Arosa Investment Management LLC wishes to express its gratitude for the outpouring of support from a broad base of shareholders over the prolonged election process that spilled over into a new year, included three scheduled meeting dates and required shareholders to submit ballots at least twice. Here are the figures from IVS Associates’ Final Report of the Inspector of Elections:

Director Candidate         For               Withheld
James R. Ward         687,269               8,625
Jack H. Jacobs         687,269               8,625
Alex Tabatabai         687,269               8,625
William H. Coates         428,749               9,180
Nicholas A. Loiacono         428,749               9,180
Laurence P. Birch         425,149               12,780

Shareholders voted approximately 61% for Arosa’s director nominees and approximately 38% for management’s candidates, with approximately a 75% shareholder turnout. Shareholders spoke resoundingly for change at their company and we, the newly elected directors, hear you and will faithfully carry out the mandate you have clearly voiced. We realize that our shareholders work hard for the investment dollars committed to Datatrak (OTC: DTRK) stock and we will work even harder to protect your investment.

We began our term serving you on Datatrak’s board as of January 8, 2016. There is a lot of work ahead of us and the improvements we seek at your company will take time and patience. Our first step will be to engage in constructive dialogue with our fellow directors already on the board. We expect our fellow directors to cooperate with us in order to take decisive actions to implement the changes that our shareholders demanded in the recent election. The most significant of these is restoring integrity to the Datatrak name, consistently growing revenues at industry average rates of at least 10-20% annually and turning your company profitable in 2016 by swiftly eliminating excess spending by the board and management.

We welcome the positive statements recently issued by Datatrak and its continuing directors. Where the continuing directors meet the recently expressed demands of shareholders for change, they will find highly cooperative and supportive board colleagues. For example, while we have not yet reviewed the details, we are pleased that Datatrak has comprehensively settled its patent litigation that cost millions of shareholder dollars and provided no return on investment. When and if the continuing directors deviate from the desires expressed by shareholders in the recent election, we owe a fiduciary duty to our shareholders to kindly remind them who really owns the company.

On that note, while we welcome constructive dialogue and cooperation amongst all board members, we unfortunately so far have encountered remaining directors who have doubled down on anti-shareholder practices on the eve of our arrival. For example, on the eve of our thrice delayed annual shareholder meeting, the former board implemented egregious changes to management’s golden parachutes and the company’s bylaws that significantly limited your new directors’ powers and enhanced the remaining directors’ powers. Their by-law changes ensure that the continuing directors may call board meetings but your new directors cannot. They appointed a new chairman who owns merely 1,776 shares of Datatrak after 17 years of serving on your board and receiving board fees. They were sure to fill all board committees without our involvement and to establish a structure where they have the ability to take action without including us.

It is our hope that our fellow directors reverse course and listen to the resounding voices of shareholders by taking action to undo their anti-shareholder measures. We encourage these directors, who will be up to election in 2016, to join us pro-shareholder directors to demonstrate to all of our shareholders, employees and customers that shareholders recently expressed mandate is respected and followed with swift and decisive pro-shareholder actions. Here are some suggestions:

  • Allowing the new board to select a new chairman of the board. A chairman should represent one of the larger shareholders in order to demonstrate alignment of interests with shareholders.
  • Allowing the new board to select the committee chairmanships and members of each committee, including the important compensation and audit committees.
  • Immediately disbanding the board’s executive committee, to ensure that all board decisions are made by the full board.
  • Acting to adjust management compensation to reasonable levels, including CEO and CFO compensation. It is also clear from his vote total that shareholders want us to replace our failed and disgraced CEO with an honest and respected executive who will revive Datatrak and lead us to consistent revenue growth and profitability achieved during 2016.
  • Providing shareholders greater transparency, specifically by seeking SEC registration for the company during 2016.
  • A comprehensive and in-depth review of the company’s expenses in order to reduce excessive and wasteful spending. The board is perfectly capable of performing its duties internally therefore eliminating unnecessary and expensive outside consultants such as “investor relations” and compensation consultants. The board should not outsource its essential functions such as determining and negotiating management’s compensation.

Your new directors’ interests are highly aligned with our shareholders and we will share alongside you the positive and negative experiences of owning Datatrak stock. We have “skin in the game” and will only benefit when all shareholders do. We are motivated to generate results for shareholders.

We look forward to continued discussions with our fellow directors, management and most importantly our valuable employees. Our employees can rest assured that your new directors are committed to the long-term success of Datatrak, and to help accomplish that we want to hear from you and listen to your thoughts, comments and concerns. We want to answer your questions. Please contact Alex Tabatabai anytime at 312-998-8755.