Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
If I'm reading the 8-k correctly, the following statement represents more than dilution:
Pursuant to the terms of the Promissory Note, the Company granted to the Note Holders a priority security interest to all intellectual property as well as all past, current and future agreements and patent infringement activity involving the Company (the “Assets”)
Heck, for $410k the lenders appear to be incentivized to work through the money, which they certainly will before a jury verdict could possibly be reached with Intel, assuming it ever goes to trial. Thus, the lenders take private control of the IP and any infringement activity.
Sweet deal, unless you are a shareholder. So glad I moved on with the run-up. Saw this coming a long time ago.....
By the way, Adognamedcharlie,
To add to my previous message, most other posters to this board believe you are an invaluable contributor. Your messages almost always have insight, thoughtfulness, and a keen sense as to what's happening with HDC.
Therefore, my fatherly advice is to refrain from adding HA Ha HA to all messages. This only serves to take away from the incredible messages that you intend to deliver.
Tell you what. For all posts moving forward, why don't you put 'Draft' on them, and the other posters will help you critique the message. Then, after modifying the language, you can post a message for which the rest of us can say 'that a boy'. Be sure to put 'Final' on those posts so that we know. (And, ps, don't include that darned HA HA HA!)
It should be a feel-good exercise, and enable you to post something legitimate. After all, you are a valued member of the posting team, and we're all here rooting for you.
Keep up the good work, and we look forward to the first 'draft'.
Adognamedcharlie,
is the continual HA HA HA due to a learning disability? It's ok if it is. Nobody's judging. Others on the message board will be happy to help you if you reach out. Just let us know what you're feeling.
LocWolf, here are some thoughts around the cancellation of the Markman Hearing. Obviously, this could be due to any number of circumstances, including the need for the judge and/or the newly appointed technical advisor to study the details. Who knows, but based on some posts on various message boards, there are some shareholders who hold out hope that a settlement is forthcoming.
So here's the potential problem. If there is a settlement, reality says that Intel isn't going to avoid a jury trial by 'generously offering' HDC billions of dollars. After all, they've argued that Intel hasn't infringed, and the company's board obviously wouldn't be overly amenable to offering up billions to a company that is expected to run out of cash by Q1 2022, before a jury trial. Thus, if we look at this rationally, a 'big number' for HDC is a 'small number' for Intel, and any settlement is conceptually a number that might actually end up being a complete disservice to HDC shareholders. For example, what if the settlement looks big on paper, but only correlates to something like 12 cents per share? Perhaps there will be some shareholders who walk away under water?
Obviously, the insiders won't be walking away under water, and we all know that the CEO and chairman isn't a spring chicken, nor are a number of HDC shareholders. The HDC team could obviously 'spin' this as the best possible opportunity, while not really representing shareholders. After all, we know the company hasn't taken steps to run this as a real business by monetizing the IP, so it very much appears to be a very calculated effort to reward insiders, potentially to the detriment of many shareholders. And, let' not forget that the law firm representing us has done so on a contingency basis, meaning that they can actually make a pretty decent return on a project that didn't even force them to go to trial. And, of course, they need to take their piece up front, leaving less available for shareholders.
We'll see, but a settlement at this point actually doesn't give me the warm and fuzzies, because it likely would be validation that Intel is avoiding a much larger number, even if it would take more time.
A poster by the name of Stephen posted on Yahoo that 98% of Intel's lawsuits result in settlement. Here is the actual post:
Keep in mind. 98% of INTEL’s lawsuits never make it to trial. That’s a fact. I’m not making that number up.
Not sure if this is the case or not, but I can't seem to find any source documents. Anyone on this board know if there is a source document that can confirm this? I think shareholders deserve to have a chance to read it, and understand the legitimacy.
Here is an interesting read. Not sure if it even has any applicability for HDC, but it's got some interesting info pertaining to Judge Albright and the patent lawsuits.
https://www.patentprogress.org/2021/03/15/one-case-all-the-problems-vlsi-v-intel-exemplifies-current-issues-in-patent-litigation/
that would be nice, but I'm so used to disappointment with HDC that I won't let myself get too hopeful.
I saw a post on Yahoo, so I checked pacer. Sure enough, the Markman Hearing scheduled for April 30 is canceled until further notice.
Not sure what to make of it. Could mean anything, good or bad. Or, it could mean nothing other than logistics. Who knows.
King Oil, you raise a good point about a settlement being the best opportunity for a number of shareholders. Putting aside the fact that so many of us have been around for so long, there are realities that I think shareholders should take into account if they expect that a successful jury verdict will get us the biggest bang for the buck.
1. Personally, I do expect that the judge will not honor Intel's motion to dismiss the case, and the Markman Hearing should prove 'favorable' for HDC shareholders. It's just my opinion but, of course, if the hearing doesn't go well, we're toast anyway;
2. The proposed schedule was already laid out, and the trial isn't scheduled until June 2022;
3. Intel obviously knows that HDC doesn't have money, so reality suggests that they will strategically drag everything on for as long as it takes, including any appeals that might be necessary. Thus, a trial wouldn't enable HDC to get any money for quite a long time;
4. HDC has signified in its 10-k that it will run out of money by first quarter 2022 unless it identifies how to infuse additional funds into the company. In other words, the money will run dry before any trial takes place;
5. Since the current team has either been incapable of monetizing the IP or, for that matter, refuse to monetize it (god knows what they've been up to other than lawsuits), we obviously can't expect any rational drivers of revenue. In other words, somebody has to pony up, and I can just imagine the terms that will be unfavorable for common shareholders. Do we need to go to Series E now? Will McGovern loan the company money again, and move his equity stake to unfathomable levels?
