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Read the 8K. It's hard to imagine how Ms. Trompeter can say that with a straight face.
We might have to wait for a quarterly report. I'd really like to know whether HVE Inc. and/or SnapServer are (still) owned by Sphere 3D. If not, whether I simply missed it, or whether SnapServer perhaps slipped away under the cover of night.
I'd think that the fate of the only real asset would be something that the shareholders should be informed of.
HVE, Inc. shows the SnapServer as their (only) product on their webpage, which shows a date of 2020. Was there a backdoor deal that quietly dealt away SnapServer, in exchange for the cash that the HVE principal put in? Perhaps another explanation?
I can't find anything that was disclosed on Edgar Online, but sometimes it's hard to find something if you don't know where to look.
I seemed to have missed if/when/where/how the disk and virtualization product "assets" left Sphere 3D. Could any of you enlighten me?
Curious, Dude. A handful of hours after I mention the dubious Luxembourg bank, that very same "bank" posts that they agree to waive some rights to their stock. It sure looks to me like Cyrus/Freidheim are still puppeteers behind the scenes - and still trying to avoid a haircut by facilitating yet another pump-and-dump. (As I recall, Cyrus/Freidheim and FBC Holdings Sarl have previously filed as related parties).
If PT had a "jaded" past, it's hard to come up with an equally appropriate adjective for the new bedfellows you out in your post's link. Somehow "slimy" seems way too mild.
Yeah, the valuation in that link is a farce. The CDN$250M is gossamer and moonbeams. Two worthless stocks swapped for each other. This is like the phony capacity swaps in the dot-com bubble, or the fake Wirecard equity.
Your unmasking of the "Global Reseller" reminds me of the Luxembourg bank that Cyrus Capital/Freidheim used to bail out Sphere 3D several times. It turned out the international bank was something like a vest-pocket pass through via a taxi driver in New York.
I've seen a very similar transaction in the past, where two worthless companies merged in a stock swap. It seemed like a good way to avoid closing out a business and drawing the scrutiny of the regulators. In that case, though, it failed when the cash ran out and the principals got caught in a kickback scheme. I wouldn't be surprised if that is in the cards here.
Let's see. This was a "mining" company that became worthless, leaving retail investors holding the bag after making insiders rich. It then became a shell for a "data management solutions" company that became worthless and left retail investors holding the bag after making insiders rich, and after it's founder left a health software company that became worthless, leaving retail investors holding the bag after making insiders rich. Now that it is recapitalized and a "Water-as-a-Service" company, is there any sane retail investor who really believes that the outcome will be any different (excluding, of course, those who think they can get in and out at the right time)? Yeah, right.
Add one more corpse to the trail of bodies...while then next victim is stalked. Apparently Canadians are slow to pick up on pump-and-dump. Perhaps it needs to be rephrased as "pump-and-dump, eh?"
Touche!
My bad. I guess it's end of year, not (just) end of quarter. It'll be a while before we know what's really going on.
They probably used a carrier pigeon for their 10-Q, and wrote it in Sanskrit...
The silence is deafening. When I read the annual meeting/proxy call, the only thought that came to my head was "Are they really going to hold one?" I'm completely divested, but I'd suspect that there are quite a few of you out there who might want answers. The only thing that is getting paid is compensation in the form of stock, which in turn is sold to suckers.
If the officers and directors were subject to California law (and I don't think they are, but it's possible, given their brick-and-mortar presence), I would think the fear of their liability would make them resign. (Some liability can't be indemnified). Even at that, I expect either a (tainted) white knight to come in in the next three weeks, or a news release stating that the board has resigned and a public trustee has been appointed.
If there's someone there in the Toronto area who still holds registered shares and attends, I'd love to hear their take on the 'splainin'. Is it even possible to screw the common stockholders any more than what they've already accomplished?
Gearz,
I'd like to bet you a bottle of wine that a, uh, white knight (okay, dirty grey knight) will show up with payroll before the end of the month. The horse will probably be the phony bank and the rider Freidheim, although it could be an HVE principal. In other words, I'm betting that the instinct to throw good money after bad will prevail at least one more time . . .
Cheers.
I see conflicting objectives. PT Barnum et Freidheim act as if it is important to maintain NASDAQ listing, but at the same time they are taking actions that destroy the marketability of their common stock to the point where, well, who cares. This latest move clearly undermines any ability to raise capital by selling common stock on the open market. They are effectively saying "Take that, sucker!" to the investor, or perhaps more accurately something similar to a dollar sheep, i.e., buck ewe. They will now issue preferred stock, rather than common stock, and especially to their insiders. (This also could facilitate shucking off those pesky, annoying retail investors through bankruptcy, while leaving the pickings for the insiders).
