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How is a short-term trading article from a year ago interesting?
That was when there were 95% less shares outstanding than today.
The slides are obviously from earlier in 2014 as it says:
Recent Bid: $0.21
52 Week Range: $0.17-$0.79
This one had me laughing:
2017: Market Cap $360M
So, starting 2015 with a market cap of under $500,000, within three years it is going to grow by over 700 times!
You'll have to excuse me if I'm not a believer.
DD2Gain - I don't think that's correct...
not a good idea and not possible due to securities laws, a number which would be broken in the process.
Time to update dilution summary DD2Gain
Another week, another 100+ million shares.
I think you're off by a decimal...
439,586,521 * .00095 = $417,607
However, you just can't issue 100+ million shares and magically increase the value of your company - all else being equal, shares will trade lower as a result.
DrContango - another 127 million shares added over past week...
http://www.sec.gov/Archives/edgar/data/1522469/000152013815000018/ltnc-20150114_8k.htm
The number of shares of the Company’s common stock outstanding as of January 13, 2015 was 439,586,521.
A few months from now there will be (at least) 5 to 10 times more shares outstanding than today.
Shares at this price are a gift for the sellers who they were given to below 0.0007 last week.
All public companies do not dilute 50% or more per week
Yes, that would be the logical thing to do IF the company were profitable. What do you think it means when the company chooses to issue 100 million shares instead of paying cash for the ~$70,000 in liabilities it is going towards paying off?
cpw - did you catch this in his 13D filing ... wink, wink
(d) Mr. Schadel has not, during the last five years, been convicted in a criminal proceeding.
Thank you for your reply Dr...we are in violent agreement...there are actually numerous red flags going all the way back to inception of the company. Here is a post I made back in August when I first learned of the company and was doing my research - when shares were at 20 cents:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=105651932
Regarding the preferred shares - obviously done because he knew very well that going forward he was going to dilute the living daylights out of every common shareholder including himself.
And just since my post you replied to, another 120+ million shares were issued taking outstanding shares from roughly 190 million to about 320 million. That is just through last week - who knows how many will be issued this week.
Further, look at how much they are paying off with the 100 million share issuances - not even $100,000. The clear implication is that company has no cash, has no ability to get cash, is losing money, and is just using new/naive gamblers to finance day to day operations. This will all crater within a few months, if not weeks.
Very nice botlow...
We are picking up some attention.
More importantly, with each issuance, because the shares are worth less and market reacts pretty swiftly, future issuances need to be even greater in size to pay the same amount. This is obviously a downward spiral at this point and likely no way out of it. Current shareholders are being raped and their only way to stop the pain is to sell and move along. Any current shareholders will be diluted to nothing in pretty short order. Same likely goes for anyone purchasing shares at any point. Company is financing itself by dumb money that buys shares which is immediately used to pay current liabilities.
My guess is that the weekly issuances will continue so company is able to meet payments and they will need to be at least 100 million in size going forward. I think that he may be able to continue doing this, so long as the recipients can turn around quickly enough and dump into the market before the shares have a chance to adjust downward after the 8K is filed. In doing this, because the shares are being issued at the 15% discount to the lowest price in the past 20 trading days (I believe that's still the stipulation), they can quickly sell and get out with their money and possibly a small profit.
My guess is that the outstanding share count will surpass 1 billion before the end of February. They are going to have to increase AS before the end of this month.
The number of shares of issuer’s common stock outstanding as of January 8, 2015 was 312,254,919.
http://www.sec.gov/Archives/edgar/data/1522469/000152013815000009/ltnc-20150108_8k.htm
Obviously untrue
We shall see
Ryan has to convince the note holders to accept preferred equity of some sort in exchange. The question is will they, and why should they?
The implication is that at this time, he does not have a way to pay the balance of what is owed on the notes.
As far as the risk factors, they are all still valid and not resolved as the latest 10Q has referenced them indicating they are unchanged.
Q3 was the pivot point
"We implemented a number of financial and operational initiatives in August 2014, with many of them starting to take hold," said Brad Eisenstein, AllDigital's Chief Financial Officer and Chief Operating Officer. "Our goal is to achieve cash flow profitability in 2015."
AllDigital anticipates that through the growth and expansion of its patented technology, tighter cost controls and continuing efficiencies in its own development methodologies, direct costs should decrease and gross profit should improve [in the near and long-term].
