Matthew Stecker and Thomas Thekkethala, Directors on the Board of SITO Mobile Ltd., Issue Open Letter to SITO CEO

JERSEY CITY, N.J.--()--Matthew Stecker and Thomas Thekkethala, directors on the Board of SITO Mobile Ltd. Issue Open Letter to Tom Pallack, CEO of SITO to address allegations made in 8-K on August 1.

To: Tom Pallack, CEO Sito Mobile, Ltd.

Cc: Directors Brent Rosenthal, Mike Durden, Itzhak Fisher; Andrew Hulsh, Pepper Hamilton, LLP

From: Matthew Stecker and Thomas Thekkethala, Directors, Sito Mobile, Ltd.

Date: August 8, 2017

Via Electronic Delivery and Public Release

Dear Mr. Pallack,

In response to our letter of July 28, 2017, you and three other directors signed a letter addressed to us, which you delivered via email and also released via an 8-K dated August 1, 2017. We are compelled to respond publicly to address some of the desperate allegations and outrageous threats made in that letter as well as to point out the continued failure of your board faction to include all duly elected directors in the company’s board deliberations.

First, it needs to be noted that the letter you signed was issued on Sito letterhead, signed by you as CEO and issued jointly on behalf of you and the three other directors copied on this letter. Rather than release this letter speaking as four individuals, you have signaled that this letter – by virtue of being on company letterhead (and released as a company 8-K) – is a communication of the company and its board. As sitting directors, we were not given the opportunity to deliberate on the issues or the response. Like much of the company’s recent actions, this letter reflects a continued pattern of action purported to be properly undertaken by the company and its board, but without exposure to or consideration by all duly elected directors.

While a majority of the board may have the right to approve certain corporate actions, the existence of such a majority does not give its members the right to deliberate and consider board matters without affording all duly elected directors the opportunities to have input into and knowledge of the company's actions. We are shocked that the company continues to operate in this way, and that its law firm, Pepper Hamilton (copied on the August 1 correspondence), appears to have encouraged this practice – a practice that obviously breaches the duty owed to all directors to allow them to participate in the ongoing discourse of the company. This unilateral exclusion is also an insult to the shareholders who elected us as part of a team designed to overcome the transparency failures of the prior board.

Turning to the content of your response, it is telling that you chose not to respond to the substantive disagreements that we addressed in our open letter dated July 28, 2017, including the exclusionary board proceedings, secretive financing, and unwarranted compensation for an unqualified management team. We suspect that this is because our assertions are factual and not refutable. Instead, you merely made two brief statements “in lieu of responding” to the substantive points in our letter. This shows nothing but contempt for the public shareholders who are highly interested in these fundamental issues of corporate governance. In addition, we find the outlandish public assertion that you have or have planned to ”report” our actions to the SEC to be misguided, but untroubling (though potentially libelous). If anything, we encourage more daylight in this situation and we are confident that any independent investigation will reveal the following:

- Your director majority, purporting to act as a duly constituted board, conceived of and ran an end-to-end private offering of the company’s securities entirely without the knowledge of one third of the board or the board’s Audit Committee chairman. We were only made aware of any aspect of this matter after the offering had been fully subscribed, through a perfunctory vote taken once the financing was already effectively finalized. Further, this financing was done without competition, below market, and selectively offered only to shareholders favored by your majority.

- Your director majority installed a management team whose CEO is a board member, whose head of sales is a brother of one of the company's largest shareholders, and whose CFO has significant history with the company’s chairman. While we continued to request to the board that – especially given the inherent conflicts in such a team – the company should interview alternative candidates, your majority continually refused to do so – failing to consider even a single alternate candidate for any of the roles making up the newly installed management team.

- Your director majority ignored our sound advice that – given the unproven nature of this team and the conflicts inherent in its makeup – significant incentive compensation and costly long-term employment agreements for this team should be postponed until after a trial period.

- Your director majority has instead issued compensation to that team that exceeds all norms for companies our size.

We have consistently been the champions of good governance, fair dealing, and – above all – responsible use of company funds. The record will show that we have been consistent advocates for competition and decreased compensation.

Additionally, your letter makes the outrageous claim that we ”represent” some particular shareholder or group of shareholders. We do not. To the contrary, as independent directors, we represent all shareholders – just as you should. Many shareholders have contacted us during this disagreement to express their views, and we take seriously our obligations to be open to communications from all shareholders.

Again, we are open to any impartial and independent analysis of the actions of all actors in this situation. We are not the directors who ran a financing without informing the board. We are not the directors who gifted an outrageous management compensation package to an unproven team riddled with conflicts.

We look forward to continuing the vigorous representation of all shareholders and insist again that the company both acknowledge and fulfill its duties to include us in the board's activities and deliberations moving forward. There are many pressing issues facing Sito, and we encourage you to quickly call its entire board to order so that we can all discuss the substantive facets of Sito’s business.


Matthew Stecker

Thomas Thekkethala


Matthew Stecker


Matthew Stecker