low double digit stock price at a minimum.
Food for thought..
Lots of potential reasons
I'd say it boils down to trust in management. Some don't want to stick around through the RS.
There's also many of us that are still sitting on healthy gains given our entry points were in the single digits in many cases. Sell now and buy after the RS based on news flow could be a train of thought. If they come through after the RS, sticking through it could be very rewarding.
That said, it appears to be a single seller that is willing to sell at a specific price. Doesn't seem like they're desperate, but they are persistent.
Typically speaking, the R/S should be voted on
A reverse split typically requires a shareholder vote (regular or forward splits do not, similar to dividends). That said, state law and the articles of incorporation are the determining factors.
Anyways, Stephenson was granted effective control through the proxy vote so I'm not sure there's anything that CLHI shareholders can do. If someone has a legal opinion otherwise, I would be very happy to see that.
It is remarkable given the stock price reaction that the company hasn't made a statement about the RS. That said, the IR guy seems to be a proponent of this move and is one of the "advisors" that pushed the idea. I encourage others to contact him and see if they have a different point of view.
It does seem like the stock has found a floor and we'll see if the company has the savvy to boost the stock with PRs and other announcements after the corporate actions take place.
Not always true
The board of directors typically only recommends the reverse split, it's a majority of shareholder votes that customarily has to approve it. That said, it's dependent on state law and I'm not sure what Delaware would require in this case.
Anyways, we don't have an option to stop it given Stephenson had control.
From the SEC website:
Although the SEC has authority over a broad range of corporate activity, state corporate law and a company’s articles of incorporation and by-laws generally govern the company’s ability to declare a reverse stock split and whether shareholder approval is required.
The SEC could stop it if there were an improper approval
I don't believe that to be the case here since we voted to give Stephenson control, but I could be wrong on that one. If there is a legal argument, it would be tied to control and improper approval at the shareholder level.
I have
Hence my confidence in answering.
What is FINRA's role?
FINRA does not approve reverse splits, but it does process reverse stock splits as part of its functions related to company corporate actions in the OTC market. OTC companies must submit notice to FINRA 10 days prior to the record/effective date of the corporate action. Once a corporate action submission is successfully processed (which may take longer than 10 days), it will be posted to the OTC Daily List. The Daily List is a place investors can learn about reverse stock splits and other company corporate actions, such as a merger or acquisition, payment of dividends or a company dissolution or liquidation.
Finra doesn't approve reverse splits
Finra processes the R/S, but that's it. It's shareholders that approve reverse splits. Because Stephenson had voting control, he could unilaterally approve it.
I like Ben Berry, and there probably wasn't much he could do, but it would have been better if he had explored this issue and included it in the proxy vote. In my mind, it's inconceivable that the company didn't have a plan in place that included the R/S prior to the vote. They're being dishonest to suggest otherwise.
That said, stock can work post RS but it's hard to know the upside. Let's hope it overshoots on a PR pump so everyone that's been here for a while can recover losses and turn a profit.
Could have been so much more, but that's our predicament IMO.
Is there anything to talk about?
Management sucked the life out of the stock.
At least the $0.30 wall got taken down!
No victory lap yet
Still a lot more upside in my view. The impatient catalyst traders exited on Friday and shares ended up in better hands.
Might have been
I've lost track of all the promises that haven't been delivered. I'd rather they do things right even if it meant taking a little longer. Unfortunately, that hasn't transpired to this point.
When's the next PR?
Since legal takes weeks to review a 2 paragraph PR, when should we expect the next one?
I'd ask Tommy, but he might be offended.
Don't disagree
My comment pertained more to there being nice blocks to buy on Friday. Today? Not so much.
Would like to buy more
But the panicked sellers from Friday seem to be gone. That's both good and bad I suppose.
Understood
I've been on the advisory side. I understand that his allegiance is to the company and not shareholders.
I asked some basic questions on the RS, but he said he couldn't say anything unless I signed an NDA. That would presumably preclude me from trading the stock, so I will pass.