The full letter is available on the Company's website at Events & Presentations |
Dear Zomedica Shareholders
After reviewing feedback from you, our shareholders, and IR firms and reading the various message boards, I would like to make a simple request of our shareholders: Please do your own due diligence.
Of course, I strongly encourage shareholders to vote FOR the reverse split, and we've been very forthright about the many potential benefits to your Company, including: 1. Removing barriers to investing by new individual/retail investors who do not invest in 'penny stocks'. This includes family offices and high net worth individuals, many of whom have already expressed strong interest in your Company. 2. Removing barriers to investing by new institutional investors who do not invest in stocks priced less than
Others have taken to the message boards to tell you to 'just say No!' and the reasons they give various reasons
Management is enriching themselves because their stock options will NOT be adjusted, so they will still have the same number of options and/or the same pre-split option price.
This is not true. As I explained during our
Management needs the reverse split so they can turn around and issue more shares, causing dilution to existing shareholders.
This is not true. Not only do we have over
Management should do a buyback with our money to make us whole.
This is not realistic. With a billion shares outstanding, we would have to buy back an enormous number of shares to reduce the float to the levels we are seeking with the reverse split. Using all of
As our Chief Financial Officer explained during our
In addition, spending our capital now for a buyback could create a situation in the future where we may have to raise cash under difficult macro-economic conditions, which would cause dilution for our shareholders. Declining to do a buyback now guards against this, and also provides cash for opportunistic accretive acquisitions to potentially hasten reaching profitability.
Our position has been consistent and will remain that a buyback is not in the best interest of the Company and its shareholders. Instead, we believe that using
We were over
We were not a day or two away from compliance. As I explained during our
For example, on the 8th day referenced above, our closing price was $0.2002; the average closing price for the trailing 30 trading days was
All Reverse-splits result in the share price falling, with most returning to pre-reverse split levels.
This is true in some cases, but not true in all cases. Share prices of companies post-reverse split can vary significantly. In our analysis of 70 reverse splits conducted by companies within the
Importantly, we believe
Even if we do see a short-term reduction in share price, we've seen more than 10% swings in our stock price over the last two years, including the last several weeks! Realistically, for those who have said our shares will fall to current levels, please review the math. To fall to
At this point our market capitalization is close to our cash and equivalents on our balance sheet. If the share price falls further post-reverse split, this may be viewed as a significant buying opportunity by investors who are then NOT constrained from buying a low priced stock!
6. Voting down the reverse split will cause the stock to rise to compliance at$0.20 per share and then it will rise organically to the$1.00 or$5.00 per share to lower the barrier for new investors.
This is not realistic, especially in the short to mid-term. We certainly may get back to
However, to rise in a short time to
Our products represent new technology for veterinarians, and it takes time to build adoption and grow the installed base, leading to consistent revenue growth. We're guiding to
So, how do we get to these valuation levels We get there by building the value of the company organically over time, by growing revenues, maintaining high margins, making accretive acquisitions, reaching profitability, and growing from there.
Performance alone has not been enough to drive valuations up. To get credit for our performance we also need to reduce the float and increase the share price through a reverse split. We've seen over the last several years that while we have performed well as a company, we have not seen that reflected in our share price. We've acquired revenue producing products and have several others in development. We've grown the products already on the market and completed development and launched new products. We built the infrastructure of the company, providing us with the people to do the work, the licenses or ownership of the technology, and the facilities to develop, produce and distribute these products efficiently and globally.
By executing the reverse split, we believe we will remove barriers inhibiting potential new investors so when we report good news, new investors have a chance to enter, providing a better chance for share price growth.
With two perspectives so far apart, who should you believe
I sincerely hope that the people expressing the views above are sincere and they really believe what they are saying, in which case, the facts above should satisfy them. But I allow for the possibility that they may already know the truth but have other reasons to motivate you to vote against the reverse split.
