Company's response to my share structure question.
My letter:
Hello Mr. Knopick,
I am an investor in APT Group and we have spoken briefly before regarding generator development by the company. I wanted to write today to express my opinion regarding the share structure in the hope that you might share it with management should the chance arise. I understand that many factors are in flux right now as the company works to meet deadlines for various filings. I want to first say that I appreciate all of the hard work that they must be putting in as well as the transparency they have displayed thus far. I think that they have been doing a great job in handling the transition. Much of what I say may already be apparent to you or the company, in which case I appreciate you simply taking the time to read this.
As I am sure you are aware the share price has tumbled in the past few weeks seemingly driven in part by dilution following debt agreements and failing to rise again due to reduced investor confidence. I spend a fair amount of time on the message boards reading people's complaints, suggestions, rants and many other things they choose to share with the internet. My suggestion today is therefore based on my understanding of the sentiments of those who share their opinions on such boards.
Many of the investors understand the need for issuing shares to resolve debt. They think this is a good use of shares and they appreciated the company clarifying the cash flow restriction which prompted the Iron Ridge deal. However the reason the daily volume of shares and likely investor confidence has remained poor is a fear that the shares that have been issued thus far, both to creditors and to company management and early investors, is just the beginning and that there are many more shares that are going to be issued further diluting the value of the stock. There are many instances of companies which trade on the OTC doing something along these lines to pad their own pockets or to pay off debt at the expense of investors. I do not believe that APT is such a company.
Everything that has been issued so far has made sense from a business standpoint and been clearly articulated to the investor community. Again, I really appreciate that. My suggestion to get investor confidence back on track is to restrict the authorized number of common shares. This is an issue that has been stated over and over in the forums. Restricting the authorized shares would allay many of the fears that are being reiterated daily. I understand that this may be difficult to do given the nature of the Iron Ridge agreement. If it is the case that such a move is simply not possible I would humbly suggest that the company consider converting management's common shares to preferred. Restricting those shares for a year would send a clear message to investors that APT is in this for the long haul and that investors interests are important to them.
I understand that there is much at work behind the scenes that I am not aware of. I just wanted the chance to express my opinion on the matter as I am not sure if the company follows the boards closely and would therefore not be privy to investor sentiment. I am personally invested with a much longer time horizon as I believe the product line the company is developing has the chance to make an incredible positive impact globally (SonicFlow and their use as generators especially). I am also a supporter of Troy's goal to have the company make an economic difference in impoverished communities globally. This is a noble cause and we have the innovative products to pull it off.
Thanks for taking the time to read this. I look forward to future communications as well. I am always happy to share my perspective with the company should they be interested in an opinion on what investor sentiment is among the forums that are available.
APT's Response:
Management has very little of the common shares. Our voting power comes from the preferred E, which is already restricted until April 2015.
Of the 2,735,501,972 common shares owned by our 84 legacy shareholders, only 590,168,091 are owned by our 5 executives. That represents 22% of the APT legacy common, but only 13% of the current O/S. All of the APT legacy shares are restricted until October 2014. Management is further restricted in selling those at 1% of the O/S per quarter.
Converting those to preferred doesn’t accomplish a whole lot.
My response, just sent:
Mr. Knopick,
Please thank management for getting back to me. I can appreciate their perspective. I hope that they will still consider reducing the authorized shares as an alternative. I believe some gesture needs to be made to the investor community in order to correct the current sentiment before a stigma of dilution becomes associated with the company preventing future interest by investors. Such a gesture would be most effective in the coming weeks as there are still many eyes on the company.
