Ben Gordon is a former board member and a significant investor in Ability, Inc. Gordon sent a letter to the CEO and Board of Ability expressing his concern about the future direction of the company.

Dear Ability board,

As you know, my family and I are the largest outside shareholders in Ability. Like all of the public shareholders, we remain deeply concerned about the direction of the company and the actions of management and the controlling stockholders, many of which we believe are averse to minority shareholder interests.

Our concern was magnified by the three and twelve-month results announced May 16, which showed continued net losses. Indeed, the earnings release discloses, “The Company has suffered losses from operations, and has a net capital deficiency that, along with other matters, raises a substantial doubt about its ability to continue as a going concern.”

The company faces a critical situation and must take significant steps to reform itself and take immediate action.

Minority stockholders invested $60 million in Ability in December 2015. Since then, the company’s performance has plummeted, the company’s warrants have been delisted, all independent directors were pushed out or resigned, management has burned through most of its cash, the company has dramatically reduced its communication with investors, and the company is tangled in lawsuits.

As a result, today the company’s warrants are nearly worthless, the stock has plunged more than 90%, and Ability is perilously low on cash, with no clarity from the company as to how it will survive, let alone succeed.

We urge management to focus on the following steps and provide a clear plan for going forward:

First, we are pleased that the company has taken steps to add board members with the experience and capability to begin the process of rebuilding the company’s credibility. We urge further steps to ensure the independence of the Board and its ability to take appropriate actions.

Second, the controlling shareholders must act to fulfill their obligations to the company and the public shareholders. As a show of good faith to investors, the controlling stockholders should cancel their put option against the company. In 2015, the controlling stockholders negotiated the right to be able to put 1.2 million shares to the company for $12 million in cash, which currently sits in escrow. Considering the company’s poor performance, we think it would be irresponsible and morally reprehensible for the founders to personally take those funds out of the company. The controlling stockholders should voluntarily cancel their put right to show their commitment to and faith in the future of the company. Then, the independent new board members ought to decide if the $12 million should be used to pursue the productive growth of the company or to provide a dividend to the minority shareholders immediately.

Third, the company should begin to provide full, transparent communication with all shareholders and the public about its business plan and growth strategy going forward, in line with the level of transparency the company provided to the public in December 2015.

Taking these steps will help restore management’s credibility and underscore a commitment to doing the right thing for the company’s shareholders. Now is the time to act.

All of us as shareholders would appreciate your response. Thank you.

Sincerely,
Ben Gordon