6. HDC is still in a stalemate with Vennwest (ie Quirk), and who knows how much more money needs to be expended relative to this lawsuit. McGovern and Quirk have been in their own little worlds battling it out, while shareholders have taken it on the chin.
In summary, if you put all this into a pot and stir it around, the result aligns with your suggestion: a settlement would be best!
HDC filed the 8-k relative to the lawsuits
By the way, there is a key word in the Yahoo poster's message that I believe is important: Involuntary
In other words, this doesn't appear to be a judge's decision on the merits of the arguments.
Thus, HDC will sit quiet, while the money drains.
A poster on Yahoo alerted shareholders that the Bear case is closed, thereby leaving just the Vennwest case open. Here is the post:
Bear case closed.
Per filing 4/6/2021 in the Superior Court of Fulton County.
Order granting motion for involuntary dismissal with prejudice.
Final order and judgement in favor of defendants.
I would assume HDC won't inform shareholders, based on the rationale that it isn't overly important, yet it obviously had to cost the company some seriously needed cash, given the company's financial condition. Further, as we all know, the suit was initially filed with Quirk, who moved on to the Vennwest suit, which HDC has signified is essentially the same argument (and same attorneys) all over again. So why wouldn't HDC share this with us? Perhaps because it wasn't dismissed based on the merits of the arguments? Or because HDC is deliberately refusing to raise the issues that continue to be of concern to so many shareholders?
I guess it all doesn't really mean anything because, at the end of the day, even though HDC has continued to convey to shareholders that it has intended to monetize the IP, the reality is that this all rests with one issue: the Intel suit. If we get a settlement or win, it goes away (unless Quirk isn't happy about the amount). If we lose, or the judge dismisses the suit, all hell breaks loose with this team that threw all its eggs in one basket and had the audacity to convey that it represented shareholders.
I guess we can all rest easy knowing that the current team is going to bed each night praying that the law firm is successful. After all, there is nothing else left to hope for. And, it's sort of funny, that given the circumstances, we should actually want the team to get rich off it at our expense, since the rest of us lose everything unless they do.
Fresh off the press:
The Court hereby appoints Dr. Joshua J. Yi to serve as the Technical Advisor for the Court in this case.
Will be interesting to take a look at this individual's background, since he will apparently be instrumental to the case.
Well, putting aside the back-and-forth commentary while we are at each others' throats, I was intrigued by following statement in HDC's March 30th Opening Claim Construction Brief:
To this end, Defendant’s erroneous proposed constructions would not aid the jury’s understanding of the claims – but instead only confuse them. The controversy between HDC and Intel has been ongoing for over a decade. Ultimately, Intel’s proposed constructions here are yet another ill-fated attempt to skirt its long history of infringing HDC’s patents, as are the seven (7) Inter Partes review (IPR) petitions it recently filed before the USPTO’s Patent Trial and Appeal Board (PTAB). The meaning of the terms at issue, in the context of the claims and specifications, is straightforward and uncomplicated.
Looks like our attorneys are trying to keep this issue a straightforward one, without allowing for enhanced complexity to an already complex lawsuit. I kind of chuckled when I saw that Intel ended up filing 7 IPR petitions, so I'm not sure how the PTAB is going to size all this up and make determinations in a timely manner. I also wonder what the judge will think of all this. I saw that Intel had filed 3 IPR petitions in the VLSI case, but it sounded as though that case may have been further along at the time of the IPR petition filings.
So, in follow up to my post about the voting rights, I need a reality check. Is there a chance it was worded in a manner that was misinterpreted, or did the current team really intend to call for 10:1 votes?
I still shake my head over the amended articles of incorporation, which I've referenced before. Yet, rather than focusing on the fact that the most recent amendments were filed in Feb 2020 with an effective date of Aug 2018, I've tried to figure out the relevant comparison between the recent amendments and the amendments which were filed in 2014, coinciding with the Series C shares.
We've all known that the HDC disastrous history has been largely predicated on a 'feud' between the current leadership and past leadership. Along these lines, the 'voting rights' provision is the most telling, since this has really all been about control. For anyone who hasn't reviewed the amended articles in order to compare them, here is the info relative to Voting Rights:
2014 amended articles - Voting Rights:
Each share of Series C Preferred Stock shall be entitled to vote on all matters submitted to a vote of the shareholders of the Corporation and each share shall have a number of votes equal to the same number of shares of Common Stock into which it is then convertible.
2018 amended articles - Voting Rights:
Each share of Series D Preferred Stock shall be entitled to vote on all matters submitted to a vote of the shareholders of the Corporation and each share shall have a number of votes equal to ten votes for the same number of shares of Common Stock into which it is then convertible.
you guys bring up wonderful history ('wonderful' being an interesting word, since 'agonizing' is the way it played out)
Loc, you are correct that the settlement was $600k, but at the time HDC didn't negotiate for royalties. Once the $600k was spent, it was over.
God, if we only had some semblance of effective management over the years, perhaps we'd be something.
Alan, good thoughts, and thanks for providing a positive spin. I certainly want to believe that there is a settlement or even a chance for one, but my hopes have been fading. After all, reading that 10-k only served to drain me of any positive thoughts.
