This will be a summary of today's HemaCare (HEMA) annual meeting. There was nothing earth shattering but it was still good. Shareholder attendance was down 33% from last year, which is to say there were only two of us this time...
The past year has been amazing for HEMA and its stock. The company has turned profitable and growth continues. HEMA has formed a strategic relationship with OneBlood and raised money at $3.44 per share. The stock has been written up at both MicroCapClub and AlphaVulture. The stock is up a few hundred percent. I think the company and stock will keep going so I hold my shares. I won't go into details on the financial results as AlphaVulture has done a great job of that. You can catch up on the history with my old HEMA posts.
So back to the annual meeting. I've only been to very small annual meetings with a few shareholders in attendance and they are all the same. The official meeting is to declare the voting results on directors and the auditor and takes all of 5 minutes. This one was maybe 10 because the CEO gave a company update similar to what you'd hear on a conference call. Then it's opened for Q&A. Myself and the other shareholder present asked questions for about 30 min. Present were the whole board of directors plus the CFO. The one new board member this year is the OneBlood CEO.
Overall there was nothing major to report and the company marches on. They are planning for growth and executing. As explained in the annual report they are using the money from OneBlood "to invest in product innovation, order fulfillment, and fund strategic initiatives." I couldn't get specifics on that but the money is generally going to fuel growth. HEMA recently signed another international distributor agreement and they continue to search for more. They are up to about 70 employees from ~50 last year and are upgrading facilities. They are working to get stickier relationships with existing customers. They are adding new customers and expanding their product offerings. International sales must be around 20% of their business now.
The most interesting information was the OneBlood stock purchase price explanation. It was asked how they came to $3.44 when the stock was trading in the $0.60's. They did not use the stock as a measuring stick due to liquidity and instead had a 3rd party perform a valuation then negotiated a 20% discount. So the official 3rd party valuation as of January 6, 2017 was $4.30.
We also had a great discussion on filing status, the SEC, and OTC Markets. We've talked about this many times in the past and brought it up again. They said the board all own a lot of stock so the stock price is definitely a concern for them, they just don't feel the benefits outweigh the cost of a few hundred grand annually to become SEC reporting again. We brought up the OTC Markets stop designation list. They were sort of aware but did not completely understand so we explained it and I've followed up with a further email. We talked about the $5k OTC Markets hostage fee and told them about the OTCM Pink Limited Information tier. Pink Limited Info would be perfect as all it requires is an annual report. The board were very receptive and I'm hopeful they will follow through. They all but declared on the spot they'd pay a $5k annual fee to get off the stop designation list so I have hope. For now the CFO will look into it further and I've sent her the details.
I asked a few questions about the OneBlood relationship. Since signing on they have been setting things up and expect to draw their first samples next week. OneBlood completed some facility work and just received the final license a couple days ago. So we should see the operational results start coming in more in the second half of the year. They explained the relationship a bit and it sounds like OneBlood is primarily a large expansion of donors for HemaCare. In the past management has mentioned the possibility of opening satellite collection centers around the country as they grow and I think OneBlood is exactly that. In the US all blood collection for patient use must come from volunteers and that's what OneBlood has always done. Blood collection for research products (such as HEMA provides) can come from paid donors so this partnership opens a new door for OneBlood as they now have an outlet for paid donor collections.
OneBlood has two more options to purchase HEMA stock at $3.44: one in 2017 and one in 2018. I asked if they are waiting on a certain gate or operational step to make the buy decision and there is nothing. OneBlood structured it in 3 buys just to give them the ability to ease into the relationship as they gain confidence. It sounded to me like OneBlood will likely make the additional option purchases but only time will tell.
disclosure: long HEMA
Looks like your suggestion of the OTC Pink-limited info tier was well received, I noticed their OTC listing upgraded from the stop designation this morning.ReplyDelete
WOW, they actually did it! This is greatDelete
Was it that they before were trading @ OTC pink no information tier before and now they are Pink Limited Information and it costs them 5000$ per year?ReplyDelete
Was it free when they were @ Pink no information?
Interesting blog btw!
Thank you and yes that's the case. The No Info tier is free. Limited costs $5k annually.Delete
And actually I have learned HEMA will be bouncing back and forth between the two. What a pain. Not long after HEMA got off the stop designation list I got an email from the CEO explaining they would be off and back on it. The problem is OTC Markets has this Limited Info tier requiring only an annual which HEMA signed up for but if a company doesn't post quarterly results they get put on the stop designation list. What a scam. So HEMA is off the stop designation list for a few months when the post their annual and bi-annual results then back on it when they don't post 1st or 3rd quarter results. Another twist to the story
It makes me wonder if HEMA will bother paying the $5k again next year or just say screw it.Delete
How can a company meet all the requirements for a valid OTCM tier yet still end up on the stop designation list?!
thanks for clarifying!ReplyDelete
Hey Dan, this is probably a stupid question but I'm wondering if one consideration when you pick a stock is their HQ location? In other words, how much does it matter to you that you live close by such that you can easily attend shareholder meetings?ReplyDelete
It’s not a consideration, I just take advantage when I can. I wish I could go to more of these little dark company meetings like SIMA, IOMT, QDLC, etc.Delete