New Hope Capital Issues Letter to Tapinator Inc. Board and Shareholders

GREAT BARRINGTON, Mass., March 11, 2020 /PRNewswire/ --

March 11, 2020

The Board of Directors and the Shareholders of Tapinator Inc
110 West 40^th Street
NYC, NY 10018

Dear Members of the Board and Fellow Shareholders,

I am writing to you on behalf of myself, David Unger the sole owner of New Hope Capital and the owner of 21,875 shares of Tapinator which represents about 4% of the company as well as a holder of 15,625 warrants that are "way out of the money".  For your information, my basis in this stock is approximately $17 per share compared to today's $4 share price.

I have been a shareholder of Tapinator for almost three years and during that period, I have done my best to try and help the company grow.  That included setting up many meetings with various experts in the field as well as contributing capital for a major Crytpto Art project that the company had undertaken which failed because of management major errors.  During the period, I met with Ilya Nikolayev and Andy Merkatz almost monthly either in person or on the phone to discuss both strategic and partnership possibilities.  All of my suggestions were declined or not acted upon properly by management.

In September of 2019, Andy and Ilya explained that the company planned to do a $10-$15 million offering with a NY based Investment Bank.  I told them that given the fact that the company only had a $4 million market cap, very little sales and a very small public float, the thought of doing an offering for what would have been at the time 300% larger than the Company's current market cap was HIGHLY unlikely. However, they proceeded thereby spending more than 4 months and several hundreds of thousands of dollars.  I even went as far as to attend the Shareholders meeting in December to further question this path and my suggestions and comments were once again ignored.

I strongly believe that management failed to explain the opportunity properly.  Instead of marketing the company to investors by explaining the company's solid revenues that were being generated from hundreds of games with many more in the pipeline, they took meetings with sophisticated investors who were told that this company should be compared to 6 companies that have a market valuation of more than $100 Billion; Activision, Electronic Arts, Zynga, Take Two Interactive, Gluu Mobile and Scientific Play versus Tapinator who has less than a $4 million market cap.  These companies generate more than $1 billion in annual revenue and Tapinator generates less than $4 million.  Being in the same industry does not equate to being identified as a peer company.

Ultimately, these time consuming and costly efforts did not warrant more than a few million dollars pledged in a $14 million offer.  Is should be noted that I personally committed to invest an additional $100,000 in this offering. 

Instead of licking their wounds and getting back to business, the company has decided to save $200,000 per year by delisting the company to a NON-REPORTING status.  Andy and Ilya and the Board should know that this effectively takes all shareholder control and gives it solely to themselves.  If these changes were to be put in place, they are no longer required to issue audited financial statements, or have Annual Shareholder Meetings and because they hold 2 of 4 Board seats, Andy and Ilya have the votes to do anything they want.  It should be noted that they own approximately 25% of the company.  It should also be noted that the two Board Members, own about 1% of the company. 

As a CPA, I would strongly advise that the company carefully audit the more than $3 million a year the company spends before making the decision to go away from being a fully reporting company.  It should be noted that both the CEO and CFO each earned $312,000 last year (including a $62,500 bonus each were paid in 2019) which represents about 20% of the revenue of the company.  Given the fact that the stock has declined from the equivalent of $75.20 on January 1, 2018 to $11.60 on January 1, 2019 to less than $4 today, shareholders should get a different perspective from new board members who own more than 1% of the company.   We the shareholders should refuse to allow for such egregious pay going forward. 

For the past 4 months, I have been blocked by Andy, Ilya and their legal representative to review the company's minutes along with any underlying board package and exhibits.  As many fellow shareholders agree, it is very important that a micro-cap company like Tapinator take into careful consideration the shareholders rights.  There is always more inherent risk and potentially higher reward related to investing in these types of companies so there is a need for protection knowing that these safeguards are in place.  I urge any shareholder who is interested in this company to reach out to Management and require them to show them the minutes, the board packages and exhibits.

In my opinion, there are many more examples of poor management decisions over the past few years but the one that is most concerning is management's reluctance to notify shareholders of its decision to reject my offer to buy the company.  The purpose of this letter is to educate my fellow shareholders on Tapinator, past, present and future.  First, I feel it is time to change management and the Board.  I have made a PUBLIC offer to acquire the company at the equivalent of $5.05 per share.  This is more than a 25% premium to current shareholder price and happens to be the same price at which the failed offering tried to achieve.  Since Management has declined my offer, I will publicly extend this offer to all shareholders in Tapinator stock in an effort to garner 51% of the voting control of the company.   You should know that having been involved with more than $1.5 billion of mergers and acquisitions, I am very capable and willing to turn this poorly run little company around.  I also have experienced executives waiting in the wings who could take over the company and run it in my opinion, better and for much less money.  I will offer all shareholders to join me to try and recoup some of the more than 90% that has been lost over the last 2+ years.

If you want to reach out to me, feel free to call me at 413 645 3357 or send me an email to [email protected].  If you want more information on me, you can check out www.Newhopecap.com. 

Yours truly,

DAVID W. UNGER
TAPINATOR INC.
SHAREHOLDER

SOURCE New Hope Capital