Let's hope you're the one who ends up being right, and I'm the one who ends up being wrong.
Well, based on all the circumstances and everyone getting at each other's throats, the reality is that we have one solitary hope: the Intel suit. It's painfully evident that nothing else will be done to move the business forward. With that in mind, here are a few thoughts and observations:
1. The company has divulged that, absent a cash infusion, it will run out of money in the first quarter of 2022. Looks like there is under $1 million left, and the ongoing legal fees will ensure that the money dries up;
2. Inasmuch as we would hope that a settlement can be reached with Intel, my supposition is that Intel won't budge. Why would it? Not only has it revealed with other infringement cases that it is willing to go to trial, but it also has the opportunity to continue appealing and pushing back, thereby dragging things out. It has that luxury as a company with resources. Further, one quick look on the part of its attorneys into the financial condition of HDC would help make that strategy an easy decision. In other words, we are likely in it for the long haul (assuming we get that far);
3. Based on the above, I'm not sure how we can expect anything but the 'long haul'. Who is going to pony up with an investment for a company that hasn't monetized anything, not to mention the fact that our patents are forever getting closer to expiring? Perhaps insiders throw more money at it and, if so, they convert to more shares, and the rest of us just keep taking it on the chin with seemingly no end in sight, and certainly no guarantees of a windfall from Intel in the near term. Meanwhile, the share price doesn't move in the right direction;
4. In the meantime, the 10-k includes the following: Additionally, the Company noted in its motion that Mr. Quirk’s claims lacked substantial justification, were commenced and maintained without reasonable cause or for an improper purpose, and the Company’s 2020 attorneys’ fees and expenses of litigation in the amount of $216,000 are reasonable. For strategic purposes, in November 2020, the Company elected to withdraw this motion against Quirk, without prejudice to renew as may be appropriate. I'm not sure what the strategic purpose means, but the money is gone for now;
5. Another telling issue relates to Dr. Zhang's compensation. We've certainly known this all along, but it has unfortunately been clarified - the guy is simply not involved, although he's the guy with the subject matter expertise. Shameful that they appear to just pay him a stipend to be the Chief Science Officer, but otherwise haven't capitalized on anything to drive revenue;
6. Unfortunately, the 10-k also includes the following: On September 24, 2020, the Company accepted service of a lawsuit filed by Laurie Venning (“Venning”) and one of his companies, Vennwest Global Technologies, Inc. (“Vennwest”) from Alberta, Canada. According to recent publications, Venning is involved in additional lawsuits, one of which is against his formal legal counsel, Dentons, who has countersued Venning. Frankly, putting aside the merits, or lack thereof, of the arguments from both parties, this second sentence about Venning being involved in additional lawsuits 'based on publications' is concerning, if not alarming. I certainly get it – HDC threw it in there to subtly ‘suggest’ that the complaint has been filed by someone who might not be above board. However, it’s pretty easy to understand that any other lawsuits which this individual may be involved in have no direct bearing on the HDC complaint. Can you imagine if it was the other way around? It’s sadly comical that Venning could say the same thing about HDC. In other words, it doesn’t give me the warm and fuzzies that HDC leadership didn’t have the common sense to leave this out of our 10-k. Thus, in and of itself, it is all too revealing about our chances for success.
Normally, I would have found myself hoping for things such as a legitimate annual meeting and enhanced communication to shareholders. However, at this point, it's not worth worrying about, since those normal expectations either won't happen or, if they do, they won't bring value and will likely be a waste of time and money.
I wish there was a ‘glass half-full’ argument, but I’m having trouble finding it.
The more I think about the disclaimer about internal controls, the more I'm confused. Leading up to the so-called annual meeting last year, the company was able to have the accounting firm certify the 10-k. There were obviously the same level of controls in place, so what changed? Either the accounting firm signified that it is uncomfortable certifying them, thereby forcing HDC to include such a disclaimer or, perhaps, the Vennwest lawsuit has raised red flags? Or, perhaps they made a conscious decision to conduct themselves in this manner because they didn't want to spend money on the accounting firm, and this was a more creative way to go about it? This last issue certainly could make sense, given that the company has also made a decision not to renew lease space in PA.
Once again, regardless of the rationale, they've produced yet another example of creating more questions than answers for shareholders, and will remain quiet rather than giving us fair information.
It doesn't appear to me that in early 2020, when HDC submitted the revised Articles with a date retro to 2018, and in which it included the Series D shares with 10-1 voting rights, that the team thought it would be appropriate to conduct such an internal evaluation. The division of responsibilities seemed to have worked quite well for them at that time.
thanks for sharing this provision in the 10-k. At the end of the reporting period they carried out an evaluation of controls? To your point, they had ample time to work through such an evaluation long before this.
Something's not right here. Obviously I think shareholders need to be deeply concerned about the goings on. Loc, do you think some of these disclosures and other so-called internal evaluations have been presented, in part, due to challenges presented by Vennwest in its lawsuit?
Well, HDC did include multiple references to the pandemic, which has adversely impacted its opportunities. Yet, when I look around, I find all kinds of companies that have had no problems.
Perhaps someone should let them know that the pandemic is easing, and that they can come out from hiding.
I can't for the life of me understand how this HDC team can believe that it is being serious. This entire situation is beyond ridiculous. Just a few hundred dollars for an LLC, spin off a consulting subsidiary, hire a guy or gal on commission only who has an appetite for 'making it happen, and put the SVM-RFE to use. What is so hard about getting something going? The fact that it is under patent isn't even important. Just start using the damn technology to drive revenue.
