RE:Sheeple The sheeple need to understand.
WiLan is dead. The WiLan business is effectively dead post-Apple. Cannacord has the WiLan business generously producing 6M EBITDA @ 7X multiple running the equivalent of a patent consignment store.
Overpaying for ITS. Quarterhill used the cash to severly overpay for ETC. Align Capital bought it for $50M ($10M equity / $40M debt) in 2020 and sold it to Quarterhill for $120M USD for a 700% return on invested capital in one year. Buying assets at peak valuations doesn't create value.
More dilution coming. Shareholders are about to vote on a new US options plan to pay the people they overpaid for even more. Shareholders will get diluted 10% more on top of the existing options plan of which there is another 6M shares to dilute. The debenture interest can also be paid in shares vs cash.
Insiders don't buy. This toxic combination of overpaying for assets and excessive dilution only exist at companies where insiders have such low ownership. They are essentially stealing from retail shareholders. There are no institutions to stop them as less than 5% of shares are owned by institutional investors.
Track record. The Board members have a track record of destroying value at other firms. Beyond the Lendified disaster, here are some other examples that were listed on an SEC filing.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Except as set forth below, none of our directors or executive officers and, to our knowledge, no shareholder holding a sufficient number of our securities to materially affect Quarterhill’s control is or was, in the 10 years preceding the date of this Annual Information Form, a director or executive officer of any company that was, while that person was acting in that capacity, (a) the subject of a cease trade or similar order or an order that denied any such company access to any exemption under securities legislation for a period of more than 30 consecutive days, (b) subject to an event that resulted, after such person ceased to be a director or executive officer, in such company being the subject of any such order or (c) within a year of such person ceasing to act in that capacity, became bankrupt, made a proposal under any bankruptcy or insolvency related legislation or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.
We understand that MedcomSoft Inc. filed a Notice of Intention to make a proposal to creditors under the Bankruptcy and Insolvency Act (Canada) on November 2, 2008. Mr. John Gillberry was a
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member of the board of MedcomSoft Inc. from January 2, 2008 to November 1, 2008.
We understand that Empirical Inc., a TSX Venture Exchange listed company, announced in January 2009 that it had entered into a standstill agreement with its creditors. Empirical Inc.’s assets were sold in February 2009, following which its shares were suspended from trading on the TSX Venture Exchange. Mr. Ian McKinnon was a director of Empirical Inc. from December 2007 until 2008.
We also understand that, in October 2011, Adeptron Technologies Corporation, a TSX Venture Exchange listed company, announced it had entered a business combination with Artaflex Inc. Following this announcement, the TSX Venture Exchange halted trading of Adeptron’s shares pending receipt and review of acceptable documentation from Adeptron in respect of this transaction. Trading of Adeptron’s shares resumed in February 2012. Mr. McKinnon was a director and chair of the board of directors of Adeptron Technologies Corporation from August 2011 to March 2012.
We understand that: (1) the Ontario Superior Court of Justice granted an initial order under the Companies’ Creditors Arrangement Act (Canada) on February 9, 2016 staying all claims and actions against GuestLogix Inc. and its assets and allowing GuestLogix to prepare a plan of compromise or arrangement for its creditors; (2) GuestLogix’s securities were suspended from trading on the TSX on February 9, 2016 while it conducted a review of whether it met the TSX’s listing requirements; and (3) on February 18, 2016, the TSX notified GuestLogix that its securities would be delisted from the TSX effective March 18, 2016 for failure to meet the applicable listing conditions. Mr. John Gillberry was a director of GuestLogix from March 2015 to September 2016 and was its interim chief executive officer from September 2015 to September 2016.
Further, we understand that DataWind Inc. was subject to a cease trade order from September 7, 2016 to November 25, 2016 and a management cease trade order effective July 6, 2016 by the Ontario Securities Commission on July for failure to file its audited financial statements and related materials for its fiscal year ended March 31, 2016 and its interim unaudited financial statements and related materials for the 3-month period ended June 30, 2016, which cease trade orders were revoked on November 25, 2016. Mr. John Gillberry was a director of DataWind from July 2014 to October 2016.