Hi Dan, Rook and others,
I've been following with interest your discussion on 'Optiongate'.
As an Adamas shareholder for over a year now, I am also extremely
disappointed with the lack of progress with the company.
But I can't say that I'm ready to bail yet.
The main reason I'm staying for now is the amount of private placements
that have been taken down by insiders in the past year. Especially at
higher prices than where we are today. As long as these shares have
trading restrictions on them, I don't think there is any chance of any
real promotion happening. There is no way that the insiders want this
thing running until they can sell (at least enough to get their original
money off the table). Once their shares become free-trading then I
believe you will see Ms. Shields go to work. I intend to have a firm
grip on the ejection-seat handle when the promoting starts and will give
it a good tug on the first sputter.
After saying that, I'll now get back to options. I think you guys are
being pretty hard on Mr. Skorpos and his activity of the past couple of
months. If you'll just let me <zziiiiippp> get into my asbestos suit :-),
I'll give you my interpretation of what is going on, and would appreciate
comments.
Someone put this insider report on the thread a couple of weeks ago, I
went to Canada Stockwatch and captured it again, then formatted it to fit
on the page better. I put a couple of extra line breaks in it to make it
easier to see the 'events'
Insider: SKOPOS, MICHAEL J
Reln Owner Class Date Nature Acquired Nature Disposed Price Balance Reported
4 0 OP 29-Aug-97 96 400,000 0 0 $0.23 400,000 24-Oct-97
4 0 OP 03-Sep-97 0 0 76 100,000 $0.23 300,000 24-Oct-97
4 0 CM 03-Sep-97 76 100,000 0 0 $0.23 100,000 24-Oct-97
4 0 CM 03-Sep-97 0 0 10 50,000 $0.27 50,000 24-Oct-97
4 0 CM 04-Sep-97 0 0 10 14,500 $0.32 35,500 24-Oct-97
4 0 CM 04-Sep-97 0 0 10 16,000 $0.36 19,500 24-Oct-97
4 0 CM 08-Sep-97 0 0 10 19,500 $0.22 0 24-Oct-97
4 0 OP 22-Sep-97 0 0 76 100,000 $0.23 200,000 24-Oct-97
4 0 CM 22-Sep-97 76 100,000 0 0 $0.23 100,000 24-Oct-97
The first line shows that on August 29th, Mr. Skopos acquired options for 400,000
shares at $0.23, for a total of 400,000 options held.
Within a week, he had exercised 100,000 options at a cost to him of $23,000 (of
his own money). This leaves him with 300,000 options and 100,000 common shares.
(lines two and three)
Over the next few days he disposes of all of these common shares as follows:
50,000 @ $0.27 = $13,500
14,500 @ $0.32 = 4,640
16,000 @ $0.36 = 5,760
19,500 @ $0.22 = 4,290
-------
Total proceeds $28,190
A discount broker would charge about $500 in commissions, a full service broker
somewhat more so I would guess that he could receive somewhere between
$27,000 and $27,500 from his broker. This would give him a taxable gain of
$4,000 to $4,500, not a bad flip if the tale ends there.
But it doesn't.
Allowing a week for settlement of his trades and a few more days for his broker
to cut him a cheque, and then on September 22nd he exercises another 100,000
options for another $23,000. At this point he has 200,000 options remaining
and is now holding 100,000 common shares. Unfortunately our story has to end
here as he hasn't reported any more activity. But with the time delays allowed
in reporting insider trades this doesn't mean there hasn't been any more. We'll
just have to wait and see.
So what does this mean? Is this guy being greedy? Is he just out to make a few
grand at a time? -- I don't know, but I don't think so.
What he has done is get $46,000 into Adamas' treasury without going through the
'private placement with attached warrants' route. How badly did Adamas need this
money? Again, I don't know, but with some of the delays (and failures) at
obtaining financing that we have seen throughout the entire junior sector, this
money could give them a little more breathing room. If Mr. Skopos had done all
his buying on the market, it may make some shareholders feel a little better, but
it doesn't get any money into the company. It just gives some other guy an exit.
My feeling is that if the board is awarding him more options to replace the ones
he used up on his 'semi-private placement' ;-) then I don't have too much of a
problem with it. I will, however, become extremely concerned if things don't
improve to the point that this kind of 'financing' is no longer needed.
---- Sorry for being so long-winded ----
Disclaimer: (paraphrased from Bohdan)
I could be, and probably am, totally wrong about all of this.
Best wishes
George |
