Here is a message I sent to Stephanie this morning. I'm sure many of you will disagree, well, have at it.
Hi Stephanie,
This doesn't require a response from you, I just ask that you send it to the board of directors, King and Lytle. If Mr. Lytle could respond to the reason for the ATM usage after 1/31, it would be most appreciated.
Gentlemen:
After a thorough review of the 10Q filed 3/13/17, a couple of glaring issues need to be clarified for shareholders. First and foremost, the ATM sales between 1/31/17 and 3/13/17 totaled over 26 million shares. No reason was given for this incredible outpouring of shares in a very short time frame. Not discussing this on the conference call was an omission of a very material fact. It leaves the shareholders wondering if this huge increase in rate of ATM usage is continuing unabated or if the 26 million was for a specific purpose and has ended. The effect of the release of so many shares is obviously to dampen down the progress made in increasing the share price in attempting to reach $1. It makes it appear unlikely that management and the board are serious about regaining compliance and avoiding a reverse split. It also appears to be very poor financial planning. Since it occurred after the quarter end, it clearly wasn't needed to avoid a going concern statement on the financials. With $40 million in the bank as of 1/31/16, it shouldn't be due to an immediate cash need that couldn't be covered over a more extended period of time, and fewer shares would need to be issued as the stock price increased, thereby reducing dilution but still allowing the additional cash to be raised for whatever purpose exists(ed). It would be most helpful if an announcement could be made that the ATM would not be used for the immediate future. That would give investors confidence that purchasing shares won't be met with an even faster dilution of their interests.
Mr. Lytle made a point of stating that R&D expenses were reduced by 50%. What about other expenses? It would seem that many expenses could be cut or at least shaved. The Board of Directors could cut their salaries or defer them until compliance is regained. It would show good faith and intent to "do the right thing" and would instill investor confidence. Also, with option award date of 5/1 approaching quickly, it would be prudent for awards to be delayed until after the stock price regains NASDAQ compliance. Many cheap options have been awarded over the years and it is time for that to stop. It is easy for the stock price to be manipulated down by selling ATM shares just before option awards. If the science and Avid progress are all that Mr. King claims, getting options at $1 will still be a bargain when the stock achieves its potential. Mr. King has stated on several conference calls that the stock price doesn't reflect value. Well, now is the time to take action to assist it in reaching its optimal valuation.
