I wrote a scathing letter to Bill Young about the planned public offering and in particular the possibility of a reverse split. Trust me, I was direct, to the point, not polite, and based my conclusions with solid arguments.
At 4:45PM, east coast time, George Smith called me directly. It was an interesting and somewhat satisfying conversation. I came away with certain conclusions that I want to share with all. First, George is a sincere, well meaning gentleman. He has great concern for his obligations to obey the law pertaining to the disclosure of inside information and he vehemently defends his contractural promise to keep the name of the foundry partner secret. He is particularly sensitive about not wanting to anger or to do anything to upset the relationship with the foundry partner. He is equally focused on doing nothing that might incur SEC scrutiny. Accordingly, he is chagrined about not putting out more information to shareholders, but he insists that the reason is because the law prohibits same.
George assured me that the progress on the Meta 6000 is on target and that tape out will occur on schedule. Of course, he would not be specific as to the date. He refused to put out any announcement that was optimistic, encouraging, or forward looking. He said such a commentary would be puffing and therefor illegal.
We discussed the possibility of a reverse split. George feels this is a way to increase the share price to allow NASDAQ listing so institutions can trade in the stock. I told him that I thought this concept was nonsense because the company has no income and therefore the stock price is not a result of price/earnings analysis or some other empirical computation. The price IMHO is simply a reflection of the inherent value investors, such as myself, put in the company. I told him that I thought a reverse split was suicide and he replied that his research says otherwise.
The company must raise cash to carry it until the Meta 6000 is in commerce. George believes a public offering is the only available way to do so, but he recognizes that a public offering at $1.25 is absurd. He wants to raise the share price; however, I don't think he has a clue on how to accomplish the goal. He may be a scientific genius but his marketing skills and experience are obviously lacking. I received no satisfactory answer why existing contracts with major corporations have not been the subject of press releases.
In sum, I was impressed by his directness and I believe his optimism was genuine. I think the company has the ability to produce a chip that will do what has been advertised. I question the ability of a CEO who is such a boy scout to advance shareholder value before revenues are available to drive the share price. George Smith is clearly not a dynamic promoter, but he strikes me as a decent, honest man. In the long run I like people with character rather than shameless hucksters. Still, this company is desperately in need of a marketing infusion and it seems unlikely that same will be forthcoming in the immediate future. |
