Yes it’s good to see Shelton and a few directors holding the stock instead of immediately dumping it, but the scale is rather underwhelming especially in relation to total holdings. If he exercised hundreds of thousands of options, and sat on the stock, then I would say that is a bullish sign. And again, it’s nice to see the performance-based bonus program, but the whole idea of Boards and compensation committees appointed by management determining said management’s bonuses and compensation is a bit of a farce in my opinion. But that’s only a small part of their compensation and they are now requesting shareholder approval for the 2018 “incentive” plan which would “compensate” them almost 4 million shares!! And yes, it’s at $10 a share, but that’s going to look cheap in a couple years, and it’s over 10% of the current shares!! I am really tired of these excessively greedy share grabs at shareholder expense and usually vote no, but they are always routinely approved anyway. But to your point, yes I would agree that it’s mildly bullish that management and the board appear to think the share price will be higher at some point this year, but really, who doesn’t think this if they are looking at another 5-7 client approvals.
Regarding recent filings and IGNORING LITTLE THINGS THAT ACTUALLY HAVE A POTENTIALLY BIG IMPACT: Did anyone notice this other little nugget from the 14a?
PROPOSAL 4 — TO AMEND THE COMPANY’S AMENDED AND RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY’S COMMON STOCK FROM 50,000,000 SHARES TO 100,000,000 SHARES.
Reason for the Amendment
We are currently authorized to issue 50,000,000 shares of common stock with a par value of $0.001 per share. As of March 22, 2018, we had 27,486,606 shares of common stock issued and outstanding and stock options, warrants to purchase up to an additional 10,463,970 shares of our common stock issued and outstanding, and 1,269,821 shares available for issuance under the 2015 Plan. Additionally, we are also requesting approval of the 2018 Plan, pursuant to which we would be authorized to issue equity awards that may result in the issuance of an additional 3,730,179 shares of common stock.
Other than the possible need to issue shares upon the exercise of options and warrants, pursuant to our 2015 Plan and pursuant to our 2018 Plan, if approved by the stockholders, we have no definitive plans or arrangements to issue any additional shares of common stock.
More generally, the increase in the authorized number of shares of common stock will enable us to engage in (i) possible future public or private equity financings, and (ii) such other corporate purposes as the Board determines in its discretion. These corporate purposes may include future stock splits, stock dividends or other distributions, future financings, acquisitions and stock options and other equity benefits under possible new benefit plans.
After the increase in the authorized number of shares of common stock, there will be available for issuance 57,049,424 shares of our common stock after giving effect to 27,486,606 shares of common stock outstanding, 10,463,970 shares reserved for the possible exercise of outstanding options and warrants, 1,269,821 shares available for issuance under the 2015 Plan (which will become available for issuance under the 2018 Plan, if approved) and 3,730,179 shares reserved for our 2018 Plan, if approved by the stockholders. The par value of our common stock will remain $0.001 share. The relative rights and limitations of the shares of common stock would remain unchanged under the Articles Amendment.
The flexibility of our Board to issue additional shares of common stock could also enhance our ability to negotiate on behalf of our stockholders in a takeover situation and have an anti-takeover effect. The authorized but unissued shares of common stock could be used by our Board to discourage, delay or make more difficult a change in the control of our company. For example, such shares could be privately placed with purchasers who might align themselves with our Board in opposing a hostile takeover bid. The issuance of additional shares could serve to dilute the stock ownership of persons seeking to obtain control and thereby increase the cost of acquiring a given percentage of our outstanding stock. Stockholders should therefore be aware that approval of this proposal could facilitate future efforts by our Board to deter or prevent changes in control of our company, including transactions in which the stockholders might otherwise receive a premium for their shares over then current market prices. The increase in our authorized common stock, however, is not being proposed in response to any effort of which we are aware to accumulate shares of our common stock or to obtain control of our Company. The availability of additional shares of common stock is particularly important in the event that our Board needs to undertake any of the foregoing actions on an expedited basis and therefore needs to avoid the time (and expense) of seeking stockholder approval in connection with the contemplated action.
Okay, first of all, they say that there would only be ~7 million authorized shares available for future equity financings or other purposes, but actually they would still have over 10 million shares available if it wasn’t for management’s attempt to award themselves 4 million shares through their proposed 2018 option plan. This filing states that there are no definitive plans to issue shares and Shelton told investors last month that they have enough cash for this year. But why take it off the table? If they were PROACTIVE and OPPORTUNISTIC and wanted to take advantage of their stock price this year, how many shares would they need to issue if they did it near the highs (mid-teens?) when these approvals are announced? But instead, it appears their plan is to wait until next year when the overall market conditions potentially may not be as favorable and more shares would be necessary.
In addition, the reasons stated are questionable. Other than equity financings, does anyone actually think that there will be stock splits, stock dividends or distributions before the next shareholder meeting? And the idea that the Board needs the flexibility to “enhance their ability to negotiate in a takeover situation and have an anti-takeover effect” is ridiculous. They already have a number of anti-takeover provisions and the Board already has the ability to issue up to 2,500,000 shares of “blank check” preferred stock, without action by stockholders.
I’m really not sure that I want to give this management team the flexibility to potentially mismanage more shares. Perhaps they need a little more accountability.
AI
