Page 13 of 13 – SEC Filing
We supported the Proposed Investment
even though it would have resulted in substantial dilution of our holdings at a stock price that is 50% below the level at
which we invested in Strata, as we believe the Proposed Investment could reverse what we believe is a negative market
perception and expectations for the Company. We believe the infusion of $15 million in added working capital could enable the
company to invest as necessary in advertising via both traditional means and social media, and other expenditures that have
been cut to virtually zero due to capital constraints. The additional capital could also be used to move
Strata’s Optimal Dosing Technology (“OTD”) program forward – which we believe harbors vast potential
over the coming years, if nurtured through the regulatory process and adopted by patients, payers, and dermatologists.
It is also perplexing that the board voted
LuAnn Via to be chairman of the board (“COB”) in the days following its move to explore strategic alternatives, as,
based on the Company’s disclosure on Form 10-K for the fiscal year ended December 31, 2016, Ms. Via has no experience in
the healthcare industry or (more specifically) in the medical device space and was specifically brought on to the board for her
experience in retail sales and manufacturing and her extensive experience as a CEO and senior
executive of several publicly-listed companies, which we deem is unrelated to the Company’s business. Without specific
experience in the medical device space, we do not believe that Ms. Via is qualified to serve as the COB.
The Proposed Investor behind the rejected
Proposed Investment is a device specialist with vast experience investing in public companies and helping them grow their businesses.
They have access to executives who have been leaders at multiple healthcare entities that Strata can greatly use as fresh voices
at the board level, and we support both their investment in Strata and their vision for changes in management.
The board specifically noted in the Press
Release that:
“The
Board has not set a timetable for this process nor has it made any decisions related to any specific strategic alternatives at
this time. There can be no assurance that the exploration of strategic alternatives will result in a transaction. STRATA
does not intend to provide any updates unless or until it determines that further disclosure is appropriate or necessary.”
In
our opinion, the Company has rejected its best path forward without proposing another clear alternative. While we are open minded
regarding viable alternatives for a justifiable path forward, we would like the board to provide an update by January 22,
2018 on its exploration of its strategic alternatives. At such time, whether or not we receive an update from the Company, we may
reevaluate our investment and may consider taking action, including calling on all shareholders to vote for alternative leadership
at the board level at the next shareholder’s meeting. Please kindly respond to this letter by January 22, 2018 with the board’s
update.
Sincerely,
Sabby Management, LLC
/s/ Hal D. Mintz
By: Hal D. Mintz, Manager