These directors need to be held accountable for their inaction. And, with that in mind, I'm having a hard time believing that it isn't a purposeful play, in some way. You literally can't be this incompetent. It brings me back to my concerns that they might want this to go belly up, but I'm not a legal expert and I don't know how that would play out in terms of the directors picking up the pieces for self-gain.
Hey Good Sport, in all fairness to all of us, what is HDC doing? Why would they even bother to file for another patent, when they can't (or won't) commercialize anything. Just a waste, and it's beyond absurd at this point.
This 10-k was an absolute joke, with more disclaimers than a 100 billion dollar company. I did love this one:
We have identified a material weakness in our internal accounting control over financial reporting.
Management has concluded that our internal control over financial reporting was not effective as of December 31, 2020. Our Chief Executive Officer, who is also serving as our Principal Executive Officer and our President who is also serving as our Principal Financial Officer, concluded that we have material weakness in our internal control over financial reporting because we do not have an adequate segregation of duties due to a limited number of employees among whom duties can be allocated. The lack of segregation of duties is due to the limited nature and resources of the Company.
Hey, all we can do is laugh. It's absolutely incredible how pathetic these guys are. I don't know how they can look themselves in the mirror every day.
Here is an email I sent to HDC tonight. If you recall, they stated in last year's terrific annual meeting that they respond to all legitimate inquiries. I think my inquiry is pretty legitimate:
As a long-time shareholder, I’m reaching out to thank you for issuing the 10-k promptly. I’m excited about the fact that you have reminded shareholders of the value of HDC’s intellectual property, and that you have included the following statement. It’s refreshing to know that we have an advantage over competitors. Shareholders should be expecting great things from such competent leadership.
______________________________________________________________________
While a number of companies perform biomarker discovery, we believe that our SVM and SVM-RFE technologies give us a distinct advantage over competing technologies.
______________________________________________________________________
Further, it’s also exciting to know that you retain intellectual property rights covering FGM, as noted by the following provision in the 10-K:
_____________________________________________________________________
We also own intellectual property rights in U.S. patents covering Fractal Genomic Modeling (“FGM”) technology. The FGM portfolio includes one issued patent:
U.S. Patent No. 7,366,719
Method for the Manipulation, Storage, Modeling, Visualization and Quantification of Datasets
Expiration Date: 01/19/2021
______________________________________________________________________
I’m having trouble even containing myself at the incredible partnerships that HDC will deliver for shareholders based on a patent that expired two months ago.
You guys are doing a bang up job. Keep up the good work.
Just one serious question: whom do you think you’re fooling?
So before HDC decided to issue this 10-k, in which they copied and pasted as much as possible, do you think someone should have proofed it? For example, take a look at the following:
___________________________________________________________________
We also own intellectual property rights in U.S. patents covering Fractal Genomic Modeling (“FGM”) technology. The FGM portfolio includes one issued patent:
Patent/Application No.
7,366,719
Title
Method for the Manipulation, Storage, Modeling, Visualization and Quantification of Datasets
Expiration Date
01/19/2021
___________________________________________________________________
Something tells me that they might not be able to put this to use. Do they know what month and year this is?
Accordingly, perhaps my 'visualization' of their weekly zoom calls wasn't off base after all.
well, perhaps I can visualize some type of a discussion amongst the parties. Might as well have some fun with it while we agonize and wait....and wait.....and wait
Looks like Mark Moore dismissed his complaint without prejudice on March 3rd.
Down to the Vennwest suit.
Actually, you raise a good point as it relates to where the case is held. I agree that it likely matters not whether it's Waco or Austin, particularly since Intel signified in its motion that it isn't seeking to replace Judge Albright. None of us care about the venue.
On the other hand, since all we have is hope, perhaps the change in date for the Markman Hearing from early June to April 29 is meaningful. I have no idea if it means anything at all, but hopefully it's a sign that the judge wants to get past the nonsense of 'venue change' and other meaningless stuff, and perhaps he gets to set the record straight that he isn't going to throw the case out. That's all shareholders can hope for at this point, since this HDC team has shown its true colors and otherwise doesn't give a you-know-what about shareholders. We will only get to realize the 'residual' benefits if HDC wins or achieves a settlement. This was all about a personal motive on the part of McGovern and company, and this HDC team is obviously an extremely rotten group whose motives were to a) stick it to Quirk and Kowbel, and b) position themselves for significant personal gain at the expense of shareholders.
Inasmuch as you state that HDC will simply lose (as it always has), I again point to hope. Fortunately, this infringement suit rests not with the self-serving, lying bunch at the helm, but with experienced and reputable attorneys who are pursuing this on contingency. Attorney Robinson sure looks like he has the credentials that we need to move this forward but, of course, who knows.
As I've posted on multiple occasions, this HDC team has deliberately failed to monetize the intellectual property, but at the same time has purposefully used language in filings to suggest that it also intended to partner with other companies. A flat out lie. Coupled with the silent 'back-dating' of the Articles which included Series D shares (thereby allowing our Chairman to grab preferred shares with 10-1 voting rights), the god-awful excuse for an annual meeting that HDC clearly didn't want to conduct, the issuance of shares to insiders as the first order of business post-annual meeting, the fact that Zhang wasn't included in the issuance of those shares (meaning he isn't involved, although HDC pretends he is), the fact that HDC didn't inform shareholders appropriately before the annual meeting about its selection of the auditors, the fact that HDC's attorneys sent a letter that they would sue Quirk and company for pursuing essentially frivolous complaints, but clearly didn't pull the trigger when they didn't budge...........the list goes on.
