I spoke with ES and Scott (CFO) over the phone for an hour a couple weeks ago. They impressed me as generally insightful and competent leaders with a specific strategy in mind. Of course, they are in a difficult position due to cash flow and the company's history. One thing I did mention was their proclivity to issue shares. I did not get a sense that they totally understand the pain that dilution gives to small investors (who are the only investors they have). But again, to some degree they have no choice; they just need to be more judicial IMO. In the end, the success or failure will be based on gaining quick traction in the EU. Their vision is that they will scale up there first and then use that to begin to grow in the US. Both they and SHers are in a race to have some substantial positive events. I agree, EU is much more green and there is substantially less gov't bureaucracy in various countries there (Germany) than here.
In regards the the R/S - it was a complete gut punch because of how unexpected it was. I will contact them soon about this. However, there is ONE positive and ONE negative way to look at this
NEGATIVE: they feel that there will not be any substantial news/events prior to the March deadline that will allow SP to break 1.00. So this decision seems to conflict with all the positive PR and they feel the only way they get to 1.00 is R/S
POSITIVE: the only positive is that they may be using this as a nuclear weapon against all the shorts. There is no time specified which means when the 20 days are done they can announce it at will. The moment they do all the shorts are completely screwed. Outstanding shares will fall so greatly and price will be so high they wont be able to cover even if they tried until the price completely breaks them. If they tie the R/S with some very positive news (ie earnings or mergers or EU) then the explosion upwards may be nuclear. I guess that is the hail mary - and I will try to determine the strategy and logic behind the R/S directly from them.
One more update, we did talk about the 1.6M ACA issue. The shares were indeed a sort of B/O to extricate themselves from ACA. ACA thought they had their tentacles on MNGA and did not want to let go and threatened all kinds of pain and lawsuits. This was the cost to get completely out. Both ES and Scott were 100% certain that ACA was indeed the entity that shorted the shares down - thus, I was right in my hunch based on clause ii that completely restricted them, or any affiliates, from any further shorting with no timeline.
The only current upside at the moment is that dilution must slow down because the SP is now below the Alta floor of .35 and the ACA floor of .40 to dump shares.
GLTA
AI
