DATATRAK INTERNATIONAL, INC. CLEVELAND, Oct. 27, 2015 /PRNewswire/ -- DATATRAK International, Inc. (OTCQX: DTRK), the leader in developing cloud-based, unified dClinical((TM)) technologies and delivering related services for the clinical trials industry, today responded to Arosa Investment Management's ("Arosa/Mr. Tabatabai's") intent to gain control of the Company without paying shareholders a premium for their shares.
DATATRAK's Board of Directors and management team issued the following statement:
"Arosa/Mr. Tabatabai's latest Press Release demonstrates his failure to understand the realities the Company faced when Laurence Birch took over as CEO in 2009, the state of the business today, and the solid foundation for growth established by the current DATATRAK team. DATATRAK has made significant progress in all areas of the business and we are poised for significant future growth if we continue to execute on our strategic plan. We strongly believe that any disruption to the Company and its management and Board would derail the momentum we have built over the past several years. We believe Arosa/Mr. Tabatabai's campaign is a gross distortion of the facts designed to trick shareholders into supporting him in his campaign to control your company--a change of control that we believe would likely put your investment at significant risk without paying a premium for the privilege.
As Arosa/Mr. Tabatabai acknowledges, DATATRAK has a great future ahead of it precisely because we invested in our technology, in Sales and Marketing, and most importantly, because we invested in our people. Arosa's nominee, Jim Bob Ward, can attest that when Laurence Birch took over in 2009, the Company had been delisted from the NASDAQ, had little cash and negative cash flow, and had no ability to raise capital. In spite of these disadvantages, the management team, led by Mr. Birch, stabilized the business and began investing operational cash flow back into the Company. In addition, we upgraded the quality of our already independent Board with the addition of two highly qualified independent Directors. To attract and retain a high quality management team at a then unstable company with an uncertain future, we sought to align the interest of our employees with those of all shareholders. Not only did we enter into a modest purchase plan in 2010 that Arosa wrongfully criticizes, but we also initiated an employee stock purchase plan and a 401K match, further aligning the interest of our employees with shareholders and giving our employees motivation to stick with DATATRAK during our turnaround. Indeed, the small private placement Arosa/Mr. Tabatabai now critiques was on more advantageous terms than were available to it through other third party financing at the time. With respect to many of Arosa's arguments, shareholders would be right to ask themselves whether Mr. Tabatabai is being disingenuous or simply doesn't understand our business.
The DATATRAK Board and management team holds itself to high professional and fiduciary standards that have allowed us to work through adversity to carry out our vision to accelerate drug and medical device development from Concept to Cure. We have built a great Company with a great future - any suggestion from Arosa/Mr. Tabatabai to the contrary is just false.
Before addressing the misleading Arosa/Mr. Tabatabai statements, we continue to call for the Arosa/Mr. Tabatabai group to address the issues that are most important to our shareholders considering this very important Proxy Vote; including:
-- Why didn't Mr. Tabatabai or Mr. Ward bring any concerns to management in
multiple previous meetings? And further, why did these gentlemen state
just weeks ago that they fully supported management and its Board
candidates? With this pattern of disingenuous behavior, how can we
expect them to be productive members of the Board?
-- Exactly what is the Strategic Plan from Arosa/Tabatabai that will drive
our business to better results?
-- The "plans" Arosa/Mr. Tabatabai states in its Proxy lack any
specificity around business growth drivers/technology/customer
acquisition, etc.
-- Who is Arosa/Mr. Tabatabai aligned with? Why will he not divulge the
extent of his group's interests in DATATRAK?
-- Why has Arosa/Mr. Tabatabai failed to address our substantial concerns
about Jim Bob Ward's suitability for the Board including the prior
litigation between Jim Bob Ward and the Company? DATATRAK would
encourage its shareholders to look into Mr. Ward's past litigation with
the Company to uncover the background on why the Board feels strongly
that he is an unsuitable candidate for the Board.
-- Why does Arosa/Mr. Tabatabai confuse the facts and fail to acknowledge
or address the poor stock performance while Jim Bob Ward was part of the
management team, including years 2007, 2008 and 2009, where the Company
lost 97% of its stock value and incurred losses of more than $32
million?"
