My concerns regarding the acquisition of Geotraq and the Series A Convertible shares.
1.) Geotraq's last 10-Q was filed for the first quarter of 2016. In this filing, they reported zero revenue and a net book value of ~$220k. If this is correct, then $ARCI management valued the company with zero revenues at over 16800% over its book value?
2.) Geotraq's previous ticker, $GTRQ, is still trading; the company that $GTRQ represents is 'Gotraq, Inc.' Both companies, Geotraq and Gotraq, are headquartered in Seattle WA. Reuters states that Gregg Sullivan (the CEO of Geotraq) has been the CFO of Gotraq since 2014. Gotraq has no SEC filings to date. Are these the same companies and if so, then did $ARCI really acquire Geotraq?
3.) Geotraq acquired two companies, OmniM2M, and Ci2i, in a pure equity deal valued at $12 million in 2015 -- Perhaps this is the reason why $ARCI paid so much for the company?? However, none of Geotraq's SEC filings reflect this transaction. There were no adjustments made to its balance sheet, no 8-Ks filed to report this transaction, and no changes made to its statement of shareholders' equity.
4.) In the Certificate of Designation in $ARCI's Q2 10-Q, it states:
"the Holders may not effectuate any Conversion and the Company may not issue any shares of Common Stock in connection therewith that would trigger any NASDAQ requirement to obtain shareholder approval prior to a Conversion or any issuance of shares of Common Stock in connection therewith that would be in excess of that number of shares of Common Stock equivalent to 19.9% of the number of shares of Common Stock as of the date hereof"
Does this statement mean only 1313k(19.9% * 6.6m OS) common shares worth of Series A convertible shares will be able to be converted? If so, then the Geotraq acquisition deal is only valued at ~2.7m at current market values.
If it does turn out that $ARCI management purchased a pre-revenue company at over 16000% over its book value, would it be outright fraud or a violation of fiduciary duty? Would it be grounds for a class action lawsuit?
I will be contacting $ARCI's IR tomorrow, Monday August 28th to get some clarity on the four aforementioned points. Hopefully I will be able to get a hold of them. I will report my findings.