Annual Meeting of Stockholders
August 31, 2010
I was 20 minutes late due to something I couldn’t get out of. That was critical, since the stockholders meeting scheduled for 1 hour and twenty minutes, was actually over in 45 minutes, due to a lack of participation. Only 7 people were there, plus Larry S. and Catherine Doll. Only 3 shareholders signed in, myself included. The other 2 were founding shareholders. The remaining 4 attendees were young guys in suits, probably “ringers” from the law firm so Larry wouldn’t be talking into an echo chamber. It was a “morgue” atmosphere compared to last year.
The 3 resolutions passed by approximately a ratio of 5,000,000 yes, 600,000 no, & 75,000 abstain. The voters must have voted the same on all three. The most interesting one was #3, an authorization to sell preferred stock. One of the founding shareholders was concerned about why we needed to have another class of stock. (I assume he was worried about the common stock being de-valued even more than it already has.) Larry assured him that it would probably never be utilized, if it was utilized it would be acquisitions of other companies, not for operating expenses. This seemed to satisfy everyone.
The resolution that interested me was #2, ratifying the auditors. KMJ Corbin. For $119,000 a year, we should have sent them packing, and opened up the bidding for other firms. But I guess it’s considered a minor issue.
(disclaimer: I haven’t followed the company since the first week of February, when the ill-advised reverse-split cost the shareholders 85% of our value. I apologized if subjects mentioned by Larry are already well-known to the “Investors hub board” and also I apologize if this report is lame, but this is all that was discussed. The lack of turn-out doomed the meeting. Larry’s comments are in quotes. My opinions are in parentheses)
The rest of Larry’s comments:
-“The $3.2 million private placement closed on August 20th will be the last round of financing for Cryoport. The company will be profitable and self-sustaining from here on out” (This seems like a stretch, but is also in line with last year’s meeting when Larry said we needed $10 million. Totaled borrowed in the last 12 months is around $8 million)
-“ The company will not be able to generate significant and meaningful revenues until after the commercial introduction of the ‘Cryoport Express Launch’ (not sure name is correct), partnered with Fed-Ex. This will be introduced sometime between now and the end of the year. The exact date is proprietary information and cannot be released, as they feel they are in competition with UPS and World Courier. Fed-Ex is making sure all their employees are fully trained (through webinar’s) before rolling it out. Fed-Ex has been meeting with Cryoport once a week. Fed-ex wants to be known as dedicated to the healthcare industry. UPS beat Fed-ex to the punch 3 years ago in healthcare”
-“Our agreement with Fed-Ex is not exclusive. We can sign deals with any other courier. Fed-Ex will end up being less than half our market.”
-“The customer relationships will be maintained Fed-Ex. They will be the contact. Our requirement is the customer must go through our Web Portal”
-“In addition, to our shipping facility in Delhi, India, we will be opening an Asian facility, probably in Singapore”
-“We will be adding sales personnel and raising company awareness. Presenting at Rodman and Renshaw conference again. Going to more bankers meetings and putting out more press releases.” (Has Stuart Fine has been jettisoned yet?)
-“Some of our key customer’s do not want their names publicly released as being users of Cryoport. This hurts our ability to promote”
-“new technology has increased the number of uses per container to 100. Further increasing our profit margins on certain shippers”
-Quest Diagnostics is moving their Laboratory from Van Nuys, Ca. to Valencia, Ca. this week. All of our employees are there helping them with the move. We are letting them use our containers at our cost.”(I assume this gesture of goodwill will increase our sales with Quest).
-“We have hired a third-party marketing firm, to go around and talk to all of our customers about their experiences with our shipping containers. The data collected will be used to further develop our systems and approach new customers”
-“Some existing customers claim we are saving them 70-80% of their “time” (aka payroll costs) on cold shipping by using our containers vs. their previous methods.”
-“ A typical conversation with a potential new customer. We explain the advantages of Cryoport cold shipping.”
Potential Customer: “This is a great idea. A lot better than what we have“
Cryoport: “Let’s get started”
Potential Customer: “What we are currently doing works. We can’t take the risk right now. We are resistant to change.”
--“Doctors, Surgeons, nurses, etc. are very unhappy with the results of dry ice. Unfortunately, they aren’t the ones who will make the change, or pay the bills.”
End of Larry’s presentation.
Other notes:
-I asked Catherine Doll how long she’s known Larry, and she said she didn’t know him before her Cryoport hiring. I thought this was interesting, as I always assumed Larry wanted his own guy (gal) in finance. I know Dee Kelly had an ugly departure from Cryoport, as they had Security personnel walk her out of the offices. I always thought Dee Kelly was competent at her job, unlike most of the other employees. Ms. Doll has made some mistakes and even had to re-issue financial statements, which is always embarrassing for a public company.
-There was a tremendous spread in the conference room of fresh fruits, pastries, juices, etc. Unfortunately, nobody was around to eat it. I assume the attorneys at Snell & Wilmer took it home.
-Peter Berry was not present. He probably saved himself some heckling and abuse in the lobby.