In regard to Arosa/Mr. Tabatabai's misleading allegations:
-- Arosa/Mr. Tabatabai Claim: "Arosa Investment Management's proxy
statement states that with revenues of only $11,010,792 in fiscal 2014,
Datatrak paid its Chairman/CEO and CFO combined cash compensation of
$1,073,737."DATATRAK FACT: Arosa/Mr. Tabatabai is confusing and misusing
the term cash compensation. The base salaries of the CEO and CFO
combined were $557,000, NOT $1,073,737 as Arosa/Mr. Tabatabai stated in
his misleading press release. Additional compensation included (1) bonus
earned under a Board approved executive compensation plan developed with
the assistance of Towers Watson, a well-respected external executive
compensation consultant, part of which the executives elected to take in
stock in lieu of cash to be better aligned with shareholder interests;
and (2) a 2011 Retention Bonus that came due in 2014 that the executives
also took in stock instead of cash. In 2011, retaining our key people
was vital to the future success of the organization.
-- Arosa/Mr. Tabatabai Claim: "Datatrak maintained a convicted felon on its
Board since 2009 and as chairman of its audit committee. This was not
disclosed in any of Datatrak's annual reports since 2009, despite this
being a clear disclosure requirement under OTC rules."DATATRAK FACT:
DATATRAK continues to satisfy its ongoing disclosure obligations through
periodic reports filed with the OTCQX Market. Although generally not as
extensive as the Company's prior filings with the SEC, these reports
continue to contain the material information regarding the Director's
qualifications, including information with respect to DATATRAK's
Directors and nominees which the Company believes is material to an
evaluation of their ability and integrity to serve as members of its
Board of Directors. The DATATRAK Board takes its disclosure
responsibilities and obligations very seriously. Arosa/Mr. Tabatabai
continues to attempt to capitalize on a personal tragedy to advance his
agenda, all while engaging in a fishing expedition without the benefit
of the full array of facts available to the Board at the time of the
incident in question. The reality is, that at the time of the incident
in question (and while we were an SEC reporting company), the Board
engaged in an extensive review of all of the facts surrounding this
incident (including various facts related to the nature and
circumstances of this tragic automobile accident which was a matter of
public record), and unanimously determined, as permitted by the
applicable SEC guidance, that no disclosure was required of the
proceedings related to the incident as the Board determined that the
proceedings were not material to an evaluation of the ability or
integrity of the Director to serve on the Board. Despite Arosa's claims
to the contrary, the OTCQX's disclosure regime is not designed to be
more stringent than the SEC guidance, but rather generally provides a
short-form version of the comparable SEC reporting regime. This was
without question a tragic event, but has had NO impact on our Company or
the performance of this Board.
-- Arosa/Mr. Tabatabai Claim: "Datatrak's Board recently completed an
internal investigation regarding the actions of its Chairman/CEO. Why
has Datatrak not disclosed the matters addressed and conclusions reached
in this investigation?"DATATRAK FACT: Arosa's prior statement of belief
in the existence of Board investigation has now somehow morphed into a
statement of fact with purported details. This is part of a pattern of
unsubstantiated claims and backchannel rumor mongering engaged in by the
dissident shareholders, all apparently in an effort to distract the
shareholders from the successful turnaround of the Company by management
and the fact that the current leadership team and Board are best
prepared to continue to execute on our long-term strategy.With respect
to the specific claim, as a matter of policy, the Board does not comment
on the existence of, or results of, internal investigations, except if
the results were material and required disclosure to the shareholders.
Likewise, as a matter of good governance, our policy is that in the
event the Company is required to investigate a matter (no matter how
substantive the matter might appear at first glance), the matter would
be conducted by the independent members of the Board of Directors using
outside and independent professionals and resources.
-- Arosa/Mr. Tabatabai Claim: "Datatrak's Board granted a special exception
under its anti-shareholder poison pill to its Chairman/CEO. This special
exception is shown as an attachment to Datatrak's quarterly report filed
with the OTC Markets on May 15, 2013."DATATRAK FACT: Arosa/Mr.
Tabatabai's egregious claim refers to a time when CEO Laurence Birch was
interested in purchasing more shares of DATATRAK to show his enthusiasm
for the future of the Company, to demonstrate his belief the stock was
undervalued, and to further align his interests with ALL shareholders.
The independent Board strongly believed that this was a positive signal
to the market but was also aware that this activity had the potential to
trigger the poison pill, which was set at 15%. As a result, the
independent Board made a decision to expand the poison pill threshold to
20% in order to allow Mr. Birch an opportunity to continue to align
himself with shareholders. Contrary to Arosa/Mr. Tabatabai's erroneous
claims, Mr. Birch's shares have no more rights than any other
shareholder. They are regular common shares purchased on the open
market. Mr. Birch bought these shares alongside shareholders. Mr.
