Here is Quirk's third email over the span of a few days late last week, pounding his chest because he believes he's outmaneuvered George, and once again pretending that he's not the mastermind of the derivative suit.
Dear HDC Shareholders,
Someone asked me if I felt this recent (Vennwest) Federal lawsuit against the HDC Board could impede any possible deal with Intel. Some speculative thoughts ...
1) It might, but Intel’s interest is solely with the substance of their own purposeful infringement, not based on any connection with McGovern. But I think it’s a bit too early for this to be anything other than a theoretical issue.
2) This lawsuit asks principally for “disgorgement” of the stock and cash the defendants have received, that is, to be returned to the Company. Absent disgorgement, defendants have, according to my calculations, about 45% of all fully diluted shares and 55% of the voting power. I also estimate that, as a group, their cost per fully diluted share for 260 million shares may be around 1.5¢ per share. Therefore, with absolute control of the Company, the defendants can proceed with any deal they like that requires shareholder approval. So, theoretically, if Intel made an offer of, say, 2¢ per share to buy HDC, the defendants could conceivably agree and make money even at that very low price.
3) In my view, absent disgorgement, the Board must push for some sort of major deal sooner rather than later because in defending against the Vennwest suit, cash will be depleted more rapidly than earlier estimates. With some 260 million fully diluted shares, they would take an eternity to sell in the market regardless of price. Therefore, only some sort of major corporate event such as an acquisition makes sense for this Board to try, and while the highest possible buyout price is clearly desirable, something as low as 2¢ a share is conceivable. But in such an instance, were this Federal suit still pending, I'd expect Vennwest to request a temporary restraining order which I think would be promptly granted.
4) In my view, with disgorgement, I believe there would be no reason why the current directors would wish to remain on the Board and new directors would take a different approach. With disgorgement, for any given deal, all other shareholders, that is, all of us, would receive a value or price that is 70% higher.
5) FWIW, I don’t think the Board expected this.
Bill
It's fascinating that the guy who was responsible for running HDC into the ground in the first place, along with his buddy Kowbel, is the guy who has gained shareholder confidence by intervening at a time when shareholders may finally be on the brink of getting some form of return on investment via the Intel suit. Quirk is basking in his glory as the lawsuits drain the company of its remaining money. Shareholders, of course, continue to pay the price.
Don't get me wrong. Putting aside the fact that Quirk has been after McGovern from the time he resigned as a director, but couldn't live with the fact that he wasn't 'the guy' who was getting things accomplished and was actually a failure to shareholders, it's actually very hard to argue with the merits of the suit. The circumstances paint a very clear picture of what has transpired. McGovern clearly had a plan to a) remain as quiet as possible and give shareholders the bare minimum in terms of company info, b) strategically amass a very considerable stake in the company at shareholder expense, c) subtly stick it to Quirk along the way (as evidenced by the brutal performance at the shareholder meeting, which McGovern clearly didn't want to hold, only to award himself and his fellow directors immediately after the meeting and diluting the hell out of everyone), d) have a singular strategy to get a windfall from an Intel settlement, and e) exit quietly out the back door.
If you look at item number 3 in Quirk's email, you can sum it all up by understanding what Quirk's concern is. McGovern and team have so many shares now, they could unload it for a very low number and still make money, while the rest of us get hosed. Hard to argue with the logic, since it's conceivable. And, if McGovern had approached this by appropriately communicating with shareholders (even though he pretends he has), and by taking steps to license the IP and/or developing products (which I view as his obligation, but he failed us), we wouldn't be sitting here with the share price less than 4 cents, and now wondering if the remaining cash will be burned even before we can resolve the Intel dispute.
It's amazing to me the audacity of both Quirk and McGovern, both feeling and acting as though HDC is their personal playground, while screwing the hell out of the rest of us.