"The third quarter looks to be a pivot point for our company, and I'm proud of what we have accomplished," said Michael Linos, AllDigital's CEO and President. "That said, there is plenty of work to be done, including increasing our revenues. I am very excited about our recent acquisition of the Brevity ultrafast transcode/transport technology and the early demand indications for our AllDigital Brevity product. This could be a real game changer for our company and our customers."
Let's review some of the other risk factors
IF WE ARE UNABLE TO CONTINUE AS A GOING CONCERN, INVESTORS MAY FACE A COMPLETE LOSS OF THEIR INVESTMENT.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern in the independent registered public accounting firm’s report to the financial statements included in this Form 10-K. If our business fails, the investors may face a complete loss of their investment.
BECAUSE WE ARE A NEWLY FOUNDED COMPANY, WE FACE A HIGH RISK OF BUSINESS FAILURE.
We were incorporated on May 31, 2011. We have no significant operating history nor do we have anyone experienced in managing a public company. There is no assurance that we will be able to maintain any sustainable operations. It is not possible at this time to predict success with any degree of certainty. An investor should consider the risks, expenses and uncertainties that a developing company like ours faces. Potential investors should be aware that there is
a substantial risk of failure associated with any new business venture as a result of problems encountered in connection with the commencement of new operations. These problems include, but are not limited to, an unstable economy, unanticipated problems relating to the entry of new competition, unanticipated moves by existing competition and unexpected additional costs and expenses that may exceed current estimates. Also, to date, we have completed only partial development of our intended operations and we can provide no assurance that our company will have a successful commercial application. There is no operating history upon which to base any projections as to the likelihood that we will prove successful in our current business plan, and thus there can be no assurance that we will be a viable, ongoing concern.
WE MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE.
Unless we begin to generate sufficient revenues, on a consistent basis, to sustain an ongoing business operation, we may experience liquidity and solvency problems. Such liquidity and solvency problems may force us to cease operations if additional financing, under acceptable terms and conditions, is not available. In the event our cash resources are insufficient to continue operations we intend to consider raising additional capital through offerings and sales of equity or debt securities. In the event we are unable to raise sufficient funds, we will be forced to terminate business operations. The possibility of such an outcome presents the risk of a complete loss of your investment in our common stock.
INVESTORS MAY LOSE THEIR ENTIRE INVESTMENT IF THE COMPANY FAILS TO IMPLEMENT ITS BUSINESS PLAN.
We expect to face substantial risks, uncertainties, expenses and difficulties. Since inception, we have accumulated deficits of $3,193,778. Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of operation. These risks include, without limitation, an unstable economy, competition, inexperienced management, lack of sufficient capital, and lack of brand recognition. We cannot guarantee that we will be successful in accomplishing our objectives.
THE COSTS, EXPENSES AND COMPLEXITY OF SEC REPORTING AND COMPLIANCE MAY INHIBIT OR SEVERELY RESTRICT OUR OPERATIONS.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. The costs of complying with these complex requirements are substantial and require extensive consumption of our time as well as retention of expensive specialists in this area. In the event we are unable to establish a base of operations that generates sufficient cash flows or cannot obtain additional equity or debt financing, the costs of maintaining our status as a reporting entity may inhibit our ability to continue our operations.
THE COMPANY MAY NOT BE ABLE TO GENERATE SUFFICIENT REVENUES TO STAY IN BUSINESS.
We expect to earn revenues solely in our chosen business area. In the opinion of our management, we reasonably believe that the Company will begin to generate reasonable revenues. However, failure to generate sufficient and consistent revenues to fully execute and adequately maintain our business plan may result in failure of our business and the loss of your investment.
COMPETITORS WITH MORE RESOURCES MAY FORCE US OUT OF BUSINESS.
The market for customers is intensely competitive and such competition is expected to continue to increase. Generally, our actual and potential competitors are larger companies with longer operating histories, greater financial and marketing resources, with superior name recognition and an entrenched client base. Therefore, many of these competitors may be able to devote greater resources to attracting customers and be able to grant preferred pricing. Competition by existing and future competitors could result in our inability to secure an adequate customer base sufficient enough to support our endeavors. We cannot be assured that we will be able to compete successfully against present or future competitors or that the competitive pressure we may face will not force us to cease operations.
