*** Open Letter from the President To Shareholders of HouseHold Direct.com ***
From: John Folger
President
HouseHold Direct.com
Over the last few days, we have noted some recurring concerns expressed by many of our shareholders, particularly among those who happen to post on the Raging Bull. As most of you know, I do spend a couple of minutes each day noticing the comments being posted, which I view as a barometer of the attitudes of our shareholders in general. While some shareholders post, many do not, so I would like to respond and clarify some of the most important issues for all.
The audits and reporting.
The audit process began last year as originally indicated in press releases starting with PCS. The audits were completed for 1998, and some preliminary accounting was initiated for 1999. We decided to change the initial auditing team during 1999, and issued a release to our shareholders naming King, Griffin and Adamson from Dallas as the auditors. This was announced in conjunction with the release that we would be using McCue and Lee, also of Dallas, as our SEC specialist counsel. We made this decision because these firms have worked together to bring non-reporting companies to reporting status with the SEC, and have a successful track record in accomplishing this task.
The companies included in the audit are HouseHold Direct.com (from its' inception as RDI Marketing), Thunderstick Software and PCS. As many of you recall, RDIM was a Florida domiciled public company that has been renamed and restructured. The surviving entity, HouseHold Direct.com has now been re-domiciled as a Delaware public company. The Company has undergone several fundings at various funding prices, which must not only confirm the amounts of money raised, but also as relates to the timing of those fundings so as to avoid any funding integration issues. Each funding requires a separate confirmation of the number of shares, share price and capital realized from funding activities.
The HouseHold Direct.com and Thunderstick site audits, which involve the auditors actually visiting locations and testing certain transactions, are nearing final completion, but there are still some remaining issues with PCS. I have asked Craig Ongley, our SEC counsel, to prepare a comment regarding the progress of the Form 10 filing to our shareholders. We expect to be able to release his comments in the very near future.
We have not proceeded with additional plans regarding any other companies, to avoid adding complications or potential delay to the audit and reporting process. You might consider this as a "quite period", because any discussion, press release or activity will then cause that entity to be added to the audit requirements of the SEC.
Our filings are now imminent!
There appears to be some confusion about the impact of these filings on the Company and our shareholders. Some shareholders are convinced that without an immediate approval, the Company will become delisted and not continue in business. This is absolutely false.
Let's clarify this issue.
The SEC decides the reporting process and timing. We need only to comply with the SEC requirements, wait for the SEC comments, if any, and then answer those comments. If the SEC does not offer comments, the approval process is then virtually automatic. The SEC process occurs either with an "E" or without an "E". The now infamous "E" is only a designation that is used by the exchange, and has nothing to do with compliance. It is the lack of compliance on the part of a company that causes delisting, not the "E". You may be assured that we are doing everything possible to complete our compliance.
Our large investors understand this process, and have indicated to us that an "E" will have no material effect on our ability to continue funding the Company.
Some companies have been processed through the Form 10 without any significant comments or delays because the SEC realizes that they have additional opportunities to "clean them up" during the 10Q and 10K process. Companies having the most difficulty are generally those that have not chosen the right advocates to comply fully with the SEC requirements. HouseHold Direct.com management, along with our experienced auditing and legal advisors, are working to make sure that HouseHold Direct.com is in accurate compliance, which is much better than a faster, but imperfect attempt at compliance.
The management of HouseHold Direct.com supports the reporting process, and will continue to do whatever is required to comply with the SEC. We plan eventually for a NASDAQ listing for HouseHold Direct.com, but we have to pass this process first. We are all committed to do so.
Insider shares and filing.
As you all know by now, Ann and I registered to sell a significant number of shares last year to accomplish two specific objectives, secure the aforementioned acquisitions and fund the continuing development of HouseHold Direct.com. This was how the shares were used, however some additional transactions involving shares to other members of management and advisors showed up on Yahoo as additional registrations in error. The total number of shares was 700,000 for Ann and me, and all of the proceeds went back into the Company in the form of loans. You will notice this confirmation in the audits. The new filing, which is about 300,000 shares (again incorrectly reported on Yahoo), will be used to continue to build the Company. There have been no sales to date.
The new website.
With the initial website, the Company had, either directly or through contract, the 800,000 products that were announced. What we did not have, which was a correct charge on the part of our shareholders, was the "live e-commerce" ability to process these sales right from the web. That has all changed with the new site. Alfred Werner, our CTO, and Thunderstick have built a fully interactive site that will not only allow for virtually seamless transactions, but is also designed to have the database and engines continually updated by the very price and product requests from our members. Each request is now integrated to continue building the database dynamically, based on the products and manufacturers that are actually requested the members.
You will shortly see what hundreds of manufacturers representing thousands of products mean to the web and our members using our new business model!
A very large part of this site is the administrative function on the backend that Alfred discussed in his message to you earlier. I would like to add that in addition to the functionality of the site, we now have a team of employees and contracted support personnel that are operating behind the scenes to maintain this dynamic transaction system. Our professional buyers and customer service personnel are now loading manufacturer and product data and fulfilling actual orders from members. Interactive customer service personnel are on the site to assist our members with questions. A team of design and development engineers are delivering the next upgraded components of the website. Strategic relationships and partners are being coordinated for several new programs that are being added.
And then the marketing plan!
Promotional incentive plans are now becoming apparent with our "New Lindal Home Premium Program". As we initiate the web-based marketing campaign, along with additional telemarketing and direct mail support to deliver our incredible price advantages to more consumers, we will be in a position to realize the monthly recurring revenue projections that we have all anticipated.
More existing club membership conversions and strategic marketing relationships will all help to grow the ranks. We are even implementing a member referral-marketing plan to compensate satisfied members to refer more members.
All of this with a 30-day money back guarantee!
We expect HouseHold Direct.com to save a typical consumer 20% to 60% or more off their annual budgets on a broad range of consumer products.
Some of you have asked whether this is a soft or hard launch. As this schedule is to begin almost immediately, we are quite sure that you will see that this two week shakedown cruise precedes a very "hard launch".
Lastly, let me thank you again for your investment in HouseHold Direct.com. In the spirit of true partnership, we continue to work very had in building a solid, meaningful, and very profitable operation in both the near and longer terms. Best of all, it will be you, our shareholders, who will benefit most from the foundation we have built for this Company, and the tremendous value that this foundation will foster for all involved, and for many years to come.
I hope this has addressed many of your questions, as well as the ones you may not have even known you had.
Sincerely,
John Folger
President
HouseHold Direct.com |
