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Message: Re: Baroni's fees .. Ease, I think that if we discover...Thanks for the info
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Dec 29, 2009 03:24PM

Dec 29, 2009 04:13PM

What info? That post contained zero "information". It contained a potentially flawed observation. While Brian is correct in suggesting that if Baroni took fees in the form of equity in PTSC, that would be a positive indicator (which I believe anyone here is capable of concluding), he is IMO incorrect when saying "in some form of PTSC equity".

Correct me if I'm wrong, but I believe there are only three forms of equity that could be offerred:

1. Preferred shares, which IMO would probably make the issue rather moot and would probably not be a significant indicator of anything.

2. Common shares, which would indeed be a positive indicator IF they were shares priced/timed at the time he initiated his effort, or in a quantity to result in a realistic dollar value based on the PPS at that time.

3. Options which could be converted into an equity position. However, this would only be a positive indicator if the strike price for those options was at or near the prevailing PPS at the time Baroni and company initiated their effort. Options at a strike price of a penny?

I suspect Brian was suggesting either Common Shares properly priced/timed or Options at a strke price in the neighborhood of the prevailing PPS at the time he entered the consulting agreement. It was a good observation, or perhaps more a good "heads up" for something to look for in the 10Q.

I'm not sure how most would feel if he was offerred Preferred Shares with generous terms. For me, it would just be a matter of "how many under what terms?", as that would be the pivotal question - it could be equated into dollars and then assessed.

I disagree with Brian when he says that "I do not believe his taking equity for payment would create conflict of interest issues for him", in that such an arrangement would almost definitely create a conflict of interest for PTSC, and indirectly for Baroni. If PTSC pays Baroni in such fashion, PTSC would probably be obligated to take what ever action(s) is recommended by Baroni.

- Why would Baroni accept such a fee arrangement if the results of his effort were not intended to be put to use? Also, I assume the thought behind such an arrangement would be to create an incentive for developing the best plan of action for PDSG. However, I'll grant you that Baroni could easily look beyond PDSG, to the MMP, for the source of appreciation for his equity position. But then, how does the incentive for improving PDSG kick in?

- If Baroni's recommendations are not put to use, why should Baroni be potentially further rewarded (via the MMP) beyond a simple cash payment for his time for a failed/unacceptable effort regarding PDSG?

Having considered all this, IMO it would probably still be a positive indicator for PTSC, but it would be unclear as to which aspect of PTSC - Baroni's perceived potential of PDSG, or of the MMP, or some combination.

JMHOs,

SGE

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