Wadirum1... I had wrote the COO earlier on Tuesday asking about the bank line of credit that was supposed to have already been done from what was said in the cc call (it'd been 3 weeks already). I said that it was important they put out an 8-K on it as the stock price was such that it seemed like they were looking to do a surprise capital raise. I'm glad to see that they did put out the 8-K the moment they could. Even better, it's not a bank line of credit, but an ability to sell their AT&T accounts receivables to the bank for 99.2+ cents on the dollar. It means they can raise cash super easy and it costs them very little.
The COO even wrote me last night back to tell me the 8-K was available.
I took the opportunity today to write him again saying now that they can easily access $4.4M or so from the AT&T receivables + the $3.3M+ in cash they have on the books, perhaps a buyback announcement of a $1M would be wise. I said with the stock price down as hard as it is the company needs a positive pr. This would be a self-generated one. They could put strong comments in it too and it'd get wider distribution vs the narrow one the CEO interview just did through their IR firm.
I admitted to him that lowering the float even more isn't a good thing long term as it's the reason for the price decline now.....namely too few buyers + some sellers + market makers + computer algorithm trading can push the price around horribly. I said a $1M buyback could be used just to buy under $4 with the idea you sell those shares back in a capital raise a year from now at $7+ if the company is truly able to grow revenues and diversify the customer base. Once some outside good news comes----international contract or rev growth shows up in Q2---then the buyback wouldn't be needed anymore.
My last point I made to him was that, if they truly thought this could be a $100M or even $300M company, then they will have to raise capital in the future for further manufacturing capacity. It has to be done above initial IPO prices to show the company rewards all investors---new and old--- to bring in the next wave. To get it above IPO prices the company then needs to show strength here. If insiders aren't going to buy, then the most powerful thing they could do is a buyback announcement.
Obviously the company isn't happy with the stock price. You can see it in the fact the 8-K was released immediately. You can see it in that they scheduled a CEO interview on Wed with their IR firm explaining the expansion and what it can do. I thought I'd put the idea in their heads that maybe a buyback announcement could break this selling pressure and turn the price upward. In microcap stocks price momentum is a big thing.
We'll see. I told him it should be something to at least consider.
