I have a copy of the old 10-K, but there's not a whole lot on it. The most interesting thing I found on it was that the company had $190,631 in revenues, and $5,691,585 in operating expenses. Not that out of the ordinary for a new company, except, $4,596,209 went for Consulting. Sleazy, Huttoe, just plain sleazy. The revenues were royalties on the dental business I assume. In the footnotes, it says that "the Company recognizes revenue when royalties are earned or products are shipped". You'll remember Dick Yoder saying in the July 3rd conference call that they had booked $6.4 million in revenues. I haven't seen a 2nd qtr. 10-Q, but I'll assume that's a bold faced lie, given that the company has shipped practically nothing. The company does have a $9.2 million tax carryforward should they become highly profitable someday. Shares issued in 1996 for cash were valued at $.10 per share for total receipts of $60,000. Free trading shares were valued at a flat discounted value of $.20 per share regardless of the trading value of the stock. Shares issued were based on the value of services rendered at the $.20 rate. So, if Huttoe went out and threw a big party in Boston, buying expensive wine and such, and ran up a $5,000 bill, he could have paid the restaurant 25,000 shares for their trouble (of course this scenario is hypothetical).
As John mentioned, the ICMX acquisition was for 9.8 million shares, all of which were restricted except for 600,000. As of Feb. 29, 1996, the Company had outstanding options of 5.2 million shares at various prices ranging from .10 to .30 per share and expiring at various dates from 1/1/2000 through 8/31/2000. 185,000 warrants were issued on 1/1/95 at 1.00 for two shares of ICMX stock for each warrant. After the ICMX acquistion, the warrants issued by ICMX were effective for the purchase of 370,000 restricted shares and will expire on 7/16/97. The Company's management and legal counsel indicate, to the best of their knowledge (which in Mr. Bragg's opinion is not real extensive) and belief, there is no litigation in process or pending.
In the commentary on the 10-K, they do make reference to estimated revenues of $41 million (watch that change on new 10-K). They also state that they are pursuing several strategic alliances and working relationships with various international sources that should profuce international sales to several countries during the coming fiscal year. Actually, I'll type verbatim the paragraphs on "The Coming Year"
The Coming Year -- The Company's main focus in the coming year will be on sales. Through the Company's relationship with its VARs and ability to expand into other areas, sales are projected to substantially increase over the next twelve months (keep in mind this is the 2/29/96 10-K). The Company has spent significant sums of money to bring the teleconferncing segment of the Company from a start up to a successful enterprise (actually Huttoe spent signficant money on consulting fees to himself). Projections of $41 million in gross revenues appear to be within the Company's grasp. The sales personnel and the VARs are making significant progress in the sales process (or so the PR people tell us). The technology has been very well received and demonstrations at the McLean, VA facility are resulting in orders.
On Sept. 13, 1996 SEXI engaged the accounting firm of M.S. Finkel & Co., as independent accountants for FY 1996, to replace Michaelson & Co. (who was brought in by Meyerson). Finkel had no disagreements with Mr. Michaelson on any matter of accounting principals or practices, financial statement disclosure or auditing scope or procedure or any reportable events (stay tuned on this one folks). Mr. Michaelson's report on the financials for the past two years contained no adverse opinion or disclaimer of opinion.
Board of Directors is comprised of Charles Huttoe, 49, and Maria Iacovelli, 30. Their compensation is $120,000 and $37,000 respectively. Large shareholders include Charles Huttoe 3.4 million shares, Maria Iacovelli 1.0 million shares, James Tulley 2.25 million shares, James Christensen 2.29 million shares.
You've already seen the balance sheet on the 10-Q, so I won't address that. Again, I direct you to the Statement of Stockholder's Equity, which is on our unofficial SEXI web page on the 10-Q. It shows how Mr. Huttoe blatantly lied about the number of shares. I can prove it, and so can you. 40.4 million shares at 2/29/96, and this doesn't include any acquistions besides ICMX. Despite what a certain PR person adamantly maintains, MR. HUTTOE BLATANTLY LIED TO SHAREHOLDERS. To this PR person I say, you cannot convince me otherwise. It's there right on the financials. Not much to say about Statement of Cash Flows. No real income, so all cash came from private placements. That's about it folks. Nothing really surprising. One interesting thing I found was that the only mention of restricted shares I saw was from ICMX acquistion.
So, I took it upon myself to again call the Transfer Agent, which the 10-K tells us is American Securities Transfer & Trust of Denver, CO. Phone number 303-298-5370. Ask for research dept. I made another call to get more information. Here's what I was told: 65.7 million shares outstanding, 15.7 million restricted. I could not get information on institutional holdings or shares authorized. So, according to the transfer agent, we have 50 million shares in the float. This is very interesting because every time I found out about more shares, I was always "reassured" that they were restricted shares. However, I did find something interesting in the 10-K. As of 2/29/96 there were 47,000,000 shares authorized. Seeing that we now stand at 65.7 million shares, apparently the Board of Directors must have had another meeting and increased those shares to 75 million, which is that last number that Ms. Iacovelli told me. Given the Board's propensity not to inform shareholders of important events, I would certainly want to check again and see if that 75 million share number has been altered. I made calls to every PR person to find out about the restricted shares. Here are my results: Geoff Eiten -- "I don't know Chuck. But at this point it doesn't matter if people know". Doris - "I was told that there were many more restricted shares, but will be talking with mgm't and try and find out. There may be different classes of restricted stock." Margaret Archibald would not return my call. Cynthia Graemer would not return my call. Steve Mitchell would not return my call. I spoke with somebody at the Virginia office, and explained to them I could not get an answer. I told her without an answer maybe I should just post this information on the online services. Her response was "Go ahead and post it". OK, here it is. Not surprisingly, not one of these people ever attempted to clarify this information.
Huttoe and a couple of other officers are gone. I think Walther needs to wipe the slate clean with the PR people also. THey have done a horrendous job, and have not once given me accurate information. Geoff Eiten even had the nerve to tell me October 4th that the SEC problems were behind the company and that Florida had been signed. Another interesting thing is that he had told several people that Florida was a $130 million deal of 3 years. PR has done terrible damage to this company.
By the way, my wife just wanted to add that she would not even hire these PR people to make coffee or copies in her office and that they should have been canned long ago. My advice from now on is to ignore the PR people. They have spread misinformation, and continue to do so as evidenced by last week's prediction of "news coming this week". (Can people tell that I'm not impressed?)
Well, we shall see what happens. Everyone is well aware of what has been promised, but the only way I'll believe it is when it comes out on the newswire and it has a contact at the company they are doing business with that I can verify the information. |
