Hearing on the Knowles lawsuit in favor of shareholders rights delayed due to snow

My Note: The hearing on private investor Charles Knowles lawsuit was continued in the Delaware Chancery Court, due to the heavy snows. 

In the meantime, the allegations in the lawsuit have sparked a number of insightful comments by investors on the InvestorVillage webpage, here are some of my favorites:

Poster tugboat11360,  noted:
"Geeze, if these API guys would fight just as much to make a profit (that's increased revenues with appropriately managed costs) as they fight to protect their little fiefdom, then we wouldn't even need the Knowles initiative. 

What a lousy aftertaste this leaves. Even if API management "wins," their victory is Pyrrhic victory at best. 

IMO, management is perusing a failed strategy in this one. But, the upturn in the telcom equipment market-space and in general economic conditions, now global general economic conditions, will bail them out and likely make them "look good" - at least for a while."

I couldn't agree more. What are they thinking? Even if Knowles loses this year, we will win next time around. The "cat" is "out of the bag", and the truth stinks. 

Poster tbrown43 added this:

"it is about time they begin to behave like the employees they are. with shareholder's interests paramount to their own....not as a piggybank that can be watered down and devalued time and time again with no regard for the individual investor."

 Hear, hear. 

Charles Knowles (posting under the message board alias of trailgenius,) shared this interesting information with the readers at IV:

"The API Bylaws were originally written before Sarbanes Oxley.They have had several revisions but none significant. 

There has to be a majority of shares owned votes cast to have the Annual meeting.

This is significant in that the shares held by brokerage firms were voted on all matters before Sarbane Oxley. So there was always a majority of shares voted.
After Sarbanes Oxley the shares that brokerage firms held could be only used for limited issues like approval of the accounting firm.

Since Sarbanes Oxley was passed API has never had enough votes cast to have a majority( a quorum). They have included the voting on an accounting firm (with no choices as usual) so that the broker non votes could be included to bring the votes up to a majority of outstanding votes ( a quorum); SO, they could have a meeting.

This is significant as the need to vote on an accounting firm yearly is not specified in the bylaws.

Let me say that again" THE NEED TO VOTE ON AN ACCOUNTING FIRM YEARLY IS NOT SPECIFIED IN THE BY LAWS"

That clearly shows that API knows that it is impossible to change the BY LAWS as they have it written in their By Laws because there has never been enough votes cast to have a meeting or therefore to change the ByLaws in anyway.
( the BOARD, on a whim, with a majority can change the By Laws)

An important aside is that this year is the exception as there were enough votes cast to have a quorum !!! AND THIS WAS DUE TO THE GROUND SWELL OF SHAREOWNERS RISING UP AGAINST THE BOARD AND VOTING FOR PROPOSAL #6!!!

API says there are provisions in place to nominate candidates for the BOARD . Yes if one owned 5% and files a 13D and goes through lots of expensive hoops a person or group can possibly get an individual on the proxy for the board. One can send out their own proxy and show up at the meeting and do about anything if they get the votes.

Back to the point that API knows that there is no way (except by a majority of the board) to change the ByLaws.
This will be the question that our chancellor will decide on. We more that met the Roberts Rue of Law on suggested rule on changing the By Laws.Roberts rule of Law is the gold standard and to change Bylaws they recommend if a quorum present then a 2/3 majority to change the Bylaws. A Quorum is more that 50% of the outstanding shares.We had a quorum and got over 75% of votes cast.

We more that met the qualified candidate for nomination!! And they never interviewed him. Never wrote him saying thanks for your interest. Never anything. NEVER ANYTHING!

Hopefully that will also come up because it is significant that the credentials of the nominee are more that the sum of the current BOARD .

It is also significant that when we were told that "although we agree that Dr. Foglesong is qualified and connected we at this time can not afford another board member"
Dr. Foglesong replied with" I will be on the board at no compensation until API is profitable"
ONCE AGAIN THEY NEVER RESPONDED !!!

So we have met and beat their every reason not to change. I feel if given a chance we will beat them in court and have change.

Also significant are the numbers. I keep repeating in hopes that the chancellor will somehow see. This year we had a quorum.The board and management collectively own nearly 4 million shares. They unanimously said to vote against Proposal #6. They did not even get as many votes as they collectively own to vote against (3.5 Million against) !!! This is as significant or more significant that the huge number, 12 MILLION , who voted for Proposal #6.

Once again this year we had a quorum without the broker non votes( which API used to vote against proposal #6 which they can not do).

And the last huge fact is GIVEN THE VOTING RESULTS "THE BOARD NOT ONCE REACHED OUT TO THE SHARE OWNERS TO REACH ANY COMPROMISE"
This is great for us. It would have been in their favor to have at least asked what we would settle for.
It would have been PROFESSIONAL if they had written, emailed, or called Dr. Foglesong or me when receiving the certified letter( Rick Kurtz) to at least acknowledge receiving.Yet they just disregarded the nomination twice until contacting lighthouse.


The Bylaws I am sure protect the board and management from any legal cost. But maybe we can get that changed also!!!"

Interesting things happening in the world of Advanced Photonix.The good news for shareholders is that I anticipate they will continue to trailblaze the way in the industrial use of Time-Domain THz, for NDT, in a growing area of industries, and industrial applications along with replacement of nuclear gauges, inspection of the F-35, and in a variety of new areas.

If they would get their "internal house" in order it would certainly benefit the company and the shareholders.

Let's hope, the Board of Directors wakes up, and recognizes they are going to lose their fight with their shareholders. They are there to serve the shareholders interests in a fiduciary capacity

As always, the thoughts I post are my opinion. I don't attest to the accuracy of any third parties opinion or view posted above, and I will retract any commentary demonstrated to be erroneous. Nothing contained here is either legal or financial advice. Perform your own due diligence.