(cont'd)
Don was asked about a possible stock buyback. He cautions us to differentiate between short term peaks upward and long term increases in stock price and questions whether decreasing the float by 3% would increase the stock price by 3% over time. In addition, there are fiduciary issues. "Do we have the cash to make sure we can run the company day to day (we do!)." What is the best use of excess cash? "Right now we are leasing a lot of equipment, costing 17-18% per annum." He would love to pay cash and save the cost. And contemplating what might come up in the future which might result in a requirement for a very substantial cash outlay, only to discover that he had already spent all the cash on a buyback program. TSIS's style has been to install equipment at its own expense and then to earn the cost through usage fees. Also, the NASDAQ listing requires $4 million in assets, including $2 million in liquid assets (essentially cash), so if liquid assets are used to buy back stock, one ends up on the bulletin board forever, or at least it delays the NASDAQ listing process. Don stated that NASDAQ listing is a critical step forward which needs to get accomplished ASAP because that's where the legitimate support from market makers will come .. once the small cap listing is accomplished.
Question: the last news release was April 9th ... have we signed any new companies? Don responded that yes we have signed companies, but noted that TSIS's difficulty is that major clients ... "every single one" ... prohibit disclosure without written consent. "We tripped over ourselves" with Frontier and "came within a whisker" of losing them as a customer. We now are hypersensitive. We'll ask for rights to news releases (I think this means in future contracts). Don agreed that he needs to pay more attention to getting the news out ... understands the market's need to have the info ... has a couple of drafts on his desk but has been unwilling to ask the clients for permission to release them ... pledges to work hard to focus on these releases ... charged JJ with being more forceful about bugging him to get the news out. Don said they have hired a consultant to get some media coverage of the company and its business in general and feels that this will get around the non-disclosure issues.
Don sees no delays in becoming fully reporting. The new US auditor is putting last year's audited financials into US GAAP, a process Don described as "a couple of technical adjustments". The FY ends on July 31st. He sees them drafting the Form 10 in August or early September, with the audit ready for publication in October. He expects to file the Form 10 by the end of October or early November, as soon as the audits are ready. Don stated his opinion that filing will not change the stock's price a penny, but it is the first step in getting to the NASDAQ.
Don stated that Scott has had nothing to do with TSIS since December 15th. Scott is in Vancouver, and Don is not aware of what he's doing. Don is "letting some grass grow between us before we come back as brothers." Prior to Scott's separation, he had options but no shares. He was given the 100,000 restricted shares as a golden parachute. Don noted that Scott did put in five years of his life, working for modest and often intermittent pay ... says that the 100,000 shares is "a paltry sum", compared with "what he forwent" and very much reflects that the company took a real loss on the buyback program.
(cont'd) |