Well, you can't say Ryan didn't warn you...
THE CONTINUED SALE OF OUR EQUITY SECURITIES WILL DILUTE THE OWNERSHIP PERCENTAGE OF OUR EXISTING STOCKHOLDERS AND MAY DECREASE THE MARKET PRICE FOR OUR COMMON STOCK.
Given our lack of financial resources and the doubtful prospect that we will earn significant profits in the next several years, we will require additional financing which will result in dilution to our existing stockholders. In short, our continued need to sell equity will result in reduced percentage ownership interests for all of our investors, which may decrease the market price for our common stock.
Wait for this weeks 8K of new shares issued and then see what 45% sales growth WITH NO PROFIT really means.
Yes - more importantly there were nice sized bids at .11 and .12 and ask moved up to .18. I saw .20 for a bit and then someone stepped in front of it - but very small size...the bids were much heftier.
All very nice - as you were saying, doesn't take much at all to get it moving.
It was also showing on the market movers list of top BB gainers for a portion of the day. ATSR later bumped it off in 10th place with 20.71% gain.
Exactly - agree on all of your points
It's really just a matter of having patience at this time.
Hi botlow.
All of my investing is initiated on insider trading and then doing research, looking at the fundamentals, and going through the filings. So I don't just go buying anything just because the CEO goes and buys some shares.
I first learned of ADGL back in August when one of the reports I use identified it based on prior insider purchases and then obviously the shares fell. Going through all of the filings, I liked what I saw. The obvious issues were the unexpected events last year, and whether the company had sufficient access to funds to keep things going. As I dug into the filings and the folks running the show I became very comfortable with it. As coincidental as it was, within minutes of when I purchased my first batch of shares, company announced CEO passed away. I just kept buying from that point.
I am not an expert in the industry, however I have good familiarity and have a technical background. I am nicely invested in CCUR which is in a very similar part of the market. They are one company I can see that would be a great fit for ADGL and potentially buying them. I also have a position in SOFO - another part of the video sector. I think that during 2015 and beyond, video is definitely the place to be - there have been great strides and things are still accelerating at this point.
My belief is that any purchases of ADGL shares below 15 cents is just free profit. You've probably also looked at the SEC filings surrounding the financing provided by management - their notes are convertible to common stock at 15 cents/share...just like their stock options. If they don't get the stock back to at least 15 cents, then they won't get to convert and they'll just get back their money with the low interest rates and their options will be worthless. Reviewing the background of these guys, and seeing the history of their last success, I am absolutely certain they have similar plans here - they are looking for a homerun - they want to be able to convert all those notes and their options at 15 cents/share. I like when I can buy below the option strike price for management - because they are going to work their tails off to get the stock price up over their exercise price.
Anyhow, I think that there are good things on the near-term as well as longer-term horizon for ADGL - it's just a matter of patience. Based on comments from the CEO, I think we should be seeing bottom line profitability very soon - if not this quarter, certainly next quarter. I think once they post a profit, no matter how small, it's going to be bringing many more investors to the table because they will be more comfortable with the company at that point.
It's time to be long or get long
Momentum in the business is just beginning to come around after an extraordinarily difficult past 9 months due to numerous unforeseen circumstances. With a good portion of the staff abruptly walking off the job earlier in the year and then the (young) CEO unexpectedly dying, these were obviously major shocks.
However, reading the press releases, reviewing the SEC filings, and understanding that sufficient financing is in place going forward, ADGL is likely going to be posting bottom line profits through 2015.
The shares are tremendously undervalued for what they have, the client base, and the opportunity going forward.
There is little reason the shares should not be trading somewhere closer to 30 cents or 50 cents today. Year end 2015 it would not be surprising to see shares back on the 75 cent to $1.00 range.
With shares at the current level and extremely cheap, I'm very surprised that other players have not approached company to scoop them up or make a strategic investment.
This management team is experienced and likely will not be settling for anything under $1.00 should an acquirer come along. My belief is that they're looking to grow the revenues probably 5 or 10 fold in the coming years before accepting a buyout in the $3.00 to $5.00 range...if not higher.
Well, last week was actually 46 million
See the Dilution Summary sticky.
The 8Ks are all right on the page.
