Open Letter to Steve Kaston........
Steve,
There are a couple additional points with which I wish
to take issue.
Per our conversation, you noted what had been conveyed to me before
by Paul Henery, namely Roix took a cut in salary and when the
deal was originally structured Roix was not going to become
the CEO. You did not also say or remember that when the deal
was originally structured that Affinity was only going to
be acquired for 7 million shares total.
You also said that once Roix realized that Tsig wasn't all that it
was made out to be that Roix proceded with the deal,albeit on
better terms, because he was a man who kept his word.
As you noted Roix could have backed out, and tsig holders would have
really been screwed and moreover still left with Rob Gordon
selling shares rather than generating revenues.
Obviously long term shareholders are better off if the financials
bare out the optimism. But as I've always mentioned to others long ago
when General Search was "acquired" by tsig.com, that acquisition
was a reverse merger. Additionally when tsig.com "acquired"
Affinity, the subsequent change in management giving Affinity
control again constituted a reverse merger, with the "parent"
becoming even more of a minor beneficial owner, especially
since the increased number of shares for acquisition of Affinity gave
Affinity greater control.
Now what Affinity did achieve from this reverse merger, as is the
case with any reverse merger, is to circumvent long and complicated
SEC filings procedures. What Affinity aso avoided was being brought
to market as an IPO in an adverse IPO climate. What Affinity
received was a stock of company that already had a high
trading volume even with a mired history of non-performance.
Plus with 12 million shares plus getting to market quickly, Roix himself
personally was provided the opportunity to become an enormously wealthy
man "if" he turned the situation around by growing revenues
and generating earnings "if" the markets noticed and the share
price rised accordingly. Roix potential wealth in a publicly
traded company far exceeds his cut in salary in a privately
held firm.
Conceivably if the stock were at its all time high of $10 post split,
Roix would be holding paper worth $120 mil dollars.
That ain't chump change unless maybe you're Bill gates.
Though I believe "the street" would be hesitant to give his company
a $1.4 bill market cap with the current OS of 114 mill shares.
So Roix has even more reason to reduce the OS through a
buy back of shares , and I'm still of the opinion that
if Affinity has sufficient revenues to pay commissions,
then it should use those revenues to repurchase shares instead,
with larger bonuses rewarded AFTER performance is demonstrated
by the audited SEC filings with strong balance sheets.
Sincerely,
ztect
xxx-xxx-xxxx
cc. sroix@theaffinitygrp.com
phenry@tsig.com |
