I called APTD and had a long conversation with Donna Millar. (I mean *long*... probably 45 minutes to an hour at the minimum.) I'll recap some of it here as best I can. (I took copious notes, but I don't write very fast, so they may come out a bit spotty.)
Here's the scoop on the sanctions:
The company had a PR contract back in October of 1991 to which apparently BFD's (APTD) lawyer at the time (see *note below regarding this) attached a performance clause. Performances clauses are illegal in Canada (and in the US, too, I think), and the company came under investigation because of it. (At the time, the price was about $10 CDN in Feb '92. They were shut down in Mar '92... ) The company settled in Nov 1993 for $30,000 CDN, with $25,000 CDN as the company's settlement. In Nov 95, Hoffman had $40,000 CDN imposed against him as a "contribution" to cover the cost of the investigation. Millar had $20,000 CDN against him. Both were forbidden from trading on the VSE for a period of 2 years (Nov 97), but by the time all this happened, it was a non-issue as the company had already become a US company and was being traded OTC.
*note: BFD's lawyer was from the 2nd largest firm in Canada at the time. They are now with the largest and have filed suit against the previous lawyer regarding the attachment of the performance clause on the PR contract. This is in the very early stages, but they feel confident that this suit will be successful. I didn't ask what the terms of the suit were specifically.
Re: listing... they will pursue a listing on either NASDAQ or AMEX as soon as they can meet the price limitation. For NASDAQ, they need to trade at $4 for 20 days/one month. For AMEX, they need to be trading at $3 and have a $750K *audited* bottom line. Donna felt confident that this will eventually happen. They traded at $3 for a couple days (didn't write down when - too lazy to look it up :-), but the minimum went up 1 Mar 97 to $4 for new listings.
They just took a $2M one-time bottom-line charge to release shares from escrow that had been held there since 1989. Their accountants (Price-Waterhouse) told them there was no way to avoid this charge whenever they released these shares from escrow, whether the price was at $3 a share or .86 a share. It would be the price times the number of the shares held in escrow (which for some strange reason, I apparently didn't write down). Anyway, they decided to release the shares on 30 Dec 96 when tax-loss selling was at its peak (or should I say "dip" :-) at .86/share. Had it not been for this one-time charge, the bottom-line would have been different. She isn't sure whether Q1 (ending Monday) will be profitable or not, but thought it would be. Given the number of contracts they have in the pipeline at the moment, she seemed to be confident that Q2 (June 30) will show increased sales and be a big quarter.
We talked about other things, location of plants, various products (which was really interesting because up until now I didn't have any idea that this was the same company that made the faux lambskin pet bedding that a number of "dog people" I know swear by!), how the shoe covers/coating were developed (interesting point... they had a hard time getting them to come out black - which is the color their test restaurants wanted), etc. The company is like a "Jr. Gillette" as much of their product line consists of disposable goods (like the shoe covers) much like the "give them the razors for almost nothing and sell them blades" concept.
Oh, and the Cede (pronounced "CeeDee") & Co. that holds 46.8% of the stock is the firm that holds the street name stock for the brokerage firms.
There are no longer any warrants outstanding. They've all been retired. There are some stock options for consultants and some key employees (not unusual).
They hired Chicopee to do their distribution as they'd tried to do it on their own and weren't very successful, so they decided to leave it to people who do this for a living with similar products from PGH. (Chicopee is a subsidiary of PGH though it used to be owned by Johnson & Johnson. PGH is currently selling at about $14/share.) PGH makes the material they use to be coated to make the shoe covers. I asked about the possibility of a merger or takeover by PGH. She said that there were no plans or talks that she knew of, but didn't feel the concept was out of the question.
I'd recommend that anyone with questions give a call to Donna: 905-479-0654 (that's in Canada, btw). She was very pleasant, knowledgeable and up front in answering questions (and actually brought up points I had on my list of questions before I could ask, like about the sanctions). Or, if you'd rather post them here, I can try to collect them and give her another call in a few weeks. (I will also state that she offerred to call me back as I was calling during prime-time hours on a calling card... it's a holiday in Canada today. I thought that was very nice of her.) |
