CYCLOPSS SHAREHOLDER'S LETTER:
August 14, 2002
Mr. A. G. Lafley, CEO
The Procter & Gamble Company
One Procter & Gamble Plaza
Cincinnati, OH 45202
Dear Mr. Lafley,
We are a group of Cyclo3pss Corporation (Cyclopss) shareholders. We are representative of a much larger group of shareholders who are very upset over recent events that resulted in our losing nearly our entire investment. We researched all available information and determined that our company's inability to continue operations is directly tied to Procter & Gamble's actions.
In February of 1999 Cyclopss entered into a one million dollar loan agreement with P&G that was secured by Cyclopss's intellectual property and contained very restrictive first right of refusal terms. This agreement was entered into with the understanding that P&G was going to provide Cyclopss with developmental contracts and support commercialization of their products under licensing and royalty agreements. This funding and support never materialized, and we were disappointed to learn P&G instead chose to fund internal ozone projects using much of the knowledge that had been gained from Cyclopss. We were shocked to learn that an internal group of P&G even attempted to patent Cyclopss' technology without Cyclopss' knowledge.
As a result of P&G failing to honor Cyclopss with developmental contracts and the commercialization of products, Cyclopss was forced to seek developmental contracts from other companies with limited success. Due to the nature of the technology, most of these companies were direct or indirect competitors to P&G. The overly restrictive terms of the first right of refusal, made it very difficult, if not impossible, to engage any of these companies in licensing and royalty agreements. We were recently surprised to learn that this first right of refusal survives even if the loan is paid in full.
P&G put Cyclopss in a position where it had to rely entirely on P&G for its survival. Yet P&G refused to provide additional finances, contracts or licensing and royalty agreements. The end result is that Cyclopss was forced to deplete its resources and suspend operations. Upon learning this P&G demanded full payment of the loan by July 2, 2002 with the complete knowledge that Cyclopss had no way of making the payment. Now, P&G can either take ownership of the intellectual property, or do nothing and prevent Cyclopss, a potential competitor, from ever resuming business. This would appear to be predatory in nature.
Around the time of P&G's original involvement, Cyclopss' market value exceeded $35 million. As a result of P&G's actions the stock now has a market value of less than $1 million. P&G, the largest beneficial shareholder, is the only one to potentially gain from these actions. There are security laws written to prevent this type of situation from occurring. As of the Company's last public filing it was estimated that there are over 3,000 shareholders, and we have collectively lost $35 million.
We hope that P&G, a preferred shareholder of Cyclopss, will reconsider its position and honor Cyclopss with the appropriate funding and support that we believed P&G was going to provide in the first place. By supporting Cyclopss and its products, P&G could find itself with another outside success story similar to that of the Spin Brush. Alternatively, we request that P&G take steps to dismiss the first right of refusal, remove the lien on Cyclopss' intellectual property, and extend repayment of the loan so that Cyclopss will have a reasonable chance of resuming business and repaying their debt to P&G. Time is of the essence and we request positive action regarding this matter before August 30, 2002.
Sincerely Yours,
_______________________
Roger T. Toland
279 Mountain View Dr. NW
Marietta, GA 30064
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Four other shareholder's signatures, legal names and addresses are on this letter. I have withheld them in order to respect their privacy. A copy of this letter is also being sent to the SEC and a securities law firm. |
