I attended the Datamarine annual meeting today. I will try to distill the comments of the meeting, try not to be too optimistic or pessimistic, and not put my own spin on it.
The business of the meeting was quickly finished. Both proposals passed with overwhelming majorities. The questions from shareholders and management discussion both revolved around the shortage of operating capital.
One shareholder, who is also a licensee, asked if the company would make available to other manufacturers, with no royalty, the permission to produce the 220MHz radio units. I thought that was an outrageous question, but David Thompson, CEO, responded that DMAR would in fact be interested if such a company could be found. The reason is that the remote units are a very low profit item and Asian production has been continuously delayed, but the lack of interest by other manufacturers is related to the uncertain nature of predicting sales volume. The advantage to DMAR would be to enable build out of the networks and promote sales of the repeater units, which are higher profit, and increasing the value of the licenses held by DMAR.
Much discussion went into the need for more operating capital. It will have to be raised by partnerships or equity infusions or....?? Although all options are nominally dilutive to present shareholders, the effect would be to break a vicious circle in which lack of capital inhibits sales which produces a lack of capital.
Marine equipment sales appear to be again on the upswing, which external factors should cause to continue for 3 years. That and the sales to Sophia, which were publicized April 4 ( and which apparently includes an option for substantially more units ), and gradually growing sales of 220MHz base stations should improve the company's position by this time next year, if it survives the capital crunch.
From here on I will editorialize. I was neither greatly encouraged, not greatly discouraged by the meeting. Management clearly has a handle on the need for capital, and appears to be pursuing the means to get that capital. The potential of the company and its markets appears undiminished. The lack of capital colors everything that DMAR does and must be addressed. The irony is that if DMAR were a dot com, people would be throwing money at the company. I don't think anyone can make a prediction when ( or if ) a significant turn will come. I assume that other holders of DMAR are, like me, people who like to take a chance on a situation which has more than the ordinary risk and more than the ordinary profit potential. Anyone wanting a "sure thing" should stay away. Anyone who likes a little excitement in their investing, may still be interested, as I am. A break, either direction, could occur almost any time and will catch all of us by surprise. The loss potential may be 100%; the profit potential is certainly many times higher. One encouraging fact: the insiders have a very large position in the stock and have much to gain or lose, and have not been selling shares. For me, I will continue to hold the shares I have, and possibly ( probably?? ) buy more at this price, or a little lower if the opportunity arises.
TR |
