There are several posters and others who are suggesting that if the shareholders don’t authorize the additional 100mm shares, the company will “close down”. These comments are nothing more than scare tactics. Per the proxy statement, the company can use the remaining authorization, about 10mm shares to raise what management estimates to be $230,000 (at a whopping 62% discount to market). In addition, the company can use the Preferred authorization to raise capital, they would just prefer not to. The company could also actually make some progress and begin to sell some machines.
I understand a couple of people associated with who posters refer to as the FL group have expressed similar concerns about the company’s viability if Ed doesn’t get the requested authorization. To me, this evidences a) that they don’t hold the sway smaller investors once thought, b) they haven’t carefully read the proxy materials and understand the capital funding alternatives, and c) they are concerned with the amount of angst shareholders have with Ed’s leadership and the prospect of the requested authorization being voted down.
My sense is that shareholders would be willing to 1) authorize a smaller share amount, say 50,000,000 shares (necessitating an additional meeting and communication if more is needed); contingent upon a) Ed offering and the BOD accepting his retirement effective on or before March 31, 2017; and b) any newly authorized incentive plan would be applied only to new hires.
To the first point, we have been provided no business plan that demonstrates the need for 100,000,000 shares. Second, it has been rumored that Ed would intend to retire upon the EPA approval being granted. It has been said that some expect the EPA to act this year, perhaps before the shareholder meeting. If the expressed intentions are true and expectations are realized, the March 31, 2017 date presents no obstacle and retirement would be of his volition, he’s not being forced out. If we don’t have EPA approval by then, we clearly need alternative leadership anyway. Further, this date gives the BOD eight months to find qualified leadership. Simply give shareholders the assurance that new leadership will be in place on or before March 31, 2017. The third point reflects the disgust shareholders have for what is viewed to be the prior payment of excess compensation to execs and BOD members based upon perceived achievement. The suggestion acknowledges the need to properly incent new hires or BOD members and makes provision for them, but such should not apply to the current execs or BOD members.
So, in my mind it comes down to this. If the lack of new authorization causes perilous difficulty for the company, are management’s ego so large that they are willing to see the company suffer and are Ed and Mike and the BOD willing to see the continuation of patient suffering and death due to the inability to progress the technology? The question isn’t, “are shareholders willing to tank the company,” the question is, “are Ed and Mike and the balance of the BOD willing to continue to take the risk of doing so”?
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Excerpt from p. 17 of the Schedule 14A
Purpose of the Amendment
We currently anticipate that additional cash will be needed to fund our activities through the next 18 months. As we have yet to establish revenue from the sale of our AsepticSure system, we have funded our operations through the sale of our equity securities – to date, our common stock. If we are unable to continue to use our common stock to raise funds, we will not have sufficient cash resources to, among other things, support our operations, fund our continuing AsepticSure development activities, and be in a position to pursue potential strategic alliances and other strategic opportunities. Of the 395 million shares of common stock authorized for issuance under our Articles of Incorporation, as of July 18, 2016, there are approximately 370 million shares issued and outstanding and approximately 21 million shares reserved for future issuance upon exercise of outstanding options and warrants, and approximately 10 million shares available for issuance. Based on the closing market price per share on July 14, 2016 ($0.055), under current market conditions, we expect that we might be able raise $230,000 from an offering of the remaining shares, which our board believes would not be sufficient to fund our activities beyond 2016 and would cause us to limit or slow the pace of our development activities, as well as efforts to identify and pursue potential strategic transactions and other opportunities.
The board of directors may establish one or more series of preferred stock and issue shares of such series in offerings to raise capital for operations. The rights and preferences of such series of preferred stock may be set by the board of directors and may be subject to negotiation with investors or potential purchasers of such securities who may demand preferential voting, dividend, liquidation, redemption and other rights that are superior and potentially adverse to the rights of our common stockholders. Our board would prefer have available a sufficient number of authorized shares of common stock for equity financing transactions.
AI
