$CGLO Majority Stockholders of Coro Global Inc. Request a Special Meeting of Stockholders to Remove the Current Directors
Press Release | 09/20/2021
Miami, FL, Sept. 20, 2021 (GLOBE NEWSWIRE) -- On September 17, 2021, a group of stockholders of Coro Global Inc. (OTC: CGLO) (“Coro Global” or the “Company”) holding of record over 50% of the Company’s common stock delivered to the Board of Directors of the Company a request to call a special meeting of stockholders pursuant to the Company’s Amended and Restated Bylaws. At the special meeting, the stockholder group, which includes Lou Naser, Carlos Naupari and Rudolph Hüppi, each of whom previously served as independent directors of Coro Global, intends to present, among other things, proposals to remove the Company’s existing directors and elect five independent, highly qualified nominees committed to bringing much-needed change and profitability to Coro Global.
In addition, the stockholder group issued an open letter to the stockholders of Coro Global highlighting the current Board of Directors’ and management’s failure to formulate and execute a strategy to generate revenue, lack of long- and short-term fiscal planning and inability to raise capital to address the Company’s continuing severe liquidity crisis. The letter raises critical questions regarding the current Board’s and management’s lack of accountability and oversight, blatant disregard for basic principles of corporate governance, entrenchment and self-dealing, and highlights the urgent need to replace the current directors and management with independent, qualified candidates committed to implementing immediate changes to unlock value for Coro Global stockholders.
“It is time for meaningful changes at Coro Global,” said Lou Naser, who previously served as an independent director and Chairman of the Board of Coro Global. “The lack of leadership and accountability by the current Board of Directors and management have brought the Company to the brink of insolvency and caused the Company’s stock price to decline by over 80% in a matter of just a few months. From failure to raise capital to poor corporate governance to entrenchment and self-dealing, there is simply no excuse for the continued value destruction overseen by the current Board and management. Immediate action is needed to address the Company’s deepening liquidity crisis, improve marketing, acquire customers and begin to generate meaningful revenue.”
“We believe that the existing directors and management should be removed,” added Mr. Naser. “We are confident that our independent, highly qualified nominees – Lou Naser, Rudolph Hüppi, J. Mark Goode, Michael Leibowitz and Jerry Moradi – will bring to the Board of Directors much needed expertise, accountability, oversight and fiscal discipline, as well as an unwavering commitment to stockholder value.”
Continued Mr. Naser, “We expect that the Company will call the special meeting within 90 days, as mandated by the Company’s Bylaws. We strongly caution Coro Global and its current Board and management against taking any further actions designed to entrench themselves, interfere with the will of public stockholders or otherwise prevent them from having a say in the future of their company. We will do everything necessary to ensure that stockholders—the true owners of Coro Global—have the opportunity to fully and fairly consider and vote on our proposals.”
The full text of the letter is reproduced below:
September 20, 2021
Dear Fellow Coro Global Stockholders:
It is time for change and meaningful improvements at Coro Global. Continued mismanagement, negligence and dereliction of duty by the current Board of Directors and management team have left the Company in a dangerous and untenable position. Management has failed to develop and execute a strategy for growing the Company’s customer base and generating meaningful revenue. The Company’s exceedingly high cash burn rate and inability to raise operating capital have driven Coro Global to the brink of insolvency. Management’s failure to maintain adequate investor relations and shareholder communication has resulted in a deep investor confidence crisis. As a result, Coro Global stockholders have suffered massive value destruction, as evidenced by a whopping drop in the Company’s stock price from over $5.00 per share to under $1.00 per share over a period of less than twelve months.
Rather than focusing full attention on solving the Company’s deepening operational and financial crisis, the current Board and management team, led by Chief Executive Officer David Dorr and his brother, Chief Financial Officer & Chief Operating Officer Brian Dorr, have focused on managing their private, unrelated business Dorr Asset Management. Further damaging the Company, the current directors and management have engaged in self-dealing to line their own pockets at the expense of Coro Global stockholders. Despite the Company’s deteriorating financial performance, the current directors and management recently granted themselves six million restricted shares for no cash consideration, causing massive dilution to all other stockholders.
Coro Global simply cannot afford continued mismanagement, lack of leadership and self-dealing by the current directors and management team. Therefore, we have requested that the Company hold a special meeting of stockholders, at which we plan to vote for the removal of the current directors and the election of five independent, highly qualified candidates (including J. Mark Goode, the former President, Chairman and Chief Executive Officer of the Company) committed to taking immediate action to bring to the Company much needed accountability, operational oversight and fiscal discipline.