Traders have a far easier time trying to get a stock price to move when there are nearly a billion shares outstanding, and no foundation of large holders (individuals, institutions, mutual funds) that are long in the stock and not likely to sell quickly. Currently our institutional holders are a very small percentage of the float, and it is in the best interest of certain traders to keep it that way versus removing their barriers to entry into owning the stock since this could provide additional buyers when someone tries to move the price through shorting.
On the other hand, we've been clear that we believe a reverse split is the best way to build value for all shareholders. We've been forthright about why we are seeking the reverse split and the benefits we expect to see.
Also remember that unlike anonymous posters on the message boards, all our comments are reviewed by our internal compliance team mindful of following
Beyond the legal and regulatory guidelines we have to follow, our motivation should be clear. We are not opponents of our shareholders; we are certainly not a large hedge fund shorting a stock as shown in a movie. I am a shareholder. Thorough our stock option program, so are all
As an example, when you look at a chart that shows my compensation, note that a significant portion of what is reported as total compensation to me and other employees and Directors of the Company is in the form of Option awards, which means that this is what we might make from the options in the future based on a set of hypothetical assumptions about future share price and is 'noncash compensation'. The simple fact is that I will not benefit from these stock options unless the share price rises above the exercise price; for my initial grant, it will be when the stock rises (post reverse split) above
While we may not agree on whether to do a buy back or a reverse stock split, we should all agree that we want the best for
Many of our shareholders saw the potential value of the Company in its early days and we appreciate your patience as we've built your company substantially over the past several years. Now it's time for you to benefit from staying long. Attracting new investors that recognize the value in
Accordingly, I ask you to do your own due diligence. Review the Proxy and all related materials and decide for yourself what is best for your Company, our customers and the pets that they treat. Reach out if you have questions or would like to discuss, and then vote the way you decide. And if you already voted one way or another, exercise your right to change your vote as you see fit. I'll respect your vote whichever way you go.
Sincerely,
Director & Chief Executive Officer
Contact:
Tel: (734) 489-6485
Email: lheaton@zomedica.com
Web: www.zomedica.com
Email: investors@zomedica.com
Tel: 1-734-369-2555
About
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Except for statements of historical fact, this news release contains certain 'forward-looking information' or 'forward-looking statements' (collectively, 'forward-looking information') within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as 'plan', 'expect', 'project', 'intend', 'believe', 'anticipate', 'estimate' and other similar words, or statements that certain events or conditions 'may' or 'will' occur and include statements relating to our expectations regarding future results. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance, or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made, including assumptions with respect to economic growth, demand for the Company's products, the Company's ability to produce and sell its products, sufficiency of our budgeted capital and operating expenditures, the satisfaction by our strategic partners of their obligations under our commercial agreements, our ability to realize upon our business plans and cost control efforts and the impact of COVID-19 on our business, results and financial condition.
Our forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: the outcome of clinical studies, the application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments, uncertainty as to whether our strategies and business plans will yield the expected benefits; uncertainty as to the timing and results of development work and verification and validation studies; uncertainty as to the timing and results of commercialization efforts, as well as the cost of commercialization efforts, including the cost to develop an internal sales force and manage our growth; uncertainty as to our ability to successfully integrate acquisitions; uncertainty as to our ability to supply products in response to customer demand; uncertainty as to the likelihood and timing of any required regulatory approvals, and the availability and cost of capital; the ability to identify and develop and achieve commercial success for new products and technologies; veterinary acceptance of our products; competition from related products; the level of expenditures necessary to maintain and improve the quality of products and services; changes in technology and changes in laws and regulations; our ability to secure and maintain strategic relationships; performance by our strategic partners of their obligations under our commercial agreements, including product manufacturing obligations; risks pertaining to permits and licensing, intellectual property infringement risks, risks relating to any required clinical trials and regulatory approvals, risks relating to the safety and efficacy of our products, the use of our products, intellectual property protection, risks related to the COVID-19 pandemic and its impact upon our business operations generally, including our ability to develop and commercialize our products, and the other risk factors disclosed in our filings with the
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