Birch's share position is still less than 15% to this day. The expansion
of the poison pill was taken as a precautionary measure. Further,
DATATRAK has asked Arosa/Mr. Tabatabai to confirm that he and his
proposed slate are not, in fact, triggering the poison pill themselves,
yet Arosa/Mr. Tabatabai have refused, despite several opportunities to
do so, to respond to this request. The Company takes this issue very
seriously, and wonders why Arosa has not yet responded.
-- Arosa/Mr. Tabatabai Claim: "Datatrak's management falsely and repeatedly
refers to having avoided dilution to shareholders."DATATRAK FACT:
DATATRAK has gone out of its way not to dilute shareholders through
broad equity placements. The Company did do a nominal ($190,000)
placement to Board and management members in 2010 to demonstrate to
fellow shareholders the Company's confidence in its plan by putting
Executive and Board capital at direct, shared risk with
shareholders.Arosa/Mr. Tabatabai continues to claim that this was
positioned such that insiders would benefit, when in fact the offer was
done to show alignment with shareholders and support of the Company and
on terms that were less advantageous at the time in respect to what
would have been financed in a third-party private placement. That said,
there has been normal dilution that has been driven by management
incentives (with plans developed by independent compensation consulting
firms, including Towers Watson). However, Arosa/Mr. Tabatabai continue
to mislead shareholders about total dilution. A significant portion of
the dilution referred to by Arosa/Mr. Tabatabai has been the result of
stock PURCHASED by employees through the Company's ESPP and by 401K
awards to employees in a match that was initiated to share the value
created by the Company's employees WITH its employees as is standard in
most well run organizations. These are all programs that align the
employees of DATATRAK DIRECTLY with those of their fellow
shareholders--Arosa/Mr. Tabatabai is aware of this fact, but continues
to state otherwise. Is Arosa/Mr. Tabatabai stating that he would cancel
these programs, thereby harming employees and misaligning the interests
of the shareholders and the employees?
-- Arosa/Mr. Tabatabai Claim: "Datatrak's management falsely states
extensively that Arosa Investment Management's Board candidate James R.
Ward is "unsuitable" and "not qualified" to be on the Board. If Mr. Ward
is "unsuitable" and "not qualified" for service and his contribution to
the company's technology was not significant, then we believe Datatrak's
management should explain why they have recently been communicating with
Mr. Ward in effort to hire him as a consultant or employee."DATATRAK
FACT: DATATRAK HAS NOT been in recent communication with Mr. Ward with
regard to his employment at the Company, this statement is completely
false. The Company did meet with Mr. Ward several weeks ago out of
respect for his position as a large shareholder of the Company. During
this meeting, Mr. Ward misrepresented himself and his intentions as he
was extremely supportive of the management team, and its Board nominees,
including Mr. Coates. The Company's view of Jim Bob Ward is colored by
his former co-workers at both ClickFind and DATATRAK, several of which
are still employed by DATATRAK today and have expressed outright concern
at the thought of having Jim Bob Ward as a part of the Company again.
Arosa claims in its October 12(th) press release that, "Jim Bob Ward is
the original inventor of the technology." However, the statement is
completely false, as Jim Bob Ward is not the listed inventor on any of
DATATRAK's current patents. Yet another misrepresentation by Arosa/Mr.
Tabatabai and Mr. Ward.
-- Arosa/Mr. Tabatabai Claim: "Datatrak's shareholders have suffered
significant net losses year after year, while management benefits from
what Arosa Investment Management believes is excessive cash
compensation, special discounted equity offerings and highly dilutive
equity awards to insiders." DATATRAK FACT: DATATRAK agrees with
Arosa/Mr. Tabatabai's acknowledgement that net losses in fiscal years
2007, 2008, and 2009 were significant. This was at a time when Jim Bob
Ward was still a member of the management team. Mr. Birch did not
inherit the cash strapped business until 2009. The years that followed,
2010 - 2015, under the leadership of Mr. Birch, led to the Company
rebounding from its dire financial position and proving it could execute
a profitable business model. From that point on, the Company chose to
use its operating cash flows to reinvest in the business, through
investments in R&D, marketing and sales, and a high quality leadership
team. These investments have led the Company to where it is today, well
positioned for growth and success.
-- Arosa/Mr. Tabatabai Claim: "Since he [Mr. Birch] was named Interim CEO
on January 21, 2009, the stock has returned 224%." DATATRAK FACT:
DATATRAK appreciates Arosa/Mr. Tabatabai's acknowledgement of the 224%
Mr. Birch has returned to shareholders during his tenure. We believe the
stock remains undervalued, which we believe will only be realized if we
are given the opportunity to see our long-term strategic plan to
fruition.
