reading through the suit filings - it appears one of the points of the KBM suit is HJOE is insolvent and therefore they should be forced to provide/unlock shares so that KBM can then "be paid" by selling them into the market. on the surface - this is somewhat silly as a judge would be endorsing letting KBM sell worthless stock to unsuspecting investors if the assumption/assertion is valid that HJOE truly is insolvent and can not repay debts.
however, that aside, if taken at face value - what happens if HJOE shows up to court and shows numerous attempts to repay in cash and/or proof of attempts to settle this privately outside of court? how will the courts respond? if HJOE operated in good faith and provided a reasonable settlement offer (which would more than likely be below the $2000/day threshold) will the judge be sympathetic? further, when prior bad acts, KBM operating in bad faith entering into the contract (under the guise they wanted to "partner" with HJOE while they were effectively taking their knees out" - how does that play into court's decision when deciding whether KBM actually HAS been damaged and to what extent in the suit or more importantly, whether the contract was valid to begin with and/or breached afterwards (by the malicious conversions/refusal to settle for cash)?
it is rather clear that these financiers make significantly more money converting shares and dumping them in the market then taking cash which eviscerates the company/shareholders and is unlike ANY other type of lending operation. hell, even loansharks realize that if you take out your customer - there are NO more payments.
it is also an unusual situation (despite the usury laws/contract breach) where HJOE is forced to violate/fight the "contract" in order to execute their fiduciary responsibilities to the shareholders. they easily could have executed the R/s, let the lenders liquidate, and then restructured all but wiping out the existing shareholder base. they could also probably come close to going private now with the share price hanging as low as it is and apparent revenue generation (but there is risk there due to lawsuit).
back to original tenet of KBM suit being HJOE is insolvent. if that IS their main thrust - why should the company do anything to let them think otherwise? further, whether or not they intend to settle or will consider settling, they should give NO appearance that they will as that is major leverage in the process. while they can not spend shareholder money for retribution (from a fiduciary position), they DO have the responsibility of maximizing shareholder value/returns and taking this all the way or providing the appearance of for leverage is STILL in the interest of shareholders even if it is counter intuitive to current price.
that leads us back to prior posts on value and what is going on now. if you believe this company/brands are taking root in the market place - why should you NOT believe mgmt is acting in the best interest of shareholders? if they were NOT acting in best interest, why wouldnt they do the R/s? insider shares have anti dilution measures attached so they would not be (overly) affected by the R/s.
with shareholders i have spoken with, this seems to be the general consensus and why we continue to buy. i am not buying aggressively at these levels because there are still buyers being aggressive and i already have a significant base. however, as the price nears trips - you see buyers getting MUCH more aggressive. eventually, the sellers will have sold and there will be few shares available. at this point, MMs will take the price up looking to create a market and entice holders to become new sellers. this is the point where it gets interesting and where i do not think it will take any news events to drive it. rather - simply supply and demand curve being inverted.
as far as the trial - there is NO sure thing in courts/lawsuits and this is anywhere CLOSE from being positive for HJOE. considering prior bad acts, the amount of money already "made" by KBM in converting shares, and the material breach of contract in bad faith acts - i think HJOE has a strong case and any indication that the judge agrees ought to bring KBM swiftly to the table due to multiplier clauses on damages. IF that happens, i think it is definitely in the best interest of the company for itself and definitely for shareholders to discuss a settlement and move forward with business. Let SEC/criminal courts take care of criminal activity and NOT the civil courts.
on the Veal comment about the notes being paid back. i took this as referring to the actual "return" KBM made on the original notes through the exercising/conversion of shares - NOT the money HJOE paid back to them. this is the main thrust of the usury argument/counterclaim. it is separate from contract breach/good faith acts but they are obviously intertwined. it also goes back to KBM being forced to prove how they were "damaged" by HJOE's breach of said contract.