If the Dingaling Brothers, Barnum & Freidheim Circus really wants the money-losing, obsolete business of Snap & HVE, all I can say is that they certainly deserve what they are getting.
(P.S. - NASDAQ apparently doesn't care if a company is no longer owned or controlled by the instruments that it exchanges. Let those pesky retail investors eat moonbeams. It serves them right for not being players.)
This has turned into quite a shell game.
M+, D,
Do either of you know if/how/why the strategy of waiving redemption rights on preferred stock reduces liability to the satisfaction of NASDAQ? I would think that the liability is still there, it just isn't current.
Does NASDAQ ignore the common stock, which is really the only investment they service? That wouldn't make sense . . .
Also, it seems to me that fabricating and shuffling the classes of preferred stock eviscerates the rights of the common stock holder. Given the current by-laws (ahem, NASDAQ), there ain't nuthin' left of the equity - the share value has been extensively diluted and subscribed elsewhere, and will continue to be asymptotically diluted.
I'm surprised it only bounced to a buck five. I guess sidestepping the gallows (yet again) is now expected.
On the other hand, it's pretty easy to read into it what you and D have - their lenders had no choice but to convert debt to stock - anything is better than nuthin'. It also kicks the can down the road. Perhaps the auditors won't make Freidheim & Co. expose the write-down in 2019, and he bought himself time to try to hide the pyramid in the sand.
It wouldn't surprise me at all if the, uh, reputable, uh, "Luxembourg", uh, bank winds up issuing ANY more debt once the dust settles. Ahhhh, the old shell game . . .
Definitely a "blood out of a turnip" transaction. Freidheim and Overland are giving up on collecting on their fictitious debt. Now all they need is yet another reverse stock split, and the hemorrhaging company will be free to bleed away for another several months . . . if NASDAQ buys in.
Celebrate??? What a joke. They bought themselves another month, which started two weeks ago. All they need to do is raise about 2 to 3x their market value in that time, in order to go from deep in the red to shallow in the black.
Late Pleistocene. I've never been much of a gamer, but seeing as how you brought up CP/M, step back a generation (before PC and Gorillas) when there was a very popular fantasy game for CP/M with the usual swords, trolls, torches, axes, etc. I can't remember what it was called, do you?
That was before .exe, back when things were .com. Don't date me by that, though. I'm really an IBM System 360 (OS) guy, but I have run tab equipment before that (early Pleistocene)...also bi-quinary, vacuum tube, Nixie displays, lead tab bars, etc.
I Love It. CP/M. Wow.
P.S. As I recall, Overland's first product (or at least the one MG showed me, somewhere back in 1980), was an S100 controller, yup, with software that ran under CP/M.
I've been on the, uh, wrong end of the stick a few decades back when one of Overland's competitors/customers/friends filed bankruptcy (on a couple of occasions, actually). The (California) court didn't pay much attention to the creditors (see "end of stick", above). The assets that weren't smuggled out wound up being brokered off to the attorneys (or at least ostensibly so), who didn't do a good job of listening to anyone but the debtor.
The court also seemed to favor the debtor in other ways. The order to restore the good faith ("end of stick", ibid) was heavily abused, sort of like granting permission to twist the knife, given that it had already been inserted deeply into the back. The bench also presumed that the debtor was the only one in the courtroom who knew the business, and bought the "events beyond our control" spiel hook, line and sinker. Bankruptcy courts have become deaf to creditors claiming fraud, scams, cons, etc., as elements of these are present in virtually every case they hear.
If Overland/Tandberg offered twenty cents on the dollar for the debt in exchange for Snap, I wouldn't be surprised if a court would order it so, wipe the remainder off the books, and let the remaining operation continue under the debtor, owing only readily diluted stock. The justification would be that there isn't a better deal on the table for the creditors - 20% vs. zilch.
That's my cynical side talking. It has more experience (and is more often right) than my usual, happy-go-lucky self.
It's just a theory, but it seems feasible to me that the UCX/HVE folks may be plotting to buy it back, and therefore they're trying to keep the doors open until the delisting. Once it's on the pink sheets it should cost them a small fraction of what they originally dumped their stock for after the merger/acquisition.
