Based on the current price of KITD common stock, the terms of the Share Purchase Agreement entered into between KITD and Hyro Limited ("Hyro") on April 21, 2012 obligate the Company to issue nearly twenty (20) million new shares to Hyro shareholders within the next 30 days; and
We have also received numerous unsolicited accounts of announcements and comments made by KITD management last week to employees, vendors and customers that call into question management's grasp of the Company's challenges or their ability to navigate the Company out of its dire straits.
Clearly explain your balance sheet fortification strategy to KITD shareholders, specifically how you intend to avoid a foreclosure by WTI or a similar action taken by a replacement, "last resort" lender;
However, several days after you received our Initial Letter, we were contacted by an executive of JEC Capital (the New York hedge fund that currently controls the Company and for which current KITD CEO Peter Heiland serves as Managing Director), who stated that you were not taking our offer seriously because you were unsure of our financial backing, and encouraged us to submit an offer to the board of KITD using a "customary offer letter format".
Given the current price of KITD stock, compounded by the Company's strategic drift and worsening liquidity and capital structure issues, we have lowered our indicative offer to acquire the Company to a range of $1.
By comparison, you granted former CEO Barak Bar-Cohen a $250,000 "success bonus" for an extremely dilutive, death-spiral financing concluded after my departure and JEC Capital (the New York hedge fund which currently controls the Company and for which current KITD CEO Peter Heiland serves as Managing Director) recently lent $2.
left an impression with staff, clients, vendors and competitors alike that KITD is under "temporary", "hedge fund", "Wall Street-focused" management.
I originally resigned from my post as CEO of KITD in March 2012 (and subsequently resigned from his role as Chairman in April, 2012) because I had come to irreconcilable differences with the Board at the time concerning strategic decisions and the future of the Company.
After my resignation, a bidding group (led by a large private equity firm which I had introduced to the Company), endeavored to obtain approval from the Special Committee to share information with me so that I could participate in connection with a potential offer for KITD.
For example, although KITD's current management and board finally adopted the staff reduction and office consolidation plan prior management first put forward almost a year ago, the delay has caused KITD to effectively run out of money and may put the Company into the pockets of its lenders.
From an operational perspective, KITD management must immediately: