Ron: I've been studying this to see if there is a slim chance of salvaging my investment too. Decided to add to my position. Here's some thoughts for what it's worth. (I don't claim to have special knowledgeable or insight other than being witness to a few miracles).
It's important to read the latest 13 D/A and 8K SEC filings to get an update on efforts currently being undertaken by a motivated group of investors to increase shareholder value. This key information is buried in the above SEC documents and is not being publicized on the newswires, unfortunately.
The group of 12 individuals "in aggregate, beneficially own, directly and indirectly, a total of 3,747,841 shares of Common Stock constituting 15.1% of the outstanding shares of common stock". The group comprises two directors, a consultant and private well placed investors. Having these folks, and especially members of the board, committed to this is a big plus. They are spending a significant amount of their own money for legal counsel and other expenses to restore investor value.
A proposal made by one key member of the group (he deserves major credit for initiating the proposal as I see it):
" seeks to impose restrictions on the grant of cash bonuses and stock options to employees or directors of the Issuer (subject to pre-existing contractual obligations) and to require that excess cash of the Issuer be utilized to repurchase shares of Common Stock of the Issuer rather than for the payment of dividends or other distributions to shareholders. In addition, the proposal would require that any increase in salary or award of stock options be contingent upon an increase in earnings per share of the Issuer of at least 50% over that reported for fiscal year 1994 ".
Just recently the board authorized the repurchase of up to 1 million shares in the open market through March 31, 1998, and as of August 13, 1997, 251,000 shares have been purchased at an average price per share of $1.72.
The last _ quarterlyL dividend payment on July 3, 1997 was $614,497. That represents a significant amount of capital that can be used either for stock repurchase if they go that route AND/OR use it to change their direction into a growth company.
Although the dividend is very attractive, I believe it can be better used growing their sales and bottom line. This is not a fortune 500 company for widows and orphans !. Using the dividend payout to foster a 30%-50% growth in earnings will attract the right institutional investment. Stock appreciation will follow.
Their financial health is still very strong with working capital in excess of $7 million. The current ratio is around 9 if I recall and zero debt.
Hopefully with the right cooperation, the Group will turn this around with pleasing results. Of course this is contigent on product sales as well. We will find out in the next three to six months, or maybe sooner.
Best wishes.
Dave
P.S.
" On or before August 20, 1997, the Company will notify your counsel,
Mr. Mann, of the date on which the Company's 1997 Annual Meeting of Shareholders will be held, which date shall not be prior to October 1, 1997 nor later than December 19, 1997 ".
No word on this yet ?? |
