A large Inksure Technologies (OTC:INKS) shareholder demanded that the software company immediately work to unlock shareholder value through a sale, merger or restructuring, according to a Schedule 13D/A filing with the SEC. Shareholders are hoping that the activist investor can convince the company to unlock value in the short-term.

James E. Lineberger Jr., who owns 8.2% of the company, said in a letter to the board that a strategic buyer for Inksure is in the best interest of all stakeholders given the company's lackluster growth and undervaluation. Moreover, action should be taken now while the company still has some momentum, a credible customer base, newly introduced technology, and cash balances to support its operations.

"As we consider the Company’s future based on its past operating and financial history and contrast it with its capital requirements, it is evident to us that immediate action is required by the directors to protect shareholder value," said Lineberger. "It is not in the best interest of stockholders (or for that matter any other stakeholders) for Inksure to remain independent."

Currently, Inksure is running an accumulated deficit of $17 million due to expenses related to its RFID project research and development. With no clear end in sight for the continuing development expenses and the uncertainty of the viability of the RFID project, the cash drain is likely to only continue.

There is also question as to management's integrity, "Further, it is clear to us that a substantial number of shareholders and other stakeholders of the Company have lost faith in the Chairman/CEO of the Company and believe that he has no credibility in the marketplace."

In the end, a sale process could generate substantial returns for shareholders and is probably the best available solution for the company. It will be interesting to see if the board agrees with the activist investor and hires and investment bank to explore its options. Meanwhile, this is definitely a stock worth watching!

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