Emory, Fletcher is a vulture investor who buys new shares at market price and gets lots of warrants for free as part of the deal. The warrants are where he makes his money. If half the companies he funds go bust, then the warrants for the other half will evenually make up for it.
For example, about the same time he funded SYQT, he also funded IPEC, which is a good little semiconductor equipment company that sells to Intel, among others. IPEC needed cash to expand plant, unlike SYQT which needed cash because it burns the stuff. Since the IPEC deal, IPEC stock has taken off along with other semi equip stocks. Fletcher happened to get his position at the bottom of a cyclical downturn in that industry. Lucky for him. Several years from now Fletcher's warrants in IPEC are likely to be worth quite a lot.
Fletcher won't make anything on SYQT, but he will on IPEC. That's how it plays out for his scheme.
To answer your question, 'why is Fletcher selling?'. He was never interested in the common. The common is just something he has to buy in order to get the warrants. The co. gets cash for the common. Fletcher dumps the common in 120 days after his lock up period for a Reg. D financing is done with. If he was smart, in the case of SYQT he hedged the common. If he didn't he lost money on the deal. Because the stock went down from 6 to 2 while he held it.
I hate to tell you this Emory, but shareholders like you were just cannon fodder for the co.'s fund raising efforts and for financiers like Fletcher. The smart money was short this stock while all the vulture financing was going on.
In the co's latest SEC filings, they indicate that due to continued losses and negative cash flow, more of this vulture financing will be needed, so you can expect the shareholder to continue to get reamed.
Why anybody with any sense would ever want to own this stock is beyond me. |
