Other concerns:
On the promotional videotape, Deb Obrien allegedly claimed that "we are successfully examining other soft tissue areas in the body with CT laser techniques, including neonatal imaging and colerectal scanning." During the interview with Skolnick, Grable apparently admitted that they have not imaged such areas. Given that such promotional material is used by investors to make decisions, the statements appear to be damaging and irresponsible.
It appears as if overly aggressive statements regarding the timing of FDA approval have been made by the company in the past. In the 1996 annual report, Grable stated "Sometime in 1997 we expect to file a pre-market application based on the test results of 400-600 cases; this application should receive an expedited review. If all goes according to plan, the scanner should have domestic marketing approval by the middle of the calendar year 1997."
Similarly on 6/27/96, Deb Obrien posted on the message boards that "Clinical testing will begin shortly. The clinical testing for the Formal Premarket Approval (PMA) application will be completed in less than 90 days." (emphasis mine). On 8/27/96, when questioned about the progress, she stated "Please do not miss quote (sic) me-I never stated that PMA would be September 25-I'm not sure where you got that exact date -an exact date has never been
given." It is now 2.5 years later and no approval has been received.
In mid-June 1998, IMDS issued a press release bemoaning the precipitous drop in share price. The release stated that the company knew of nothing that would warrant such a share price drop. However, within one month, an S-2 draft was issued stating that the patent license was memorialized in a way that benefited Grable at the expense of the common shareholder. It further admitted that the number of authorized shares were likely to be expanded from
48.000,000 to 100,000,000 due to the conversion of certain preferred securities to common shares. The Company was likely aware of these issues 30 days before the S-2 draft was issued. It would appear that a press release giving false reassurances was made, to the detriment of the common shareholder.
The company has had to restate the financial statements on at least two occasions. First, the SEC apparently demanded that the company restate because it had previously capitalized software costs that should have been expensed. Second, one AOL board poster (BOB) alleged that the company was improperly accounting for non-qualified option plans several years ago. Deb Obrien publicly told the investor he was mistaken. I believe that she was
incorrect and that the company has now restated.
In September, the on-line version of the U.S. News and World Report did an article on IMDS. The article quoted a woman who had been tested praising the IMDS device. It stated that she was part of a nearly completed 400 person clinical trial. No where in the article does it state that she was an employee (Head of Purchasing). Further, a 400 person clinical trial was nowhere near complete (started?).
Recall when the generous management of this company GAVE the funds from the sale of their shares to the company out of the goodness of their hearts (but failed to mention in the press release that they were being reimbursed for this)? The reason they gave for doing this was to help cash flow. Some of us recall that we had a $15mm line of credit that was supposed to carry us thru as far as we needed to go. Once again, listen to their own words in the May 1998 press release: "The completion of this financing, which is structured as an equity line of credit, is signficant because it provides the key capital component for our completing FDA clinical trials through PMA submission and subsequently ramping up to full manufacturing capacity. With no future financial concerns facing us, we are now free to focus strictly on bringing the worlds first laser-based mammography system to market." Where did the sudden financial concerns come from since 5/98 that warrant this "charity" by the founders? Was this yet another misleading press release giving false assurances about our financial condition?
Note that I have not even addressed the history at Lintronics or the charges of image doctoring by Diane Strait. I have simply focused on publicly availalbe information for the most part.
I've said it before - you cannot separate management integrity from stock success, particularly when it comes to penny stocks. |