The Current Board and Management Are Responsible for the Company’s Precarious Financial Position
The Company is significantly undercapitalized. The current Board’s and management’s failure to develop and execute a strategy for growing the Company’s customer base and facilitating product development have prevented the Company from generating meaningful revenue from operations.1 At the same time, the Company has been burning cash at an exceedingly high rate.2 As a result, the Company remains unprofitable and is at high risk of running out of operating capital.3 In fact, the Company has reported that it must obtain additional financing to continue its operations.4
The Current Directors and Management Are Focused on Operating Their Private Business Venture to the Detriment of Coro Global
The current Board of Directors apparently consists solely of the two Dorr brothers, who are the co-founders of the Company and were appointed to the Board in January 2021. Messrs. Naser, Naupari and Hüppi, who previously served as independent directors, resigned from the Board in August 2021, for the reasons described below.
The Company’s management team currently consists of six individuals, including David Dorr and Brian Dorr, who serve as CEO and CFO / COO, respectively. Since their appointment in January 2021, the current management team has consistently failed to devote sufficient time and effort to the Company’s business, for the reasons described below. We believe that management’s continued failure to do their jobs is nothing less than a breach of their fiduciary duties to Coro Global stockholders.
Management’s failure to devote adequate time and attention to Coro Global has had a devastating impact on the Company’s business. Following their appointment as directors and officers of the Company in January 2021, David Dorr and Brian Dorr have continued to focus on operating their private asset management firm, Dorr Asset Management, and spend a considerable amount, if not most, of their time outside of the United States. As a result, they have not devoted adequate time and attention to operating and growing Coro Global’s business. At the same time, they chose not to appoint a full-time management team and instead have attempted to manage the Company’s business “in their spare time.” This Miami, Florida based business cannot be run successfully on a part-time basis from the Dorr brothers’ home in Medellin, Colombia. This irresponsible approach has had a devastating impact on Coro Global’s business. Despite repeated requests by the former independent directors prior to their recent resignation, management failed to develop a comprehensive business plan or implement strategies to improve the Company’s operations, product development and marketing or take other necessary steps to acquire customers and generate revenue. Furthermore, management mishandled the Company’s public offering and uplisting to Nasdaq (as described in more detail below), leaving the Company with limited options for raising much needed operating and growth capital.
Failure to appoint a full-time Chief Marketing Officer has been a key factor in the Company’s inability to generate revenue. As part of their irresponsible strategy of running the Coro Global business on a part-time basis, the Dorr brothers chose not to appoint an experienced, full-time Chief Marketing Officer. This has proven to be a costly mistake. The current CMO Anna Milaeva has virtually no marketing experience. In addition, we believe that Ms. Milaeva devotes most of her time to the business of Dorr Asset Management, where she serves as Chief of Staff. The absence of an experienced, full-time CMO has had a major negative impact on the Company’s ability to expand its customer base and generate meaningful revenue.
David and Brian Dorr deliberately misled the independent directors about the Company’s affairs. The management team’s lack of commitment and leadership has rendered them utterly ineffective in solving the problems facing the Company. Despite repeated and explicit directives from the former independent directors, management has failed to take any steps to address the Company’s liquidity crisis, execute a capital raise and generate revenue. To make matters worse, when confronted by the former independent directors, the Dorr brothers repeatedly assured them that all necessary steps were being taken to achieve these objectives, even though they knew full well that no such work was in fact taking place. We believe that the Dorr brothers’ tactics of deliberately misleading the independent directors about management’s activities are also a serious breach of their fiduciary duties as directors and officers of the Company.
Management Has Failed to Raise Capital Necessary to Fund the Company’s Operations
Despite the critical importance of securing additional capital to fund the Company’s operations, the current management team has failed to devote sufficient time and attention to raising additional operating capital. During their tenures as independent directors, Messrs. Naser, Naupari and Hüppi repeatedly directed management to prioritize and focus their efforts on securing private investment for Coro Global and improving the Company’s almost non-existent investor relations efforts. Inexplicably, the management team failed to pursue any investor opportunities that were available to the Company, even though they repeatedly assured the independent directors that the Company was actively pursuing a capital raise. As a result, the Company has failed to secure any additional investment since January 2021. Because management has failed to maintain trust with investors and stockholders, stockholder confidence and market support have evaporated, causing the erosion of the Company’s stock price by more than 80% over a period of just a few months.
Furthermore, the current management team grossly mishandled the Company’s public offering and uplisting to Nasdaq. Although the Company filed with the SEC a registration statement for an underwritten public offering in January 2021, management chose not to go through with the offering, and the registration statement was ultimately withdrawn in May 2021. The former independent directors believe they were deliberately misled by management as to the reasons that the public offering and Nasdaq uplisting were abandoned.
The Current Directors and Management Have Demonstrated Blatant Disregard for Basic Principles of Corporate Governance
In addition to their continuing failure to take action to address the Company’s financial problems and improve operations, the current directors and management have also demonstrated their utmost disrespect for accountability, oversight and other fundamental principles of corporate governance.
