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Lemelson Capital Demands Geospace Replace Leadership, Explore Company Sale

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Lemelson Capital Demands Geospace Replace Leadership, Explore Company Sale
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Lemelson Capital Management challenged the board of Geospace Technologies Corporation (NASDAQ: GEOS) Friday to explore a company sale, replace its top two executives and correct allegedly erroneous regulatory filings.

“CEO Rick Wheeler and CFO Tom McEntire have recently and knowingly allowed the filing of a materially misleading form 8-K with the Securities and Exchange Commission, failed to design and maintain controls over financial reporting, and allowed dysfunction and incompetence to lead to the loss of major contracts,” the Rev. Emmanuel Lemelson, chief investment officer at Lemelson Capital Management, said in a Friday statement.

Benzinga left a message with Geospace Technologies seeking comment for this story. 

Geospace's failure to renew services with Statoil ASA(ADR) (NYSE: STO) is indicative of management ineptitude and jeopardizes the odds of securing a critical Petroleo Brasileiro SA Petrobras (ADR) (NYSE: PBR) contract in 2018, Lemelson said. 

A change in leadership is seen to help “allay legitimate concerns and uncertainty now flooding the marketplace.”

Geospace’s $12.32 stock is trading around 52-week lows, down 90 percent since Wheeler took office in 2014 — even as oil and gas peers trend near 52-week highs. Lemelson, who owns 10 percent of shares on behalf of clients, said he considers the stock worth at least $38.

“As significant shareholders who take our fiduciary duties to investors seriously, we cannot stand by silently as Geospace, a company with vast under-reported and unencumbered assets, including near-record cash and liquidity, engages in a campaign of cash preservation and cost cutting measures which make no business sense,” he said. 

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