if the judge is a contract language stickler - HJOE may have an uphill battle. however, if so, they will need to fight hard to show the original breach by KBM not entering into the contract in good faith or with clean hands. if they materially prove that - the judge may ignore the specific language and default to forcing KBM to prove where they had been damaged and/or put them on the defensive for usury/breach.
however, that aside, if taken at face value - what happens if HJOE shows up to court and shows numerous attempts to repay in cash and/or proof of attempts to settle this privately outside of court? how will the courts respond? if HJOE operated in good faith and provided a reasonable settlement offer (which would more than likely be below the $2000/day threshold) will the judge be sympathetic? further, when prior bad acts, KBM operating in bad faith entering into the contract (under the guise they wanted to "partner" with HJOE while they were effectively taking their knees out" - how does that play into court's decision when deciding whether KBM actually HAS been damaged and to what extent in the suit or more importantly, whether the contract was valid to begin with and/or breached afterwards (by the malicious conversions/refusal to settle for cash)?
it is rather clear that these financiers make significantly more money converting shares and dumping them in the market then taking cash which eviscerates the company/shareholders and is unlike ANY other type of lending operation. hell, even loansharks realize that if you take out your customer - there are NO more payments.
it is also an unusual situation (despite the usury laws/contract breach) where HJOE is forced to violate/fight the "contract" in order to execute their fiduciary responsibilities to the shareholders. they easily could have executed the R/s, let the lenders liquidate, and then restructured all but wiping out the existing shareholder base. they could also probably come close to going private now with the share price hanging as low as it is and apparent revenue generation (but there is risk there due to lawsuit).
back to original tenet of KBM suit being HJOE is insolvent. if that IS their main thrust - why should the company do anything to let them think otherwise? further, whether or not they intend to settle or will consider settling, they should give NO appearance that they will as that is major leverage in the process. while they can not spend shareholder money for retribution (from a fiduciary position), they DO have the responsibility of maximizing shareholder value/returns and taking this all the way or providing the appearance of for leverage is STILL in the interest of shareholders even if it is counter intuitive to current price.
that leads us back to prior posts on value and what is going on now. if you believe this company/brands are taking root in the market place - why should you NOT believe mgmt is acting in the best interest of shareholders? if they were NOT acting in best interest, why wouldnt they do the R/s? insider shares have anti dilution measures attached so they would not be (overly) affected by the R/s.
with shareholders i have spoken with, this seems to be the general consensus and why we continue to buy. i am not buying aggressively at these levels because there are still buyers being aggressive and i already have a significant base. however, as the price nears trips - you see buyers getting MUCH more aggressive. eventually, the sellers will have sold and there will be few shares available. at this point, MMs will take the price up looking to create a market and entice holders to become new sellers. this is the point where it gets interesting and where i do not think it will take any news events to drive it. rather - simply supply and demand curve being inverted.
as far as the trial - there is NO sure thing in courts/lawsuits and this is anywhere CLOSE from being positive for HJOE. considering prior bad acts, the amount of money already "made" by KBM in converting shares, and the material breach of contract in bad faith acts - i think HJOE has a strong case and any indication that the judge agrees ought to bring KBM swiftly to the table due to multiplier clauses on damages. IF that happens, i think it is definitely in the best interest of the company for itself and definitely for shareholders to discuss a settlement and move forward with business. Let SEC/criminal courts take care of criminal activity and NOT the civil courts.
on the Veal comment about the notes being paid back. i took this as referring to the actual "return" KBM made on the original notes through the exercising/conversion of shares - NOT the money HJOE paid back to them. this is the main thrust of the usury argument/counterclaim. it is separate from contract breach/good faith acts but they are obviously intertwined. it also goes back to KBM being forced to prove how they were "damaged" by HJOE's breach of said contract.
if the judge is a contract language stickler - HJOE may have an uphill battle. however, if so, they will need to fight hard to show the original breach by KBM not entering into the contract in good faith or with clean hands. if they materially prove that - the judge may ignore the specific language and default to forcing KBM to prove where they had been damaged and/or put them on the defensive for usury/breach.
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