CHICAGO--(BUSINESS WIRE)--Arosa Investment Management LLC, the beneficial owner of approximately 9.9% of the shares of Datatrak International, Inc. (OTC:DTRK), today announced that it has initiated a proxy contest to elect three new directors at Datatrak’s annual meeting of shareholders scheduled to be held on November 11, 2015. These director candidates would fill the three director positions up for election on Datatrak’s five-member staggered board.
Arosa Investment Management intends to nominate the following three director candidates at the annual meeting:
Jack H. Jacobs is a principal of The Fitzroy Group, Ltd., a real estate development firm. He was previously a managing director of Bankers Trust, as well as a co-founder of AutoFinance Group, Inc. He has held the McDermott Chair of Politics at West Point since 2005 and has served as an NBC military analyst since 2002. Mr. Jacobs’ military career included two tours of duty in Vietnam where he was among the most highly decorated soldiers, earning three Bronze Stars, two Silver Stars and the Medal of Honor. He is on the board of the Medal of Honor Foundation and the USO of New York.
James R. Ward is the consulting chief information officer for a large non-profit market research and promotion organization. He was the founder and CEO of ClickFind, Inc., which conducted over 100 clinical trials worldwide before being acquired by Datatrak. He is the original inventor of the technology and past VP of Research and Development and VP of Customer and Market Strategy for Datatrak. He pioneered several web-based companies and software products beginning in 1994 and provided economic and technology consulting for Eastern Europe and South America governments at Texas A&M University.
Alex Tabatabai is the Managing Member of Arosa Investment Management LLC, the general partner of Arosa Investment Partners LP, a private investment fund. He previously served as Managing Member of Fernbank Partners LLC, the investment manager of Fernbank LLC, a private investment fund.
Arosa Investment Management strongly believes that Datatrak is in dire need of new leadership at the board level to address the following problems that it believes exist at the company:
• Dismal stock performance: Datatrak’s stock has returned approximately -38% for shareholders over the past five years and approximately -94% for shareholders over the past ten years. Arosa Investment Management believes that shareholders deserve better than this performance.
• Continuing significant net losses: Datatrak reported net losses of $1,292,834, $128,902, $1,539,348 and $1,006,887 on revenues of $11,010,792, $10,900,711, $9,716,225 and $7,926,342 in fiscal years 2014, 2013, 2012 and 2011. Datatrak reported even greater net losses in fiscal years 2007, 2008 and 2009.
• Excessive executive compensation: With revenues of only $11,010,792 in fiscal 2014, Datatrak paid its CEO and CFO combined cash compensation of $1,073,737. This information is contained in Datatrak’s annual report filed with the OTC Markets on March 13, 2015, but surprisingly it is not included in the abridged annual report that Datatrak mailed to shareholders with its proxy statement for the annual meeting. The CEO and CFO received similar levels of compensation in 2013. These figures do not include the equity awards that have been granted to the CEO and CFO on top of their regular cash compensation.
• Poor corporate governance: Datatrak maintains a staggered board and an anti-shareholder poison pill, with a specially granted exception under the poison pill to the company’s Chairman/CEO. Datatrak has maintained a convicted felon on its board of directors and as chairman of its audit committee since 2009 and has failed to make the required public disclosures of this felony conviction. Datatrak’s new proposed nominee for the board is a current Datatrak employee. Arosa Investment Management believes that the Datatrak board recently completed an internal investigation relating to the conduct of its Chairman/CEO. Arosa Investment Management calls on the Datatrak board to immediately release the results of this investigation. Based on its review of the board’s decisions over many years, Arosa Investment Management believes that the Datatrak board does not act as an appropriate check against the Chairman/CEO’s actions and desires.
• Shareholder dilution: Although Datatrak’s Chairman/CEO stated in his recent annual report cover letter that “this management team has not raised capital through… highly dilutive equity infusions in the last six years that we have managed this company,” Arosa Investment Management believes this statement is false and misleading. Since 2009, Datatrak’s shareholders have been diluted by approximately 32.25% through stock awards to executives and directors—shareholder dilution that brought little to no additional capital to the company. In addition, Datatrak has reported in its own annual report that “on July 1, 2010, the Company privately placed 357,857 Common Shares with certain members of the Board of Directors and key employees.” This special offering for insiders was made at a 15% discount and occurred over two years after the current Chairman/CEO was appointed Chairman of the Board.
• Minimal board share ownership: Datatrak’s outside “independent” directors have little “skin in the game,” owning only 0.79% of the company’s stock. Arosa Investment Management believes that this provides the outside directors with little incentive to seek returns for shareholders and exercise appropriate oversight over management.
Shareholders will receive a proxy statement and proxy card from Arosa Investment Management. You may also obtain a proxy card from Arosa Investment Management’s proxy advisor as provided below. We urge you to cast your vote on Arosa Investment Management’s proxy card.
Shareholders may have already received a proxy statement and proxy card from Datatrak’s management. We urge you not to return management’s proxy card. If you have already returned management’s proxy card, you may revoke it simply by now voting on Arosa Investment Management’s proxy card.
If you own shares of Datatrak, we would like to hear from you. We urge you to call us so that we can provide you with additional information and our proxy materials. Please contact Alliance Advisors, Arosa Investment Management’s proxy advisor, toll-free at 855-737-3183.
Arosa Investment Management calls on the Datatrak board to comply with its legal obligations and not interfere with the right of the company’s shareholders to elect three of five directors at the already announced annual meeting to be held on November 11, 2015.