Warning--Late Night Long Post
Mark-where are you getting these facts about "the great fraud that was carried out.."? I believe that I have read each news release and SEC filing for the past 2 years. I certainly see the potential for fraudulent behavior, however, until we get the audited statements, I don't know what to believe. The releases from the interim management are short of substance and contradictory. For example, we are told that 30+ mil. must be written off, most in the plant & equipment accounts. We are also told that business operations continue at a normal, growing pace. If we are writing off 97% of the new plant & equipment booked in the past 4 years, are we not to presume that the plant & equipment has little value? If so, what is being used to produce the product that is being manufactured and sold as part of these normal, growing operations? Others have applauded these guys for communicating with us. If communication is the dissemination of information, what do we know? We were told today that we would soon be told what the revenues were for the 9 months ended September. Why couldn't we have been told 3 months ago what the revenues were for the 6 months ended June? We have been told of resignations, but nothing of whether or not there was a severance involved, or whether David Sherman or anyone else is receiving remuneration while they are no longer working. The letter from KPMG that accompanied the SEC filing on the write-off did not support the amounts that were being written off. It read more like a laundry list of items that deserved their attention (or an engagement letter) than an itemization of charges to the balance sheet. If KPMG did not tally the items to written off, who did and why? IMO neither the Board of Directors or the management has been at all forthcoming to us the shareholders.
While we are informed of operations proceeding normally with growth, we are not informed about turnover or lack thereof among company employees. Does KPMG have a blank check to get the books in order or have they submitted a proposal with a maximum fixed fee against hourly charges? Is there not even an estimate of the cost? How about with Mr. Pappas and his associates? They don't work inexpensively, and yet they are in charge and we know their hourly rates, but are there performance hurdles or some safeguards that might limit their compensation other than their conscience and the funds available? I know that all of us are frustrated by the facts and circumstances that our investment in this company with so much potential has brought to us. My questions and comments are part venting, and part to see if others are as unhappy with the quality of the communication from the company as I am. One of the rules of communication is that where there is a void it will be filled with FUD. I suspect that I am proving that rule which, if true, is contrary to my motivation.
I don't personally know any of the Board of Directors and I am certain that they may be fine people. I don't have any comfort that they are endowed with business savvy or good judgment about how to cope with this difficult situation. IMO it is necessary to have the best legal advice, but potentially disastrous, if those receiving the legal advice don't have the wisdom to apply the advice about legal issues into the context of running a business. This business seems to this outsider as if it is being run by lawyers with an objective to win a legal action, or shield these individual directors from liability, and not by someone seeking to maximize shareholder value.
I am not an expert in corporate governance, but if the magnitude of the write-off is justified, then our problem goes beyond the CEO and includes the Board of Directors. My fear is that it is this same Board of Directors now directing the attempt to clean up the mess. They are the ones who hired Pappas and his company. They promote their business as "crisis management". To my knowledge, "crisis management" is a euphemism for bankruptcy specialist. Most "crisis managers" are imposed on a company by its lenders. Are our directors telling us and the rest of the world that this company is headed for Ch. 11? I believe that the Board may be over their head. Is it their fault for shouldering this burden or is it our fault for not demanding a special shareholders meeting and relieving them of a burden perhaps too heavy? Does anyone know what rights our corporate by-laws give to shareholders in a situation like this? Am I the only one who cares? |