Q4 is supposed to show operational profitability
That was the message during the Q3 conference call. Since government business in Q3 was so low, and Q4 includes end of the fiscal year for the government, absolutely any business coming from the government will have a positive impact and provide upside surprise.
Beyond that, I think 2015 should be the year we really see the turnaround begin to take effect. Revenues have begun to turn the corner with the new products and expanding client base (away from government). As things progress, government business is going to become irrelevant to the point that it won't be necessary at all - any government revenues will be considered icing on the cake.
It's still a long haul, however, the financials remain extremely strong, the company is cash flow positive, and losses that are posted are minimal. The plan that management has in place is a very good one and as long as they continue to execute on it, the future is very bright for the company.
We still have about 9 weeks until the earnings announcement. Assuming we're not going to get any news in the near-term, best we can hope for is a January Effect bounce to get shares back to the normal trading range between $3.50 and $3.75.
We need more insider purchases!
The purchase by Robert Shaw in early December was nice to see. However, it was only for a total of 3200 shares.
It's been a while since Popielec and Fain have bought any. Phil Fain last purchased shares in August 2013 at $3.75/share - that was a 10,000 share purchase.
With shares now 20% lower, and the turnaround coming to fruition in the near-term (sooner rather than later), I would think that both Popielec and Fain would be accumulating at the current share price. We are in the period after close of the quarter and before the announcement, so I'm sure they can't be buying shares now. However, once Q4 earnings are announced, if the shares do not move significantly higher, hopefully both will be buying.
Share buyback is still in place with lots of shares left for repurchase. Hopefully company is picking up all the shares they can whenever it dips below $3.00.
As mentioned on a prior earnings call, because of the poor liquidity in the shares, it's difficult for company to be purchasing regularly. However, they should be working with a broker and just have a standing open order that whenever 5000 or more shares show up on the ask below a certain price threshold, then they buy and likewise setting some price floor where they will always be buying.
Further, company should set up a 10b5-1 trading plan for itself, so they can be buying back shares without any blackout restrictions that may come about due to news or timeframes related to earnings announcements.
Anyone have ideas on the price spike last week?
Looks like it was a very small number of shares just in the last couple minutes of trading.
When I saw it, I was thinking I should have sold that there was nothing to it and shares would fall back. However, had I sold, with my luck, shares would have kept going higher.
LTNC: Stock Dilution Scam in action (informational)
LTNC Board - Dilution Summary
Date Share Price Shares Outstanding
10/1/14 0.10 28,557,173
11/18/14 0.015 55,000,000
12/4/14 0.005 76,368,113
12/12/14 0.0024 104,479,103
12/19/14 0.0017 144,345,751
12/29/14 0.0016 190,993,565
1/3/15 0.0013
Look, I'm not going to get into an argument over this as it's petty. DD2Gain is using the sticky, I indicated that I think it's valuable information. If you don't, fine - you can have your opinion as well.
Why go picking through the 8K weekly when the sticky provides not only the information in an easy to read format, but also a nice history?
I think that as a sticky, it also directs newcomers to an important piece of information which they may not be aware of. Isn't that the purpose of the sticky? I think it's much more valuable than the garbage/pumping Targets sticky which has been way off the mark for months.
Again, as long as shares keep being issued as rapidly as over the past few weeks, share price will continue lower.
Do you know how many more shares will be issued? I certainly don't, but believe it is much more than what the current share count is.
Think for a moment - one year ago there were maybe 20 million shares outstanding. Today there are about 10 times as many shares outstanding and the value has fallen by well over 99%. Has business improved? Is the company profitable? Are the finances stable?
The shares don't have to stop going lower if there's no reason.
Can I ask why you "invested" in this company? Out of the tens of thousands of other companies that have stock you could purchase, why did you choose LTNC above all of the others you could have bought? How did you learn of LTNC and what kind of research did you do before purchasing shares?
DD2Gain - this dilution summary sticky is important info.
Please continue to keep it updated weekly as new shares are given out like candy.
Good job.
If the company continues issuing 40 million shares a week, then the dumping will continue.
Vote the GOLD Proxy card
Read Terence Wise's additional info for his proxy filed this afternoon.