It's a form of turnabout being fair play. They thought (and I don't agree) they got rooked in the original deal, now they could wind up with their company back, and a few million better off in their personal accounts. That won't fix their own product line's hemorrhaging, though, which is why they were in a position to sell out so cheaply in the first place (in my opinion). They'd also have to find a way to scrub off the (huge) debt. Bankruptcy comes to mind (debtor in possession, self dealing), but perhaps they could find yet another sucker to assume the Snap crap in exchange for the liabilities. EK once sold it for nine figures, bought it back for pennies on the dollar, then sold it again. Why not? They might even be able to trade it back to him for the debt.
Gearz,
I've got an alternate theory (perhaps less likely). I've noticed a pattern whereby any time they, uh, shall we say, sucker someone into a PP, there is a spike. It is kind of odd, in that the PP is usually a desperation move to avoid a terminal default. In other words, the spike is the result of it "leaking" out that they won't be shut down "tomorrow", to great relief. (Remember when VMF's "family trust" bought in?)
What I don't get is that, even if they bring in another half a million to make payroll for another month, the delisting is still imminent. It's not just waiting for the ax to fall, this time there are multiple axes.
Just a thought.
It looks like the "sucker" was one of the principals of UCX. It would be entertaining to know his motive. Was he simply being a nice guy? I'm skeptical, and also I'm not sure how he isn't an "insider". I suspect that he intends to participate in a buy-back of ANY's ConneXions line and might not be able to do that if they belly-up. It still looks like good money after bad to me, but maybe he knew of (or perhaps even participated in) the recent pump/spike.
I don't see PT letting them go quietly into that good night, but I don't disagree with what you are saying.
Mr. Barnum always has something up his sleeve.
A couple of points:
1) The creditors have nothing to gain by forcing bankruptcy. There aren't enough assets to cover ANYs costs of bankruptcy alone, much less make distributions to creditors. I think Freidheim said as much when he converted the bank debt to stock. There was no point in being a creditor (although in his case especially, a default appears worse than an investment loss). Prolonging hope is more appealing than forcing a confrontation of reality.
2) HVE was on a doomed trajectory when acquired by ANY. Nevertheless, they manipulated that negative into a positive, paying an artificially high "price" (phony stock swap) to have the (artificial) asset on the books. It was enough to keep ANY appearing as if it were growing, and gave PT & company pump fodder for a couple of years. It wouldn't surprise me that PT would rinse and repeat. He may find a company that needs to be able to show growth in revenue and assets to stave of their own day of reckoning, even if those come with debt and are in their own death spiral. Remember when the telecom bubble burst? They were pumping up their balance sheets with "capacity swaps", trading moonbeams for fools gold. I wouldn't rule that out.
I think the sleaze factor could be the show-stopper, but hey, there's a sucker born every minute. Not everyone does a criminal background check, and not every crime shows up - just the ones that were successfully prosecuted.
When I look in my crystal ball, I see PT merging ANY with another doomed (but pump-able) company, on the condition that he become the CEO. I don't think his ego would tolerate a pink stain on his tailored Italian suits.
Your right. Ultimately, the retail investor pays for it. Perhaps the PP straw buyer strategy appears more palatable than simply issuing new shares?
Come on, someone, anyone (?), offer some BS and speculation about how they're going to slither out of the NASDAQ shareholder equity extension expiration/hearing. When it comes to enforcement, NASDAQ has demonstrated that they have the spine of a jellyfish, but even they have their limits.
...
P.S. M, my '87 runs great, so I've got you beat by a couple of decades. The '61 Willys CJ3B needs some transmission work, though. Maybe this winter.
M, that's a lot of money, almost enough to buy a meal at a fast-food restaurant! Perhaps you should negotiate a private placement with PT, given the large cash layout. I'm sure his attorneys would appreciate the almost-paid lunch at In-and-Out burger while they're pretending to choose between liquidation or receivership. (Debtor in possession? YGTBFK.)
...
(Okay, I wouldn't say that your offer is generous, but it certainly is considerate...)
...
I wish I knew who the suckers were who forked over the cash for payroll so they didn't get padlocked. There's got to be a story there.
...
I once bought and registered a single share of one of their competitors (and my supplier) so that I had "standing" at a shareholder's meeting. I used it to negotiate a better delivery schedule where they hadn't disclosed a material event.
It might be entertaining for someone who actually lost money to buy and register a share so that they have standing in the upcoming proceedings.
...
P.S. I took the hard top off my old Jeep last week so I could soak in what's left of summer. All the best!
Golden Parachute? Poison Pill? Poison Parachute?