In other words, I have no legitimate argument against anyone who posts, whether positive or negative, about HDC or its chances for survival. Yet, part of me would love to see what happens if the judge dismisses the suit, or if HDC ultimately loses. Perhaps we'll then get to see how the smug HDC directors then respond, particularly since Quirk, who couldn't run a lollipop stand, is already nipping at their heels and obviously out-maneuvered McGovern. With all the agony that so many of us long-term investors have endured for the past 15-20 years, perhaps that would be more fun than getting a few bucks out of a bad investment.
So here is what I find interesting on both the scheduling and the venue, based on the docket report on PACER.
On Dec 21 2020, the Scheduling Order was posted (document 27) which referenced the Markman Hearing for early June. One week later, Intel filed its Motion to Transfer (document 28), in which it asked that the venue be changed from Waco to Austin, and that its request was unopposed by HDC. I don't see any documentation that the judge denied the request, and the only documents on the docket report since the Motion to Transfer was filed (documents 29 and 30) don't relate to it.
Again, the judge's calendar still shows that the Markman Hearing is now scheduled for April 29th in Waco.
Here are the most recent 4 documents on PACER:
02/12/2021 30
Standing Order Regarding Filing Documents Under Seal and Redacted Pleadings in Patent Cases. Signed by Judge Alan D Albright. as of 2/12/2021. (bot1) (Entered: 02/24/2021)
02/09/2021 29
NOTICE of Compliance (Disclosure of Patent Terms for Construction) by Health Discovery Corporation (Robinson, Erick) (Entered: 02/09/2021)
12/28/2020 28
Unopposed MOTION to Transfer Case Intel's Unopposed Motion to Transfer Venue Within This District Under 28 U.S.C. 1404(a) by Intel Corporation. (Attachments: # 1 Proposed Order)(Ray, Brent) (Entered: 12/28/2020)
12/21/2020 27
SCHEDULING ORDER: Markman Hearing set for 6/3/2021 before Judge Alan D Albright. Joinder of Parties due by 7/16/2021. Amended Pleadings due by 9/24/2021. Motions due by 3/18/2022. Pretrial Conference set for 5/26/2022 before Judge Alan D Albright. Jury Selection and Jury Trial set for 6/20/2022 before Judge Alan D Albright. Signed by Judge Alan D Albright. (am) (Entered: 12/21/2020)
I will look further, but here is some preliminary info.
On Dec 28 2020 Intel filed its Motion to Transfer. Some references from the document:
THIS ACTION SHOULD BE TRANSFERRED TO THE AUSTIN DIVISION OF
THIS DISTRICT UNDER 28 U.S.C. § 1404(a)
CERTIFICATE OF CONFERENCE
I hereby certify that on December 23rd, 24th and 28th of 2020, the undersigned counsel conferred with opposing counsel concerning the relief sought in this Motion. Although HDC is fine with its chosen venue in Waco, HDC does not oppose this Motion for a transfer to Austin subject to Intel’s further stipulation that if the action is transferred to the Austin Division, Intel will not seek to transfer the action out of the Western District of Texas. Based on the unique circumstances of this case, Intel requests for the purposes of this action only that an Order be entered directing the Clerk of the Court to transfer the above-captioned case to the Austin Division but to remain on the docket of the Honorable Alan D. Albright.
I need to review PACER further, but I did look at Judge Albright's calendar again this morning, and it still shows the Markman Hearing in Waco for April 29th. This could simply be a matter of not being updated, but I'll try to flush out more.
Thursday, April 29, 2021, Waco District Courtroom #1
1:30 PM MARKMAN HEARING
WA:20-CV-00666
Well, it should be interesting to see how HDC is able to manage its remaining money. By the way, it appears that the Yahoo post this morning about Intel's petition is off the board. Not sure why
I sent this note to George, our CEO and Chairman:
George, don’t you think you should remove Dr. Zhang’s name from the website?
It’s not appropriate to list someone as part of the team when they really aren’t.
Oh, and for what it's worth, wouldn't common sense dictate that this team make a decision to remove Dr. Zhang from the website as one of the team members?
He clearly isn't one, and this is, at a minimum, deceptive.
Once again, our HDC team is showing its true colors.
Thanks LocWolf. I made up the $100 payment to Dr Zhang, but something tells me I probably wasn't far off. You see, I didn't make up the fact that after last year's disgusting annual meeting, the team granted themselves shares, but Dr Zhang didn't get any. Of course, this means that he wasn't really involved in anything.
If you play this out, it means that the team has never intended to do anything with a need for Dr. Zhang's expertise (meaning that they never intended to commercialize anything) even though they portrayed to shareholders that they were pursuing partnerships. What a joke.
And, perhaps the most incredible piece that I also didn't make up relates to their filing of the re-stated articles on Feb 7 2020 with the state of Georgia in which they amended the articles to insert a new Series D preferred stock provision. This, of course, was back-dated to August 1, 2018. Some shareholders don't know this, but it certainly explains why Quirk et al didn't concern themselves with HDC's initial threats that their lawsuits were frivolous. Obviously, they weren't frivolous.