Dear Fellow Forward Shareholder,
I have been a shareholder and a member of the Board of Directors of Forward Industries, Inc. since 2012. I am also Forward’s largest shareholder; I hold approximately 19.6% of Forward’s common stock. In my time as a Forward shareholder and director, I have come to see the potential in Forward’s business and the value it could provide shareholders. However, I have also seen, firsthand, the harm being caused to Forward’s business by its current management and the destruction of shareholder value at the hands of Forward’s Chairman, Frank LaGrange Johnson. I therefore find myself compelled to appeal directly to you for your support in voting for the five highly qualified candidates, including myself, that I have nominated for election to the Forward Board of Directors. Forward needs a fresh perspective, independent thinking and analytical rigor – traits that I believe my director nominees possess in abundance and which I propose to harness in the service of all Forward’s shareholders.
Over the past year, Mr. Johnson and a dominant faction of Forward’s Board have authorized a number of questionable transactions that I believe have severely impacted the value of your investment in Forward. My efforts to engage with the Board to rectify the resulting fall in Forward’s share price, the apparent mismanagement of corporate funds and repeated instances of self-dealing have only resulted in my increasing marginalization by the other members of the Board. Instead of embracing the need for change at the top, Mr. Johnson and his cohorts are now seeking to consolidate their control of the Board by purging it of all voices of dissent.
As a result, I have lost all confidence in the ability of the current Board, under the leadership of Mr. Johnson and his hand-picked management, to effectively run Forward and reverse the evident destruction of shareholder value. Accordingly, I am compelled to bring my concerns directly to Forward’s shareholders by nominating a new slate of director nominees for election. In doing so, my aim is to establish an independent and balanced board that will represent the best interests of all shareholders and reclaim Forward’s future.
I urge you to vote on the GOLD proxy card for the five highly qualified individuals who are committed to increasing the value of your Forward investment. Please vote TODAY by telephone, over the Internet, or by signing, dating and returning the enclosed GOLD proxy card in the postage-paid envelope provided.
Forward’s stock today is worth 31% less than it was one year ago and 67% less than it was on August 9, 2010, the day prior to the Forward’s announcement of Mr. Johnson’s appointment as Chairman of the Board, the appointment of two of Mr. Johnson’s nominees as directors, and the replacement of Forward’s CEO with Mr. Johnson’s handpicked candidate. By way of contrast, the NASDAQ Composite Index has risen over 100% in that same time period.
During this time, Forward’s balance sheet has deteriorated significantly – with shareholders’ equity (i.e., total assets minus its total liabilities) dropping from over $22 million as at June 30, 2010 (the last reporting date prior to Mr. Johnson’s appointment as Chairman) to just over $10 million as at June 30, 2014 (a nearly 55% decline in four years). Over the same period, Forward has witnessed a significant decline in cash reserves. Forward’s reported cash and cash equivalents have dropped from nearly $20 million as at June 30, 2010 to just over $7 million as at June 30, 2014. This represents a reduction in cash and cash equivalents of $12,863,377, or a nearly 65% decline.
I believe that these statistics, among many others, demonstrate the substantial erosion of Forward’s assets and resources that has occurred under Mr. Johnson’s tenure as Chairman. As a result, Forward is constrained in its ability to grow its core business and capitalize on favorable market dynamics. The devaluation of Forward’s equity has directly translated into a devaluation of Forward’s stock and shareholder value, evidencing the clear and compelling need for change in Forward’s direction and management.
Mr. Johnson Has Repeatedly Engaged in Questionable Self-Serving Transactions
Over the past year, Mr. Johnson has engaged in a number of transactions with Forward for his personal profit, several of which occurred without the approval of the full Board. I believe these related-party transactions are highly inappropriate given Forward’s financial circumstances and have significantly compromised Mr. Johnson’s ability to exercise independent judgment in carrying out his responsibilities as Chairman.
