i genuinely think they got caught off guard with the regulatory issue on the recovery shot with the Japan deal. if the headline was to mislead - why would they have chosen different verbiage? the info in the PR was more direct and less bombastic than the headline and the entire agreement was provided in the 10Q. however, headlines are supposed to turn heads and compel one to read the article. now - did they do too good of a job on the headline? in hindsight - yes. but, again, if they really believed the deal was suspect - i think they would have chosen their words differently.
as far as prosecution of scammers - there are plenty that go unnoticed and plenty that are gone after by the SEC with little or no real punishment. however, in this case, what are they GAINING from taking on that RISK? they are making mediocre salaries, are not getting ridiculous options/grants/bonuses at the expense of common shareholders, and they arent churning shares as secondary income (all of which i can provide unending examples of happening). so - why take the risk and deal with all of the exposure to make $100K /year? that may be a lot of money for most but it is barely mid level at a major corporation for anyone with a strong background that produces.
HJOE does have a lot of outstanding bills. they have also settled with several of those that they owed and some have gone away. most of these were a direct result of the interruption of production by the 3rd party production facility which is currently their largest liability (legal) and which they have a counter suit. i have had a couple of attorneys look over the public docs in the case and on the surface - HJOE seems to have a strong hand. in court - logic and reason go right out the window so it is luck of the draw with the judge. however, they continue to settle past amounts while they produce product and create/restart revenues. what would you suggest mgmt do - just throw in the towel and enter BK?
it remains a long road and considerable risk but relative to where they were a 12-18 months ago and considering they did close to $2MM on the recover shot alone prior to the interruption - the risk going forward are considerably reduced even WITH teh dilution. they still have a market cap around $1MM which if they produce revenues where i am modeling in teh current quarter around $250-400K - they are only 2-4X sales on the market cap for an aggressively growing company (or what will be at that point based on the trend and forward looking guidance).
again - i keep going back to compensation and the no or low interest loans that are not convertible to the company by the insiders along with the deferred salaries. what is the POINT of taking that risk if they are not committed to long term success...?