In other words, this HDC team is comprised of some really bad people. People who need to figure out a way to move on, and fast.
Here's summary of what I visualize for one of HDC's typical team meetings:
G = George
HZ = Hong Zhang, PhD
M = Marty
C = Colleen Hutchinson
W = William Fromholzer
E = Ed Morrison
J = Jim Murphy
G: Hi everyone. Thanks for joining our weekly call. We have a lot to cover, since we’ve been working exceptionally hard moving the company forward on behalf of our shareholders.
C: Daddy, I didn’t know we have shareholders.
G: Yes, honey, we do. We just don’t like them.
C: Oh, ok. By the way, when are we going to award more shares to ourselves again? I like those. Isn’t the last time we did that almost a year ago?
G: Well, we’ll get to that. First we need to pretend that we did something important, so that I can state that the awards are based on our ‘ongoing contributions to the company.’ M, any ideas?
M: Sorry, I was eating. What did you say?
G: Do you have any ideas about contributions to the company?
M: Absolutely! I was able to purchase new ink for our printer, and I started to copy and paste information from last year’s 10-k so that we can file the same information this year.
G: That’s not exactly what I meant, but good work. I love your loyalty. I need to reference your loyalty again in another 8-k. E, you’re an accountant, do you have any insight for a 10-k that might make sense?
E: Sorry, G, J’s the accountant. I’m not sure what a 10-k is.
G: Oh, yeah, that’s right. J, any info you can share?
J: [Silence]
G: J? You’re on mute.
J: Sorry guys. No, I can’t think of anything. I think M’s suggestion to just cut and paste is excellent. I don’t think we accomplished anything anyway, did we?
G: Ok, makes sense. And, you’re right. We didn’t do anything with our IP.
C: Daddy, what does IP mean?
G: Intellectual property, honey.
C: Oh.
G: W, your eyes are shut. Are you awake?
W: Just resting my eyes. However, I was wondering if we should make these meetings bi-weekly instead of every week. The weekly calls are draining.
G: Good thought, let’s consider it. HZ, what do you think of potential partnerships for the company?
M: G, HZ isn’t here.
G: Why not?
M: He’s not really a member of the team. Remember, we just pretend that he is, because it looks good, and I recommended that we put his name on the website to make it look real. You also said in last year’s annual meeting what a great guy he is. I think shareholders bought it.
G: Oh yeah. I think we gave him $100 to be part of that meeting, didn’t we? I know that we didn’t give him any stock options after the meeting, because we’ve never asked him to contribute.
M: Right. That was $100 well spent. By the way, J, how do we hide that $100 in our filing so that it doesn’t appear we paid him?
J: Just bury it under consulting.
M: Great call, J! I’ll do that after I finish cutting and pasting everything else. I also need to figure out a way to get the new ink I bought into the printer. Could be a long day.
G: Ok, let’s move on to legal mumbo-jumbo.
C: Daddy, what’s mumbo-jumbo?
G: Just an expression, honey. I want to have a frank discussion about all the lawsuits that we’re dealing with.
W: What lawsuits are those?
G: W, we have several of them from shareholders who are a pain.
M: G, maybe we don’t have to worry about them. We’re almost out of money anyway, so we can blame it all on the shareholders.
G: M, did I tell you I love your loyalty?
J: M, how much money do we have?
M: I’ll need to double check. It should be pretty much gone by year-end, though.
J: Outstanding.
C: Oh, that’s great, M!
G: It’s actually not that great, honey. We need money to keep the company alive until we can win that Intel lawsuit and then take our money and run.
W: Is Intel a big company, G?
G: Yes, very big W. I’m hoping they can pay us a boat load of money for stealing our IP.
C: Why would they steal it, daddy?
G: They need it, honey, and just didn’t want to pay for it.
C: Wow, that makes sense. Good for them.
M: G, remember how we told shareholders that we were going to sue them for filing frivolous lawsuits against us?
C: Daddy, what does frivolous mean?
G: Don’t worry, honey, it’s not important. M, we couldn’t move forward with that because it turns out the suits really weren’t frivolous. Those damn shareholders caught us doing something naughty, like granting ourselves tons of preferred shares without letting anyone know, then silently submitting new articles retroactively. Hi hate those shareholders who demand too much.
M: I agree, they suck.
G: M, did I tell you I love your loyalty? That’s why I promoted you. I really don’t care that you don’t know how to commercialize anything. That’s not important.
M: Thanks man.
C: Daddy, can I get promoted?
G: Sure honey. Let me get back to you on that.
E: Hey guys, are we going to waste our time by trying to have another one of those annual meetings this year? I had to spend at least an hour preparing, and it was grueling.
G: Probably not, E. We don’t have anything to say anyway. Plus, we can blame it on the shareholders. W, are you still with us?
W: Sorry, just catching some z’s
G: You mean HZ?
W: No, it’s an expression meaning taking a nap.
G: Oh, by the way, if we don’t have an annual meeting this year, we can save $100 by not having to pay HZ.
C: But daddy, if we don’t have the meeting, does it mean we can’t get more options?
G: No, honey. I think we can figure out a way to grant ourselves more shares. Maybe we just won’t tell anyone.
J: OK, maybe we can just bury it under consulting.
M: Great call, J! I’ll work on that as well. Gosh, I’ll be here until dinner time trying to handle all this.
G: Did I tell you how much I appreciate your loyalty, M? Don’t worry about not being able to get a single thing done. It’s the title you want.
