Why Wireless Ronin Is Taking A Beating…
Adrian J Cotterill, Editor-in-Chief
The title for this post was originally, when in draft form “they tell you when they win but not when they lose” – we changed the title to make a point – a couple of signage sites and some industry blogs have been wondering why Wireless Ronin stock has taken a battering and why their CFO resigned.
We quote from just one such source, screens.tv (we are not picking on them specifically)…
For U.S. digital-signage software maker Wireless Ronin, it was not financials but the surprise late-Monday resignation of CFO and executive VP John A. Witham that gave investors the jitters. By midday, trading volume was already at about four times its daily average, and the stock (ticker symbol RNIN) was down 13.45 percent on the previous day’s close, to 6.05.
The company gave no reason for Witham’s departure. Brian S. Anderson, VP and controller, will act as interim CFO.
It’s all about research. We noticed last week the issue of a “Form 8-K for WIRELESS RONIN TECHNOLOGIES INC”…
Entry into a Material Definitive Agreement, Financial Statements
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
As previously reported, in January 2008 and subsequently in April 2008, we extended the maturity date of the Secured Promissory Note (the “Note”) issued by NewSight Corporation (“NewSight”) to our company in October 2007. Pursuant to the most recent extension, the Note was to mature on the first to occur of (1) successful completion of NewSight’s financing efforts, or (2) May 30, 2008. NewSight has advised us that it is still in the process of raising capital, and has requested that the maturity date of the Note be further extended. On June 5, 2008, we entered into a letter agreement with NewSight (the “Letter Agreement”) pursuant to which the Note will now mature on the first to occur of (i) August 15, 2008 or (ii) the completion of NewSight’s next financing transaction, generally excluding any financing of less than $3,000,000 solely from Prentice Capital Management, L.P. or its affiliates. In addition, if NewSight pays us amounts due for network operating and maintenance services fees through July 31, 2008 by that date, we will extend the maturity date of the Note to September 30, 2008, provided that fees for services after July 31, 2008 are paid as and when due. The Letter Agreement also provides that the Digital Signage Agreement dated May 25, 2007 by and between WRT and NewSight regarding CBL Mall Installations (the “CBL Mall Agreement”) is terminated. Our other agreements with NewSight, including the Digital Signage Agreement effective October 12, 2007 (the “Meijer Agreement”) and the Security Agreement effective October 12, 2007 (the “Security Agreement”) remain in full force and effect. The Letter Agreement provides that the amount due under the Note will be due and payable immediately upon the occurrence of one or more of the following events: (1) NewSight’s breach of or default under the Meijer Agreement, the Note, the Security Agreement, or the Letter Agreement (in each case after giving effect to any applicable cure periods described therein); or (2) NewSight’s completion of a financing transaction, excluding any financing of less than $3,000,000 solely from Prentice Capital Management, L.P. or its affiliates. Termination by NewSight of its engagement agreement with Lazard Freres will not constitute a default under the Note. The Letter Agreement specifies that, except as our company and NewSight may subsequently agree in writing, no additional credit shall be extended to NewSight by us pursuant to the Note or on trade credit terms. Sales to NewSight represented 42.5% of our total sales for the year ended December 31, 2007. The Letter Agreement, which appears as Exhibit 10 to this report, is incorporated by reference in response to this Item 1.01. A copy of the press release announcing our entry into this Letter Agreement is filed as Exhibit 99 to this report and is incorporated by reference into this Item 1.01.
In May 2007 Wireless Ronin and NewSight made a big deal of an announcement “Wireless Ronin Expands Digital Signage Mall Project with NewSight”
Wireless Ronin have a customer where, and we quote “Sales to NewSight represented 42.5% of our total sales for the year ended December 31, 2007″
Your customer (NewSight) owes you money, and you have extended credit terms and extended and extended and, err extended and they (the customer) have effectively defaulted on payments again and again.
It will be interesting to see whether this is in anyway a ‘related party transaction’
Obviously a very weird financial transaction and will we are sure be watched closely now by the US Securities and Exchange Commission (SEC).