Cindy:
We recently had the opportunity to review NVID International, Inc.'s letter to shareholders dated October 1, 1997. It appears to be more of the same old Klenovic/Bunte/Arata rhetoric but this time the players are obviously being guided slightly to the acceptable side of the legal/illegal line.
Several observations and questions come to mind after reading this document:
1. For all intent and purposes the company is broke. It has $180,511 in cash and $155,449 in liabilities, exclusive of employee back salaries and expenses. They attempt a positive spin by indicating they have $42,024 in parts for ionization equipment and $110,000 in value of existing completed ionization equipment inventory. "If" the parts can be assembled into acceptable, marketable product; and "if" the existing inventory can be sold, it is estimated approximately $300,000 could be generated. In looking back at the revenue generated by NVID's ionization products during the past three years, there is no chance this will happen in the foreseeable future. Meanwhile, in view of the foregoing does it seem a little unusual that Larson and Redden would pay themselves $87,500 and $62,500, respectively, per year?
2. Does anyone ever wonder why during this entire fiasco there has not been one shred of evidence to suggest that Axen is a legitimate, potentially viable product? A legitimate company with a legitimate product could and would produce reasonable data to support their position. This could be and is done without jeopardizing intellectual property. Their continuing efforts to establish credibility by suggesting they are in discussions with other companies to develop and market their mysterious products and pay license and royalty fees to do so are absurd.
3. We believe the ongoing association and relationship with Arata is highly suspect. We early on provided Arata's credentials, or lack thereof, and will not again go into detail. Suffice it to say that in the past seven years he has been associated with at least seven companies in mediocre positions and then suddenly became the scientist/inventor. For the investors' sake, we hope so, but don't think so. We still believe he should be standing along side Klenovic and Bunte as a participant in the NVID scam and a recipient of the proceeds. Perhaps the reason he isn't is the authorities needed his testimony to strengthen their position with Klenovic and Bunte. Or maybe as the plea deals made by Klenovic and Bunte evolve, Arata will still be implicated and invited on another government paid vacation.
4. As best we can determine, Environetic, Arata's new company, and Aqua Bio, NVID's subsidiary, are competitors. Yet Aqua Bio is going to buy product from Environetic to sell under the Aqua Bio name. There seems to be a conflict of sorts and also seems to reduce Aqua Bio to nothing more than a distributor for Arata's new venture, Environetic. It is also interesting to note that "Aqua Bio has approximately two distributors, twelve dealers, and one sales representative for the marketing and sale of Aqua Bio products." We find the word "approximately" interesting. It would seem they would know exactly. It would also seem with this distribution network there would be an ongoing income stream which there is not.
5. "The management of NVID desires to sell the homes of Messrs. Bunte and Klenovic and use the sale proceeds for the development and marketing of Axen, as well as for other general corporate purposes." WOW! Isn't it about time this company operate like a normal business and survive based on their sale of products or services rather than on money stolen from shareholders? We wonder how much confidence Larson and Redden would have in their products and their ability to market those products if they were unable to continue or had to reduce their substantial salaries, and if they didn't have substantial shares they would like to eventually convert to cash.
Just a few quick observations. Hopefully, Larson and Redden will be able to enlighten all those who attend their shareholder meeting. Being major shareholders, perhaps Klenovic, Bunte and Arata will be there to lend further insight and credibility.
A final note, we exposed the NVID scam on December 8, 1996. We understand Klenovic will be sentenced in December. We hope it's on the 8th.
Best regards to all. |