· Significant Corporate Funds Invested With Mr. Johnson’s Hedge Fund, Leading to Significant Losses. In April 2013, Forward entered into an agreement with Mr. Johnson’s hedge fund, LaGrange Capital Administration, L.L.C. (“LCA”), and subsequently authorized the investment of up to $2,000,000 with LCA, for which Mr. Johnson received both an advisory and compensation fee, totaling $25,000 to-date. My fellow directors and I initially voted in favor of this investment. However, despite the obvious risks associated with investing such a significant sum given Forward’s relatively small size, Mr. Johnson has been pursuing a volatile and risky strategy of short-term swing trading. This strategy resulted in a net loss of over $720,000 by July 2013 – almost half of the amount invested with LCA! Mr. Johnson’s investment strategy is so risky that he managed to lose over $250,000 in the month of September 2014 alone, bringing total reported loses to almost $1 million. This investment raises significant concerns about the ability of the current Board to serve as an effective check on Mr. Johnson’s self-dealing, despite my continued admonitions for Forward to prudently divest itself of this investment. We have incurred significant losses through an investment strategy that is fundamentally unrelated to our core business. That Mr. Johnson’s associates on the Board continue to permit Mr. Johnson’s trading unabated is simply unacceptable.
· New 6% Senior Convertible Preferred Stock Issued. In June 2013, a special committee of the Board, comprising Mr. Chiste and two former directors, Mr. King and Mr. Gordon, unilaterally determined to designate and issue a new series of convertible preferred stock. This private placement was made without any input or deliberation by the other uninterested directors on the Board. Moreover, the issuance was only offered to Forward insiders and their affiliates – the 12 subscribers include Mr. Johnson, Johnson appointee Mr. Gordon and new Board member Robert Neal. The designation and issuance of convertible preferred stock was a serious decision, with preferential dividend, governance and liquidation rights that materially impact the rights of Forward’s common stockholders. Importantly, the terms of the convertible preferred stock provide its holders with a 6% cumulative dividend, while prohibiting Forward from paying dividends on its common stock without the preferred stockholders’ consent. The terms also provide for a liquidation payment in the event of a change of control in the composition of the Board, which currently totals $1,275,000. To be clear, this issuance was explicitly designed to furnish Mr. Johnson with further control over Forward, to your detriment as a shareholder, while providing him with yet another revenue stream derived from corporate funds.
· Mr. Johnson Requests Lucrative Management Role with the Company. In February 2014, Mr. Johnson approached the Board seeking an executive position with Forward, purportedly to focus on sourcing and executing M&A opportunities for Forward, in addition to his current role as Chairman. In exchange for this bespoke executive position, Mr. Johnson requested additional compensation of $300,000 per annum. Mr. Johnson later withdrew this request in light of the opposition from several Board members. While an acquisition search process should undoubtedly be a complementary element to our existing business, the Chairman’s first and foremost priority must be Forward’s core business and delivering meaningful profit to our shareholders. The preoccupation of our Chairman with boosting his personal finances at the expense of Forward’s relatively limited financial resources, particularly during a period where shareholder returns have not been strong, raises serious questions as to Mr. Johnson’s judgment and competence.
· 400%+ Increase in Rent Payable to Mr. Johnson for a One-Man Office Space in NY. In May 2014, it came to light that Mr. Johnson was benefiting from yet another lucrative deal with Forward that was put in place without consideration by, or even notice to, the full Board. In February 2014, Forward’s CEO Robert Garrett concluded a lease agreement with Mr. Johnson’s hedge fund LCA for office space at a rate of $2,500 per month, or $30,000 per annum. As of April 1, 2014, however, Mr. Garrett increased the amount of rental charges payable to Mr. Johnson to $12,700 per month, or $152,400 per annum, with no explanation for the additional charges. Setting aside the obvious question of why Forward should be paying for an expensive one-man NY office, given that the rest of our executive team and head office is located in Florida, it is shocking that Mr. Garrett would obligate Forward to a 400% increase in rent payable to our Chairman without bringing the matter to the full Board – a sum that is almost twice the amount Forward spends on its head office in Florida ($6,500 per month, or $78,000 per annum). There is no evident reason for this increase or benefit to Forward in agreeing to it, other than lining Mr. Johnson’s pockets with corporate funds.
Mr. Johnson and His Management Team Are Seeking to
DEMOLISH Forward’s Capital Structure and Business Model
You should be aware that Mr. Johnson and his supporters on the Board have been attempting to take the following actions in advance of the 2014 Annual Meeting:
1) Significantly Dilute Your Shareholding in Forward by issuing a considerable amount of additional convertible preferred stock; and
2) Sell or Leverage Forward’s Existing Assets and use the proceeds and resulting public shell to invest in an entirely different industry.