-- Arosa/Mr. Tabatabai Claim: "Datatrak's management tries to scare
shareholders with the boilerplate slogan that Arosa Investment
Management seeks to take control of the Company without paying
shareholders a premium."DATATRAK FACT: DATATRAK's statement that
Arosa/Mr. Tabatabai is attempting to take control of the Company without
paying shareholders a premium is not an attempt to scare shareholders,
it is the truth. By its own admission, Arosa is attempting to control a
majority of DATATRAK's Board. If it were not attempting to effect a
change in control, Arosa/Mr. Tabatabai would have approached the
management team with constructive suggestions for change during one of
several in-person meetings held between the Company and Arosa. Instead,
Arosa/Mr. Tabatabai misrepresented his intentions and chose to engage in
a very costly proxy contest to pursue his own interests.
-- Arosa/Mr. Tabatabai Claim: "Datatrak's management falsely states that
"Arosa/Mr. Tabatabai has presented no new ideas and has no plan. Arosa
Investment Management's plan for the company is described on pages 2-5
of its proxy statement."DATATRAK FACT: DATATRAK has reviewed Arosa/Mr.
Tabatabai's, "Plans for the Company" as highlighted in one page of its
proxy statement. When it comes to running the business, Arosa has
presented no new plans that would put the Company in a better position
than its current strategy and position itself for growth in the future.
The business activities suggested by Arosa, such as conducting a
competitive analysis, exploring strategic alternatives, and initiating
communications with industry participants are all things that DATATRAK
has already done or is already doing. The lack of industry, Board and
management level experience of Mr. Tabatabai are apparent from this
proposed "plan".
DATATRAK urges shareholders to vote "FOR ALL" of DATATRAK's highly qualified, experienced director nominees: Laurence Birch, William Coates, and Nicholas Loiacono on the WHITE PROXY CARD.
These nominees have a significant track record of aligning themselves with shareholders and are the right individuals to build upon the Company's current momentum.
If you have any questions on how to vote your shares, please call Morrow & Co., LLC toll free at (800) 662-5200 or (203) 658-9400.
CAUTION: Any vote for Arosa/ Mr. Tabatabai's control slate has the potential to:
1. Curtail DATATRAK's recent history of success and may place the company
back into severe financial distress;
2. Inhibit important partner and customer relationships
3. Take control of the Company without paying shareholders a premium.
Do not sign or return any BLUE proxy card sent to you by Arosa/Tabatabai. Simply discard it.
If you have any questions or need assistance in voting your WHITE PROXY CARD, please contact Morrow & Co., our proxy solicitor, toll-free at 800-662-5200, or via E-mail at DTRK@morrowco.com.
DATATRAK is a worldwide technology and consulting Company delivering digital clinical solutions and related services for the clinical trials industry. The Company delivers a portfolio of software solutions through the unified dClinical((TM)) platform, safely accelerating clinical research, from Concept to Cure(®).
About DATATRAK
DATATRAK International is a worldwide technology and services Company delivering Unified dClinical((TM)) solutions and related services for the clinical trials industry. DATATRAK built its multi-component, comprehensive solution on a single, unified platform and expanded this concept to include services delivery via DATATRAK's Clinical and Consulting Services group. The Company delivers a complete portfolio of software products designed to accelerate the reporting of clinical research data from sites to sponsors and ultimately regulatory authorities, faster and more efficiently than loosely integrated technologies. The DATATRAK ONE(®) software solution, deployed worldwide through an ASP or Enterprise Transfer offering, supports Phase I - Phase IV drug and device studies in multiple languages throughout the world. DATATRAK has offices located in Chicago, IL; Cary Research Triangle Park (RTP), North Carolina; Bryan, Texas; and Cleveland, Ohio. For more information, visit http://www.datatrak.com.
Except for the historical information contained in this press release, the statements made in this release are forward-looking statements. These forward-looking statements are made based on management's expectations, assumptions, estimates and current beliefs concerning the operations, future results and prospects of the Company and are subject to uncertainties and factors which are difficult to predict and, in many instances, are beyond the control of the Company, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. For a list of certain factors that may cause actual results to differ materially from those contemplated in these forward looking statements, please see the Company's report filed with the OTCQX Market on March 13, 2015 announcing its results for the full year period ended December 31, 2014. The Company undertakes no obligation to update publicly or revise any forward-looking statement whether as a result of new information, future events or otherwise.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/datatrak-issues-statement-regarding-arosa-investment-managements-false--misleading-statements-300167222.html
SOURCE DATATRAK International, Inc.