Yup. It's getting close to where I could buy it with, well, uh, my 401K. It would be a whole lot of fun firing PT and KK (and especially, depriving them the opportunity to resign with some semblance of dignity, no matter how artificial), but I doubt the exhilaration would last long. Perhaps a second or two before reality set in.
Notice how the press release left out substantially every relevant item, but instead focused on misleading cuts in losses and expenses (based of course, more on residue from the Overland/Tandberg divorce than anything approaching what would be imperative to survive . . .)
Their assets are liabilities. They consist of intangibles and goodwill from product lines that weigh about 100 times more than their gross revenue can support. If I were, say, EMC, I wouldn't assume their assets unless they came with about $100-$200M in investment, and then I'd still be skeptical. I've worked for a competitor who tried to bring a (perhaps more viable) disk product line to the market with about $25M. I told the CEO it would take about $400M, and that still wouldn't guarantee success. As it turns out, the $25M would have been better spent on moonbeams. In the case of ANY, they didn't even get moonbeams. The money vanished in a black hole.
Sorry, but a few more juicy tidbits:
Gearz, they restate it even worse further down the filing, taking out the "if"s:
"Based upon the Company's current expectations and projections for the next year, the Company believes that it will not have sufficient liquidity necessary to sustain operations beyond August 31, 2019."
Also, note that their accounts payable are $5.3M, with accounts receivable of only $641K to put that in perspective. Also, compare the $5.3M with the six-month gross revenue of $3.1M. Deep, deep, doo-doo. Even worse, they've lost $3.5M year-to-date (six months).
With only US creditors, but operating under the Maple Leaf, the situation is ideal to set a record for negative ratios. Perhaps PT Barnum can put that on his resume.
P.S. My insider in the SEC says they're setting up a new unit focusing on small-cap fraud.
P.P.S. Over the next two weeks we'll see if Freidheim and his phony Luxembourg bank are going to pitch in yet again to postpone the day of reckoning. I think it's a 50/50 call at this point. Also, he may have another dog in his portfolio that he can merge with to keep the books from closing for a couple more years.
Gearz, I have a theory, but can't support it.
This stock is ripe for manipulation by some bottom-feeder players. The low market cap makes it vulnerable to moves with a relatively small impetus. If it's been dormant and sagging for a while, for example, I'd consider putting in a market order for 10,000 shares. I'd not be putting myself at a great deal at risk, but it will move the share price way up. There is a very good chance that the sudden bump will catch the attention of day traders, who will then attempt to buy on the upswing and continue to drive it up. (Many will believe there's a rumor of something big about to happen). I could then feed my shares back slowly, and I may have made myself a few thousand bucks for the day, without a lot of risk.
If the stock were substantial, had a legit P/E and a well-understood market role, this strategy would never work.
A few years back I put in a market order for 1000 shares, and was not only amazed how much the price surged. I thought I was anticipating PT Barnum's pre-earnings hype, but sold out for an $800 profit anyway, and learned two lessons: 1) it wasn't fun, and 2) I have better, less-risky ways to make $800.
Have I got a deal for you! Wanna' make a quick, extra $1,800? If you can find a legal way to structure it, send me $14,500 ($1.45/share), and I'll deliver you 10,000 shares on August 31. (My broker tells me I can't short this stock, at least through him, but hey, if you're game, so am I). It's gotta be US legal, though.
I'd bet that their suppliers are involuntarily funding what's left of Spiffy. Even if there weren't the additional hurdle of the international barrier, there ain't enough left to even make it worthwhile to petition for involuntary bankruptcy. PT and KK know this well.
I do agree that Johnny Retail funded the PP, whether by ruse or sham, desperation or foolishness. PT Barnum always said that there's one born every minute . . .
By the way, it doesn't look like Overland/Tandberg is doing any better. Look how out-of-date their webpage is, and also their press releases. They even show KK as still being there. (I'm sure that they will change that just about as soon as this post hits).
Cheers.
M,
That KK dumped some stock as he was awarded new shares suggests to me that he 1) doesn't believe the stock will be worth more in the future, and 2) the stock that he sold was likely sold as soon as RSYs vested.
If he, or PT Barnum, for that matter, had any faith at all in the company, they would be accumulating shares and/or making an offer to take it private. There is so little left, anything that they could hope to save if it falls further would be insignificant. Instead, we've seen VMF bail, CCP bail, KK dump, etc.
Their product line is so bloated there's no way that they could do anything other than continue to hemorrhage without immediate, drastic measures. That they haven't done so also speaks volumes.