Mr. Johnson’s Plan to Issue Additional Convertible Preferred Stock Would Have Significantly Diluted Your Shareholding in Forward – Court Enjoined It As “An Incumbent Board Entrenchment Tactic”
Mr. Johnson and his supporters on the Board have been seeking to issue a new series of convertible preferred stock to undisclosed investors. In July 2014, it came to light through various Board e-mail communications that Mr. Johnson and his affiliates had attempted to file a listing application with NASDAQ for the prospective issuance of preferred stock at a 10% discount to market value, without notifying the full Board or the CFO despite the fact that the CFO was required to have signed the application and was incorrectly represented as having done so. More recently, on December 5, 2014, Mr. Johnson sought and received approval from a majority of the Board for an issuance of preferred stock with preferential dividend and liquidation payment rights to undisclosed investors. The issuance would have been convertible into shares of common stock representing just under 20% of Forward’s current outstanding common stock – which is conveniently just under the NASDAQ threshold requiring a shareholder vote, thus depriving shareholders of their say on a massively dilutive transaction. If this issuance had been effected, a mere two days in advance of the Record Date for the Annual Meeting, your voting and economic interests in Forward would have been significantly diluted. On December 8, 2014, I succeeded in obtaining a preliminary injunction from the Supreme Court of the State of New York, New York County, enjoining this issuance, which the Court called “an incumbent board entrenchment tactic.” These repeated attempts at preferred stock issuances to undisclosed investors can only be considered part and parcel of Mr. Johnson and his supporters’ efforts to entrench themselves in office and further their own personal interests, rather than act in the best interests of Forward’s shareholders.
The Scheme to Sell Forward’s Assets and Invest in a Completely Different Industry is Irresponsible and Will Harm the Value of Your Shares
I have become aware that the dilutive capital raise referenced above is also part of Mr. Johnson and his supporters’ broader and wildly reckless scheme to abandon Forward’s business and use the company as their own personal acquisition vehicle. It has come to light that Mr. Johnson and his supporters are seeking to strip Forward of its core business, by leveraging or selling off all or substantially all of Forward’s existing assets, with the intention of discontinuing this business and putting the proceeds towards acquiring and operating an entirely new line of business. Mr. Johnson and his affiliates have been courting private investors and pursuing various institutional lending streams in an effort to turn Forward into a highly-leveraged investment vehicle. Again, this scheme was conceived and put into motion without full Board and management notification or involvement. Such a self-interested plan would amount to a monumental and material change to Forward and its shareholders – it would essentially allow Mr. Johnson and his supporters to remain in control of a public company while depriving minority shareholders of an opportunity to receive a premium on their investment. This will render Forward shareholders investors in an entirely different company and has the potential to seriously harm the value of your investment. This is not what we as shareholders signed up for and we must act now to save our company.
I am Proposing Independent Board Candidates That Are Well Qualified to Oversee the Restoration of Value and Sound Governance at Forward
Forward requires a fresh perspective, independent thinking and analytical rigor – traits that I believe the Board as currently composed under Mr. Johnson’s leadership lacks. I have nominated five highly qualified candidates, including myself, whose experience should add immediate value to the Board. My nominees are:
N. Scott Fine. Mr. Fine has been an investment banker for over 35 years, having previously worked since 2007 for Scarsdale Equities LLC, a boutique investment banking firm, and formerly served as the Vice Chairman and Lead Director of Central European Distribution Corporation (“CEDC”), a multi-billion dollar alcohol beverage company domiciled in Delaware with the majority of its operations in Eastern Europe. Mr. Fine served as a director of CEDC for over a decade, during which time he co-managed its IPO and listing on NASDAQ, and led the CEDC Board’s successful efforts in 2013 to restructure the company through a pre-packaged Chapter 11 process whereby CEDC was acquired by the Russian Standard alcohol group. Mr. Fine has been involved in corporate finance for over 30 years and has considerable experience in the medical and medical device sectors, having served as an advisor for companies such as Research Medical, Derma Sciences, and Interleukin Genetics, among many others. Mr. Fine also acts as Vice Chairman and Lead Director of CTD Holdings, Inc., a specialty biopharmaceutical manufacturing and marketing company. Mr. Fine is the sole director of Better Place, Inc., an electric car company, where he was brought in to design, oversee and manage the orderly liquidation of the Delaware holding company of the Better Place group. He is also a director of Operation Respect, an anti-bullying education non-profit organization. Mr. Fine will bring crucially needed experience in corporate finance and restructuring and M&A strategy to the Board.
