The shadow asked about a press report that TTSA had a "$37.4 million deficit." As Thomas R. Morrison indicated in his reply, that was an erroneous report, apparently written by a journalist who had a poor grasp of his subject matter. However, my understanding of the nature of the reporting error is a little different from that posted by Mr. Morrison. The figure does not relate to a shortfall in fundraising. Rather, in brief, TTSA "pays" certain officers and advisory board members in stock options. These options are recorded on books as liabilities under accounting rules, but it is actually not money owed to anyone. Someday these stock options may be worth something.
TTSA itself has directly addressed this issue in a more detailed fashion. On December 12, 2018, TTSA conducted a 30-minute telephonic "annual stockholders meeting." A transcript of that tightly scripted event has been posted on the TTSA website, and it is also attached to this post. The transcript includes the following exchange between Jim Semivan, director and vice-president of operations, and Louis Tommasino, chief financial officer.
Jim Semivan: We will now answer a few questions from the stockholders. The first question is please explain stock-based compensation and why it is at $37 million deficit. Louis, I would like you to answer this one.
Louis Tommasino: Thank you, Jim. It would be my pleasure to answer that question. Stock-based compensation is when stock options are part of a person’s compensation for their work on behalf of the Company. In our case, that is certain officers and advisory board members. The value of these stock options is a non-cash transaction recorded on our books based on the per share amount we have received from the public for selling our shares at $5 a share. This per share amount is then multiplied by the number of shares a stock option holder has vested. It was $37 million in our last filing but will go up as more stock options are vested. Under generally accepted accounting principles, or “GAAP” rules, the Company is required to record this transaction in our financial statements even though we do not owe it to anyone. It just reflects the fact that we have been paying our people like many startups and development stage companies do, in stock as opposed to paying them in dollars. I hope that answers the question.