I sort of expected a buyout would follow the recent private placement. Perhaps that's the only hope buyers have? I remember dumping my mother's Sun Microsystems stock, because it was down the drain, but then Oracle bought it for a 3x premium. But then again, both Sun and Oracle were reputable companies, and showed a great deal of candor with their stockholders.
Also, KK, VMF, etc., bailing wouldn't be happening if there were even a glimmer of hope for a buyout.
Ha. I love it, but you give them too much credit. They never were a brilliant supernova, nor a huge imploding black hole. Just a couple of companies whose management failed to keep up with the times, only to be take over by shysters.
How about we agree on "a burst balloon"?
The lyrics go "... Hangman is comin' down from the gallows and I don't have very long The jig is up, the news is out They've finally found me ..."
Hangman = NASDAQ, noose = shareholder equity, trapdoor = cash on hand
This is a tale with many ironies.
M+ will remember the days when he and I we were relentlessly assailed on the Yahoo boards. It was obvious that at least one of the assailants was a proxy to an OVRL insider. I believe what they were doing was clearly illegal. A lot of what was posted should have been announced in conjunction with SEC filings, not through manipulative leaks on Yahoo, IH, SH, etc.
I was working in the industry, and had known one of the OVRL founders since 1980. I had spent some thirty years working either for or with one of their competitors. The OVRL stock had fallen so low that I was considering buying the company, selling a couple of lines of business off to competitors, and picking the carcass for the profitable cost centers (mostly service contracts).
I abandoned Yahoo because they revised their bull board, and the new format breached the identities of those who posted - it showed their account names instead of their board monikers.
Originally, the OVRL participation from CALPERS was the biggest public fraud, although I give no quarter to California's intrinsic governmental corruption and incompetence. I believe CALPERS motives in buoying up EK were highly political.
What was more remarkable was that CCP then filled their void, and persisted for years in effecting scheme after scheme. I know they defrauded many public investors, but probably defrauded themselves even more. It is not conceivable that they weren't fully on board with the shotgun (plural) marriage with serial conman Sheldon Iwentash and relentless a-hole PT Barnum. I actually believe the original Glassware developer and the folks at HVE were as much victims of the con as anyone. (I know some of you disagree with me on this). Their development efforts were probably legitimately undertaken (perhaps naively), and it was there lives, hopes and dreams they were investing only to have their works prematurely hyped and conflated beyond all reason. They had come up with a new drive shaft design, and PT Barnum promoted it as if it were a Ferrari ready for sale. Few succeed in their industry, but their fate was sealed as soon as PT Barnum and EK entered their lives. They never had a chance at legitimacy.
PT Barnum genuinely deserves a lifetime ban from public companies (and staring at steel bars would be justified). I believe that CCP is culpable in the fraud, and the SEC should be all over them, as well as their phony, captive Luxembourg bank. Freidheim & Co. make Paul Manafort look like a saint. I also believe that they had to take back the losses they tried to unload on Opus Bank because not doing so would have invited a federal investigation that would have likely resulted in criminal charges.
In the interest of full disclosure, I only owned their stock for a handful of days (on the hunch that they were going to continue with yet another fraudulent quarterly results release, which they proceeded to do), walked away with a profit of just over $800, and decided it wasn't worth it - there are a lot better ways to make that little money.
Yup...the scurry of rats leaving the ship.
I don't think they get a six month grace period, or at least aren't entitled to one. They've already used that one up. I believe that their appeal can be rejected at any time. Given how deeply their shareholder equity has gone in the red (per this week's posting of their financials), it seems to me that NASDAQ's credibility would fall into the "even more laughable" category if they gave them another shot at compliance.
Their 600K+ private placement (if it went through, which I presume it did, but we don't know the "subject to conditions") should get them through the end of June, given the burn rate.
Even that notwithstanding, I suspect that PT Barnum is checking the rigging on his parachute as we speak . . .
Abandon all hope, ye who enter here . . .
It looks like PT Barnum and KK have commenced their exit strategy, strapping on the body armor, raiding the pantry, and barricading themselves in.
The lack of shareholder equity makes delisting imminent. Even if they come up with an eleventh hour bailout, any current investments will be diluted well into the penny region, anyway. Ahhh, the dilution solution!
The officer/director/agent indemnification delineated in yesterday's S-8 won't do them too much immediate good if the doors are closed and there's no cash to be raided for their defense fund. On the other hand, the indemnification (particularly as wrapped in bankruptcy) may put one more barrier between their personal wealth and those who they played.
Issuing new shares at $2.00 to live another month. Ya' gotta be prowd of these guys . . .