M: Thanks so much!
G: Ok, everyone. That’s it for today. I’ll let you know if any of those damn shareholders give us more trouble.
M: Thanks G. I’ll give you a call off-line if I need help with the ink for the printer.
you know, I've also been wondering what a typical team meeting might be like with HDC's directors. I think I'll spend some time formulating a summary of what the discussions would sound like
So....after this saga ends badly, and the company is bankrupt, what does a guy like our esteemed President & COO (Mr. Delmonte) do? I guess he looks for another job. I was thinking about that, and I was visualizing how the interview would play out. Here is my best guess (“C” is the company, and “D” is our esteemed President and COO, Mr Delmonte).
C: Welcome, D, and thanks for interviewing with our company. As you are likely aware, we’re a company focused on accomplishment, and we pride ourselves on getting things done. In this hiring process, we’re eager to hire an individual with not only impeccable credentials, but also a ‘go-get-um’ attitude. Therefore, I’m looking forward to our discussion.
D: Thanks
C: I see from your resume that you were promoted in April 2020 to President and COO of a promising company, so we’re delighted to speak with you about your deal-making ability and your incredible accomplishments. Why don’t we start by having you tell us about some of the partnerships and collaborations that you spearheaded.
D: Um…..Um…..Um…..Um
C: Mr D, it’s ok. I’m sure you have a lot running through your mind about where to start, so let’s just take one accomplishment at a time. Where do you want to focus?
D: Well, at my prior company, we didn’t do any deals.
C: “Laughing”. I see that you have a terrific sense of humor. Thanks for breaking the ice. So…..let’s talk about your accomplishments.
D: For starters, I am proud that I was promoted by our CEO and Chairman based on my loyalty.
C: Yes, and?
D: Well, that’s it.
C: I don’t seem to understand. I was under the impression that you were also promoted based on your partnering initiatives?
D: That was just some language that our Chairman, George, jammed into the filing in April 2020. We didn’t intend to partner with anyone.
C: I see….but this confuses me a bit. My impression is that you were with the organization for a number of years, and received a promotion. That would naturally tell me that you are a deal-maker.
D: Chuckling. No, deal-making wasn’t our intent. We only wanted to make some ‘pain-in-the-ass’ shareholders think that. I think we did a great job of throwing them a curve-ball, and suggesting that it was our intent to make deals. In reality, our goal was to strike a legal settlement with Intel.
C: Intel, meaning, the company Intel Corporation?
D: That’s right. We think they used our technology without our permission. So we should get some money out of it.
C: I assume you are referencing patent infringement?
D: Yeah, that’s right, I think. Infringement, or something like that.
C: OK. In the meantime, while your attorneys were at work, what were your responsibilities? I’m sure you were hard at work formulating strategies to move the company forward?
D: Not really. I needed to make sure I could quickly answer any phone calls that might have come in from our attorneys, so that I could fax them info quickly. And we had a great fax machine.
C: ???? I’m not sure what to say.
D: To be honest, I’m so proud of myself. I don’t think I missed a single call from the attorneys, and was able to turn documents around expeditiously. That’s what I’m most proud of.
C: Ok. {whispering under his breath, “this is brutal”}. Therefore, you must have had a clinical or mathematical expert on your team who spearheaded things, since my understanding is that HDC is the sole owner, world-wide, of SVM-RFE?
D: What’s SVM-RFE?
C: Oh my goodness, I thought you would tell me.
D: Oh, yeah, it’s some crazy mathematical pattern recognition stuff, but our team didn’t worry about the details.
C: Why not?
D: We didn’t care about that, or any other of the other things. I think they called them patents. We just wanted to strike a deal with Intel and head out with some dough.
C: But in the meantime, didn’t you think you had a responsibility to represent shareholders? Wasn’t HDC a publicly traded company?
D: You got me. Either way, it didn’t matter. I just wanted that title on my resume. Our chairman was cool enough to help me out.
C: Ok, so if the company was still alive, didn’t it employ or at least contract with a clinical or mathematical expert, who could speak the language?
D: It’s funny that you ask. When we conducted an annual meeting for shareholders last year, which we wanted to make sure didn’t even last 30 minutes, and we did a fantastic job at that, our Chairman mentioned what a great guy Dr. Zhang is.
C: Who is Dr. Zhang?
D: He’s a college professor, but we pretended he works for us. We actually put his name on our website, to make it seem real. It’s pretty cool.
C: Has Dr. Zhang ever worked with you on deals?
D: No, since I really haven’t done any deals.
C: I see. So your promotion last year was based on loyalty? I’m not sure how else to interpret this.
D: Yup. Damn straight.
C: Good for you, Mr. D. Tell you what…………I have an important call that I need to make, so I’m going to have to break away. I’ll have my HR folks follow up with you. Thanks so much for coming in.
D: Thanks so much. I really enjoyed this chat. Can’t wait to talk more.
C: Ok. I’ll have someone see you out.
just to be clear for other posters, these messages I posted were emails I sent directly to HDC. Doubt they will respond. After all, they've been 'outed'.
time for the team to come up with a transition plan, in my mind.