Michael Luetkemeyer. Mr. Luetkemeyer, has extensive executive experience in the medical device industry, Forward’s largest market, having served as the Chief Financial Officer of TranS1, Inc., a NASDAQ-listed medical device company from April 2007 through March 2010. He currently works as an independent consultant in the areas of strategic planning, financial management and infrastructure development. Prior to serving as CFO of TranS1, Mr. Luetkemeyer served as Senior Vice President and Chief Financial Officer of Micromuse, Inc., a NASDAQ-listed provider of network management software, from October 2001 to May 2006. He also served as a member of Micromuse’s board of directors from January 2003 through February 2005, and as its interim CEO during 2003. Prior to Micromuse, Mr. Luetkemeyer also served as Chief Financial Officer at NASDAQ-listed companies Rawlings Sporting Goods and Electronic Retailing Systems. Mr. Luetkemeyer has held a variety of senior finance positions throughout his career, including more than 10 years with General Electric, where he served with GE Aerospace, GE Semiconductor, and GE Plastics. Mr. Luetkemeyer will bring extensive financial and accounting experience to the Board.
Eric Freitag. Mr. Freitag currently acts as the Group Director of Product Innovation for R/GA, an international digital advertising agency, focusing on brand development and technology. Mr. Freitag specializes in the healthcare sector with extensive experience working with pharmaceutical, medical device and healthcare provider clients. Mr. Freitag has previously held leadership management positions at Smart Design, an innovation consulting firm, subsequent to a career in product development, having served as Global Director of its Healthcare Practice and Director of Engineering Services for nearly a decade. Mr. Freitag will bring crucially needed experience in product design and strategic innovation to the Board.
Howard Morgan. Mr. Morgan has served as an independent director of Forward since February 2012. Mr. Morgan has been the Managing Director of The Justwise Group Limited, a consumer durable products company, since 1997, having previously been employed by Justwise in various senior executive roles since 1989. Mr. Morgan has also served as a Director of Eurofresh, a wholesale distribution company of fresh produce, since March 2013. Mr. Morgan brings significant business management and operational skills and experience to the Board.
Terence Bernard Wise. Mr. Wise has served as a director of Forward since February 2012 and has over 30 years of experience in the furniture, plastics, luggage and accessories industries. Mr. Wise serves as principal and Chairman of The Justwise Group Limited, which he founded in 1977, a company that specializes in the procurement of consumer durable products from Asia and is an established supplier to a list of major UK multi-channel retailers. Mr. Wise also serves as a principal of Forward Industries Asia-Pacific Corporation (f/k/a Seaton Global Corporation) (“Forward China”) and has significant shareholdings in two manufacturing plants in China. In addition to his business management skills, Mr. Wise brings extensive experience in Asian markets to the Board.
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I believe Mr. Johnson and his supporters will stop at nothing to preserve their control of the Board, even at the expense of significantly impairing shareholder value. Mr. Johnson's self-serving motions and arguments have now been rejected by three different courts that have seen his repeated self-serving actions for the entrenchment tactics they are, aimed only at preventing you from exercising your right to vote on alternative director candidates. These obstructive tactics are unacceptable. I am urging all shareholders to consider the prospective harm these repeated actions may cause Forward.
I look forward to further engaging with you in advance of the 2014 Annual Meeting and welcome any feedback you may have. I believe my candidates possess the skills necessary to get Forward back on track and, more importantly, to independently represent your best interests. Please do not hesitate to contact Innisfree M&A Incorporated, the firm that will be assisting me in the solicitation of proxies, at (212) 750-5833 with any concerns or questions you may have. If we work collaboratively, I am certain we can reclaim Forward’s future together.
Time to be buying folks!
Stock is selling off on miniscule volume. Now is when you should be buying, not during pump/dumps like September.
Shares are trading at cash value, there is no debt, and positive cash flow.
Terence Wise is going to win the proxy fight in 6 weeks and shares are going to move higher.
Buy low, sell high - now is low!
Well, that was a quick 50% profit!
Annual return = infinite.
I took my profit and am a happy camper. Will gladly repurchase again if it retraces. If not, I'm still a happy camper for the quick overnight profit.