Coro Global has not held a stockholders meeting since 1997. The Company’s current Board of Directors consists of its CEO, David Dorr, and its CFO, Brian Dorr. Neither of them has been elected to the Board by Coro Global stockholders. In fact, it appears that the Company has not held a meeting of stockholders since 1997.5 We believe that this is an appalling lack of corporate governance. At the special meeting, we intend to give our fellow stockholders an opportunity to elect directors for the first time in over twenty years.
The Dorr brothers’ actions prevented the former independent directors from bringing accountability and oversight to the Board, which prompted them to resign. When Messrs. Naser, Naupari and Hüppi were appointed as independent directors in June 2020, they believed that their primary mission was to bring accountability and oversight to the Board and management. However, when David and Brian Dorr joined the Board as directors and officers of the Company in January 2021, the independent directors quickly realized that the Dorr brothers had no intention of allowing them to play a meaningful role in the Company’s affairs. Instead, they chose to ignore the independent directors’ recommendations, repeatedly misled them about the Company’s activities and made it clear that the independent directors were expected to rubber-stamp management’s questionable decisions. Unwilling to cover for management’s continued negligence and dereliction of duty, the independent directors had no choice but to resign from the Board in August 2021.
Inadequate stockholder engagement has resulted in a deep crisis of investor confidence. The continued deterioration of the Company’s financial performance and the steep decline in its stock price have raised significant investor concerns. In these circumstances, it is critically important for the Company to maintain an open dialogue with its stockholders about its business and strategy. However, the current Board and management have failed to respond to investor inquiries or provide regular updates about their plans for financing the Company’s operations, growing its customer base or generating revenue. As a result, the Company is facing a deepening crisis of investor confidence and continuing loss of market support, which will likely make it difficult for the Company to raise capital going forward.
The Recent Massive Grant of Restricted Stock to the Current Directors and Management is a Brazen Act of Self-Dealing and Entrenchment
On September 10, 2021, the Company announced a grant of six million restricted shares, without cash consideration, to six members of the Company’s management and consultant team, including one million shares granted to each of David Dorr and Brian Dorr.6 This egregious grant of free equity – which represents nearly 25% of the Company’s outstanding common stock – is a brazen act of self-dealing and entrenchment by the current Board and management team, taken in breach of their fiduciary duties to Coro Global stockholders and in violation of the Company’s Bylaws.
This massive equity grant is a shameless attempt by the current directors and management to line their pockets while the Company remains in financial distress. In light of the Company’s declining financial performance, the current directors’ and management’s decision to grant themselves equity awards worth over $5.0 million (even at the current stock price) is mind boggling. However, the current market value of this outsized and undeserved stock grant pales in comparison to the massive dilution caused to the dozens of stockholders who purchased Coro Global stock at $5.00 per share. In these circumstances, this enormous grant of free equity is nothing short of a shameless attempt by the current Board and management team to line their pockets at the expense of other investors and stockholders, while at the same time seeking to give themselves control of the Company.
In violation of the Company’s Bylaws, the equity grant was approved by the managers, for the managers and without regard for standard procedures for approving management compensation. While the Company did not disclose any details relating to the Board’s approval of this equity grant, it appears that it was unilaterally approved by the Dorr brothers (who are the only directors currently serving on the Board) without any apparent independent director review and without engaging an outside compensation consultant, which are standard procedures for approving compensation decisions for public companies. It also appears that the grant was approved in violation of the Company’s Bylaws, which require a majority of the authorized number of directors (i.e., at least three directors out of five) to constitute a quorum for the transaction of business at any Board meeting. The Company’s stockholders believe that the Dorr brothers should be held accountable for this appalling and dishonest action.
It is time for meaningful changes at Coro Global. The continued value destruction, mismanagement, lack of leadership, self-dealing and efforts to entrench themselves by the current directors and management team can no longer be tolerated. At the special meeting, we plan to vote for the removal of the current directors and the election of five independent, highly qualified candidates committed to taking immediate action to improve the Company’s capitalization,
marketing, product development and business operations, promote fiscal discipline and steer the Company to profitability for the benefit of all stockholders.
Contact:
Lou Naser
(408) 236-7630
1 The Company reported negligible revenue of $1,756 for the six months ended June 30, 2021. See Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2021, filed by the Company with the SEC on August 23, 2021 (hereinafter, the “Form 10-Q”).
2 The Company reported approximately $1.7 million of operating expenses during the first six months of 2021. The Company also reported that it anticipates that it will require approximately $4.2 million in general, administrative and other expenses during the next 12 months. See Form 10-Q.
3 The Company reported a net loss of approximately $1.73 million for the six months ended June 30, 2021. See Form 10-Q.
4 See Form 10-Q.
5 Based on the Company’s SEC filings, it appears that the last annual meeting of stockholders was held on October 24, 1997 by Coro Global’s predecessor company.
6 See Current Report on Form 8-K filed by the Company with the SEC on September 10, 2021.
