How can this cycle be broken?
I would recommend the following:
a) Hire a top auditor for FY11, preferably top 4.
b) Remove all shelf registrations and publicly state that no capital raising activity will occur in the future until valuations normalize.
c) Buy back your stock - and follow through. (subject to cash amounts held offshore.)
d) Institute a dividend. (subject to cash amounts held offshore.)
e) Explore ways to go private in a reputable way...as opposed to the ENHD way!
r) All top management start buying company stock immediately.
I agree with you that the reverse merger/SPAC method of going public is probably broken beyond repair.
Once trust and confidence are broken, valuations no longer matter.
I will say that two companies I've followed for a long time, CBPO and SOKF were investments of IDG-Accel after they completed their RTOs, and that has stabilized their stocks. So, there is hope....but its faint, and so many of these companies have made terrible mistakes with their capital raise activity and poor shareholder relations that no one trusts them to do the right thing anymore.