Here is another follow up to remind George of what he has done not only to shareholders, but to someone loyal to him:
George, I’d be remiss if I didn’t follow up on my previous email to you, in which I outlined how not only disappointed I am, but in which I summarized a number of deeply concerning issues with your selfish motives. In this case, I think it is very important for shareholders to understand the real role of Mr. Delmonte. This isn’t simply a ‘personal affront’. It’s a summary of how things have obviously played out. And, inasmuch as this summary will outline how I believe you orchestrated this, it will also reveal to shareholders how you didn’t simply deceive shareholders, but how you also took advantage of someone who has been overly loyal, perhaps to his own detriment. Allow me to elaborate.
Prior to the point in which you took control of HDC, Mr. Delmonte worked for the organization, although shareholders had essentially never heard of him. In other words, he served in a support role. Well and good. Then, after you took control, there was a single ‘common denominator’. Mr. Delmonte, of course. This all makes sense, since your control necessitated, to some degree, an individual who had some degree of historical knowledge and access to internal documents. You’re not kidding anyone, George, since that individual was Mr. Delmonte. Now let’s fast forward.
Along the way, shareholders were informed of his ‘promotion’ and, in the SEC filing announcing it, you specifically indicated that his promotion was based, in part, on both his “loyalty” (great wording, George) and ‘other partnering initiatives’. If you don’t recall, George, I can point you to the 8-k that you filed dated April 10, 2020. Since you have been at the helm since 2017, and since there are no partnering initiatives, we know that you were being deceitful. The reality is that Mr. Delmonte has never been in a position to be able to develop partnering initiatives, has he? You know why I ask? Because I had a personal email exchange along the way with Quirk, and informed him that Mr. Delmonte didn’t take too kindly of him. Guess what his reaction was: Why?
You know what all this tells me George? It tells me that you likely conveyed to Mr. Delmonte that he’d be better off being loyal to you. Obviously, he’s done that, but now he looks like a stooge, doesn’t he? Not only are there no partnerships, but there is something even more telling to me, George. Want to take a guess? Take a look at your equity versus the equity of the individual who is currently our so-called President and COO. You’re kidding me, right George. The President has a few million shares, and there hasn’t been mention of a rather significant equity stake on his part? What gives? Looks like you personally took most of the equity.
I know what gives. You have not only taken advantage of shareholders, but you have taken advantage of someone who doesn’t have the capacity to move the company forward, and you took advantage of him personally. Great, he’s got a title. On the other hand, he’s got a lot of enemies who won’t have a problem outlining how he has been instrumental in running HDC into the ground. And, I can tell you personally, you and Mr. Delmonte, through his blind loyalty, won’t run my investment into the ground.
Good work, George. Time to tell shareholders the truth, and for you to figure out how you are going to work your way out of this logjam that you created. You had an opportunity to do the right thing. Clearly, you chose otherwise. And, for what it’s worth, perhaps it’s time for Mr. Delmonte to wake up and smell the coffee.
Here is my note to HDC, given that the company was 'too busy' to respond to my initial, and very appropriate, inquiry from yesterday.
George, I’m actually quite astonished (in retrospect) at the degree to which you and your colleagues deliberately took advantage of my early support for the team. I’m sending you this personal note because I want to convey to you that you had no right to do what you’ve done to me, and certainly to all shareholders.
I hoped for better, and the issues that subsequently surfaced, which revealed that the team was sometimes deceptive, was sometimes less than honest, and was sometimes ridiculously smug, clearly led me to understand that my support was erroneously based. Simply stated, you had no right to do this, and from a basic “decency” standpoint, you need to focus on either telling shareholders what is really going on, or sailing into the sunset after relinquishing your deliberately orchestrated equity in the company (at shareholder expense). George, I have no respect for you or any other members of the team, who portrayed themselves as ‘good guys’. Well, since it’s 2021, please tell me how you are ‘good guys’. Who the hell runs a company which, after over three years, hasn’t taken deliberate steps to generate revenue? In my line of work, if nothing is accomplished in 3 weeks, I ask questions. In yours, 3 years with nothing? Of course, all shareholders know at this point, since the answer (clearly) is a team of individuals who had a ‘get rich quick’ strategy, that hasn’t unfolded. Now you’re in a pickle.
You had the audacity to deliberately convey to shareholders in 2019 that the organization was focused not just on legal matters with Intel, but also on moving the company forward. (Of course, I can’t help but convey that I have always found it astonishing that you stated in your 2019 shareholder letter that it was the ‘first time’ you had a chance to write to shareholders. You took over control in 2017. In other words, this is simply another example of whom you really are. Who the hell doesn’t have time in two years to write a letter? Your lack of integrity was telling at that time, let alone now). Since it’s 2021, and nothing has been done to move the company forward, you were clearly less than honest. You also know that the so-called ‘Annual Meeting of Shareholders’ last year was a disgrace, and you’re very conscious decision to reward insiders for their ‘ongoing contributions to the company’ as your first order of business post-meeting, was not well received.
Perhaps you are missing something, so I’ll tell you directly. Inasmuch as shareholders hold out hope that the Intel suit will result in something favorable, REALITY says that the company will soon be bankrupt. Everyone knows that you are dealing with multiple lawsuits, which are draining money, and Quirk is now laughing in your face. You could have avoided this, had you been the ‘good guy’ that Mr. Delmonte deliberately lied about. So either he’s a ‘loyalist’ who will be inappropriately rewarded, or a stooge. I happen to think he’s the latter.
I am going to hope that you don’t try to settle with Intel for a very minimal sum to get yourself an easy exit. You don’t deserve it. Nor do shareholders.
Shame on you, George, and shame on the entire team. I’ll be watching closely.