Well, IVXX, that post just about wore me out. Part of the problem is that while I was aware of the LYJN back in May (and avoided it because it looked too risky), I was not and am still not aware of what the company did and didn't say with regard to selling of shares. Here are the main issues I see that one might look at to 'keep it real'.
1. The blatant pumping of the stock back in the spring. Again, I wasn't looking too closely at that back then, so may be missing information. It does seem apparant to me that there was a lot of positive news and efforts to generate interest in the stock. To the extent that the intent was to manipulate the stock upward in order to sell shares into the market to those financing the company, I have a few reactions:
First, keeping the price up reduces the dilution of the float when raising cash. The lower the price, the more shares given to the investor who then sells into the float. So, such 'pumping' CAN be positive for a long term investor.
Second, it may be that the company took some bad advice--not realizing the longer term price erosion that can occur with relatively large selling into a small float, and it is also possible that they took bad advice with regard to some of the promotional outfits they chose to represent them.
Third, it is certainly possible that the company knew that over time the price would erode as selling continued.
Fourth, regadless of the above three issues, if you are going to do anything that affects stock dilution, I think it is most appropriate to inform the shareholder of what is happening. However, another side of me says that this is not something a company on the pink sheets should be expected to do. It would be nice, but just as we don't expect them to file financials, I'm not sure we should require that they explain financing and share structure changes--that's all part of 'financials'.
2. Communication with regard to selling of shares. It still is not clear to me that the company ever said that selling of shares wasn't taking place. As stated in number 4 above, I think the high moral ground is to explain what is happening, but we should NOT expect it for a pink sheet company. I DO think that if they ever said that selling of shares WASN'T taking place, that is wrong and inappropriate if such selling actually WAS occuring. When I first talked to Mr. Braxton in September it seemed to me that he danced around the issue of selling of shares and financing. He never said to me that selling didn't happen.
Again, it appears to me that whatever selling did take place was not real significant. The volume just doesn't seem to have been large enough.
3. The delay of the 'debut'. First, what was the company really talking about? Were they talking about actual products being debuted (sp?) at stores or to the 'industry'? Some say that the debut DID happen at the party with America in early October (the fall), where people in the know were given--and the PR uses the words 'a sneak preview'--of the debut collection. So, in a sense the debut was not really delayed, though it wasn't as complete as what seemed to have been the original intent. And, I might add, it looked to me like there was no sneak preview of the denim line, which was supposed to be part of the debut.
I for one agree that the company was insensitive to shareholder perception on this issue, and should have addressed it in a clearer manner. At the same time I must say that a LARGE percentage of companies simply don't make PR announcements with regard to product delays--so LYJN isn't all that out of the 'norm' on this issue. I prefer however, that companies would tell us of product delays, especially when the product is their sole business! I wrote LYJN a strongly worded email when I found out they were late and hadn't really told investors. It hurt their credibility, and that is when I called American Garment sewing--the DD helped me keep the faith.
You wrote:
"IF THEY REALLY CARED ABOUT THE SHAREHOLDERS THEY COULD HAVE AT LEAST RELEASED A PR NOTICE TO WHY THEY DID NOT LAUNCH AS THEY SAID…NOTHINHG? "
As I've thought about it some more, my position is close to this for a company that is on the pink sheets:
1. The company is under no obligation to discuss financials or share structure, or anything that they haven't previosly discussed with shareholders.
2. If the company DOES discuss anything, they are under a moral obligation to tell us the truth.
3. If the company HAS told us something that absolutely has turned out to be incorrect (the delay, no selling of shares--if true, the outstanding share count), they are under a moral obligation to inform shareholders of the change in information.
As far as I know, the only way they haven't met my criteria is in their lack of clarification about the delay in the debut of the denim portion of their line. They should have been more 'real' about that. As for all the other items, I don't see how they owe us anything they haven't given us.
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