MicroCap PubCo CEO – Summertime Blues [Guest Post]
Ok, its summer, the sun is shining, the waves are crashing on the beach and you are now in what’s called the OTC CEO summer doldrums because those things are happening for everyone else except you. And if you are lucky enough to be able to take your family on a summer vacation, don’t worry, the stress doesn’t go away, and your phone will still ring. All you have done is temporarily trade your desk for a chaise lounge chair and instead of looking out a window over a parking lot, you can observe the seemingly carefree nature of others around you as they soak up the sun and splash in the waves. Yea, good luck with that one. This is because an OTC CEO rarely has time to rest. Let’s face it – everything is an uphill battle. Some OTC CEO’s think about their actual business, while most of them think stock – it’s just the nature of the beast, especially if you are struggling. Hopefully you aren’t like I was – glued to the Level II day and night – in the office and on your phone – because it is addicting and a necessary evil for most OTC CEO’s.
Any stock performance over the summer is basically sheer luck because most of the retail brokers, IR firms and investment bankers are on vacation (deep sea fishing off the coast of Miami, or skiing in Chile – at least that’s what I was told by those I had hired in the past) and none are really paying any attention to your, or anyone else’s stock. But you better get ready because come first week in September, everything changes. The brokers are back, the IR people are back and the Investment Bankers are back, all looking for deals before the winter holidays. This is why you, as the CEO of a microcap company, need to prep for the fall sale just like any other retailer.
Summertime is the best time to clean house, review your product lines, services and to map out how you are going to increase shareholder value starting in September when your press releases and 8K’s really start to get noticed and have impact on your market cap. First, get together with your SEC counsel (who all work over the summer), and start reviewing your cap table to see what if anything can be done to improve shareholder value. Make sure you are ready to stay in compliance with your reporting requirements, and if your not reporting, start thinking about how to get your company reporting. Next, sit down with your CFO or advisor and review your cash flow and your debt and liabilities. You will need to survey dates upon which toxic convertible notes age and start to develop a plan to retire them before they do. If you are trapped into an “equity line of credit” make sure you check dates and plan out your S1 filing – you’ll need money for legal and accounting fees.
The biggest challenge for OTC CEO’s over the summer is that it will take money in order to effectuate goals that you have set for your company, especially with September and October fast approaching. Several of my clients have been busy over the summer signing LOI’s to acquire complimentary companies with revenues, have taken administrative steps to create new equity classes that will be used to retain executives and board members, used for acquisitions, used to retire debt and other liabilities, and most of all, to raise money to be able to implement the plans. Microcap CEO’s should understand that if your company is not performing in the market, it’s usually a function of investor perception based on stagnate or poor performance. Hundreds of millions in shares, hundreds of thousands of convertible debt, tired management, tired products, .00 something stock price, face it, its just not exciting except those who play for fractions of a penny, and I am SURE that this isn’t what you expected nor committed all of your energies toward.
As a CEO, you will need to make the most out of the summer in order to have a more positive outcome that will help steer your company over the next 6 and 12 months. A lot of companies end up doing many different things over the summer to improve their positions in the market. Most reverse splits are considered and originated during the summer months that coincide with a stock restructuring and debt remediation plans. Corp. name changes (usually to get away from the stigma of an old name and stock symbol as well as for new branding opportunities) occur during the end of the summer and announced in September. New product lines and services are contemplated whether they are derived organically, or through acquisition. If you haven’t said these things out loud, I am sure you have said them in your inner voice. Listen to your inner voice.
I truly hope you are enjoying your summer, but I know what the stress is having been the CEO of 2 OTC Pubco’s myself, and its not good. But, if you plan accordingly, you can lessen the stress and move forward towards a path of success.
About Mark R. Basile, Esq.
Mark R. Basile, Esq. is a nationally known corporate restructuring and workout attorney and is a member of The Basile Law Firm, P.C.. The Firm represents numerous OTC and Pink Sheet companies in both litigation and corporate restructurings www.thebasilelawfirm.com. Mr. Basile is also managing director at www.otcworkouts.com
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