The company issued a pair of press releases late last week and on Monday refuting many of the claims that Adam Adamou, a former chair, made in a recent letter to shareholders.
The sides are sparring ahead of the annual general meeting on July 31, when shareholders are to elect a new board of directors.
In press releases, IDC said Mr. Adamou's strategy of growth by acquisition had unduly cost the company money and that he had made an unauthorized filing on SEDAR under IDC's profile on July 9, which IDC said has since been removed.
Further, IDC stated that two of Mr. Adamou's nominees for board of directors were not in support of his strategy. Jim Hall, IDC stated, supported Mr. Adamou's removal as executive chair and resigned as a director before being asked to vote on a transaction that later failed.
Frederick Godard, IDC's CEO and also a nominee, will not accept Mr. Adamou's invitation due to Mr. Adamou's "costly mistake" for the company, IDC added.
"Mr. Adamou's dissident proxy circular advocates a continuation of his costly and failed acquisition strategy," IDC stated.
"Fundamentally, Mr. Adamou's strategy involves high risk. As noted in a recent article published by the Harvard Business Review, it is estimated that the failure rate for mergers and acquisitions is between 70 per cent and 90 per cent. In order to succeed with an acquisition strategy, a company typically must be well-funded and have the backing of a financial sponsor, which is markedly different from IDC's circumstances."
IDC further stated the acquisition strategy had cost IDC $871,658, with $239,597 of that coming in the current quarter. These costs will significantly affect IDC's bottom line in the next quarterly results, the firm stated.
This quarter's cost, IDC added, "was incurred in negotiating a transaction that was sourced and principally negotiated by Mr. Adamou ... This transaction ultimately failed as it was rejected by the other party."
Other transactions considered by Mr. Adamou and an investment committee he headed were not brought to the full board, IDC said.
"Mr. Adamou was in fact terminated as executive chairman of IDC, in part as a result of his record of execution on the (business acquisition strategy). As an accommodation to Mr. Adamou, he was permitted to resign his employment instead."
IDC maintained that its new business strategy would bring the business forward and would represent better value for its shareholders.
"In spite of the (business acquisition strategy) distraction, over the past two years management has been steadfastly executing a turnaround of the legacy product business of IDC plus developing and launching new products into larger markets," IDC stated.
"Management's strategy is to build a stronger, focused, growth-oriented technology enterprise through continued improvements in legacy operating performance and the expansion of IDC's new product initiatives. Management is confident that this single focus will translate into strong financial performance in the very near term. This focused business growth strategy is supported by management's director nominees."
IDC did not rule out growth by acquisition in the future, but said right now the company would focus on higher-growth markets rather than niche products, as well as solidifying business fundamentals such as reducing costs and improving gross margins.
It hinted at a further threat regarding Mr. Adamou's shares, which IDC said were mostly acquired through a $552,000 shareholder loan.
"Mr. Adamou is the only current director, officer or employee of IDC who has received the benefit of a share purchase loan. IDC's board has the ability to call Mr. Adamou's shareholder loan 90 days after he ceases to be a director."
Previously, Mr. Adamou claimed that growth at IDC in the past year was hampered due to a "dysfunctional" board that included directors with little experience in publicly traded companies.
"It has proven incapable of defining or committing to any consistent value creating strategies or actions for the business. The current board of directors and governance structure at IDC is broken," he wrote.
IDC advertises its business as a digital content distributor for broadcasters for digital cinema, radio, data and television, and has 100 local workers, according to Ottawa Technology magazine.
In the last quarterly results, IDC slashed its net loss by nearly 60 per cent, to $207,203 compared with a loss of $510,512 in 2011. Revenue increased 16 per cent to $9.7 million in the same time period.
Shareholders will vote July 31 at the Holiday Inn & Suites in Kanata.