Comprehensive Report on TSIG - Part V (a):
Concerns And Risks that Have Been Expressed By Jeff A. Berry On the Thread - Fact or Fiction? ; Truth or Distortion?
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Due to space limitations, this report has now been split into Part V(a) and Part V(b)
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The day after I posted my first four-part report, I received a PM from Jeff Berry (aka JAB) about some apparent concerns that I did not touch upon in the report. He felt that I did a good job but still did not present the proper balanced view that would take into account many risks involved in investing in TSIG. Because of that request, I'm taking on all the issues he has raised. I know that to many of you, again, this may be old news but I feel it would be of great benefit to the new arrivals. Please bear with me.
Jeff, because I'm addressing the issues you've raised, I feel it's easier and more clear if I post your PM. I hope it's alright. Here's Jeff's message.
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Jeff's Message
"Poisontaster, Nice job compiling all the DD.
If it your intention to provide potential investor's with a balanced overview of TSIG so as to make a risk informed decision, you still have much to communicate with regard to the known risks.
You have entirely omitted the fact that Mr. Gordon sold 6,480,000 shares between 5/8 and 6/25 and that on 6/25 he has also registered to sell an additional 7,520,000 shares, and could be very well along in the process of selling these as well.
You have completely omitted the cash crisis that TSIG must deal with. A crisis so intense, that bankruptcy is a real possibility if the pending PP is not completely soon.
Also omitted are a host of other valid concerns that I am sure you would want to be aware of if you were a potential investor who was looking at TSIG as a long term hold.
If you are truly intent on providing a balanced commentary I suggest that you read and research the following posts. After doing so perhaps you might add another chapter to your "new investor report" called: "concerns and risks that have been expressed on the thread".
(old thread) Post: #905,910,971,975,1380,1387,1422,1423,1525,1528,1533,1614,1990,2650
Being forthright in presenting the dark side, as well as the bright side of TSIG will help to eliminate criticism of your DD by others, new and old to the thread. It will also result in trust and confidence by others in the communications that are shared on the TSIG thread, which will help to eliminate the suspicion of hype that so often accompanies BB stocks....Hype that all to often leads to financial ruin for those that are inclined toward trust.
Poisontaster, You are somewhat new to the TSIG thread. My perception of your posts over the last few weeks is that you indeed desire to present the balanced truth.
I do not seek to embarrass anyone, especially if their motives are sound. I would prefer not to post a contrarian rebuttle and addendum to the fine work that you have performed. It would be far more beneficial if the factually based risks and concerns were addressed head on by yourself. Thus providing a true picture of balance.
Best Regards, Jeff"
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Before I start the presentation of my research, I like to direct all of your attention to the newly added Exhibits that will accompany this report. (preceding or following the reports as separate messages) I recommend that you have a duplicate page open so you can refer to them as I do in this report.
Exhibit 5A: List of Jeff A. Berry's Messages on the Original Thread.
Exhibit 5B: Revolving Credit Loan Agreement
Exhibit 5C: Security Act of 1933 - Employee Benefit Plan Release 6188
Exhibit 5D: Addendum To CCI's Asset Acquisition
Exhibit 5E: Asset Acquition of CCI (full)
Exhibit 5F: Federal Lien Search
Exhibit 5G: Past and On-Going Legal Proceeding of TSIG
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OK Guys, this message and many of the exhibits couldn't be posted in one message. I have made the following modifications:
1) This report will now be divided in 2 parts.
2) Exhibit 5B will now contain the relevant cited information
in the header and a link to the actual SEC report that contains
the Revolving
3) Exhibit 5C will now contain the relvant cited information
in the header. I will send a full copy of the Act, 39pages
via e-mail by request.
4) Exhibit 5D will now contain a link to 8-k that contains the
Full Asset Acquisition of CCI of Nevada.
5) Exhibit 5F will contain about only 20 examples of my research.
I will send the full copy, 189 pages, via e-mail by request.
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Also all the Replies referred to are in the old TSIG thread: Compact Connections (TSIG).
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Lets Begin
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Let me begin by a a quote from JAB (Reply 1614 , Paragraph 3):
" I never considered the possibility that the posters including yourself (gambler) had never actually read the S-8. It still amazes me that was actually the case. Through examination of an S-8 should be basic investing 101 for all investors.... Especially for those who have taken on the responsibility of thread oversight"
Let's look at what JAB has presented to us in over 18 messages.
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Here is what JAB is CLAIMing:
TSIG is a crash and burn operation because of an apparent cashflow problem. Mr. Gordon knows that it's a fatal problem and has and will completely cash out, leaving investers dangling in the wind, because he is untrustworthy.
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These are the HARD EVIDENCE he presented:
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1) 5 million dollar loan agreement between Gordon and TSIG
2) Gordon sold 6,480,000 shares. Gordon registered to exercise an additional 7 million shares.
3) a FICA withholding owed to the IRS.
4) $2,250,000 paid to CCI -- statement by Mr. Gordon.
5) current litigations and loss of clients
6) delays of events and inaccurate statements of Mr. Gordon re: CCI website date, the private placement of the $7.5 million.
7) past SEC document of a "cease and decease order" against Gordon.
8) 10-Q Financial Statements showing negative cashflow and declining revenue.
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These are the ASSUMPTIONS he made:
a) the $5 million loan between Gordon and TSIG is fake, designed to sidesteer investors from recognizing the cashflow problem and make profits for Gordon through debt conversion.
b) Gordon sold the 6,480,000 shares into the open market in small oddlots so as to escape notice. He looks like he's going to sell the other 7 million.
c) Gordon makes strange cash handling decisions. Gordon stated that $2,250,000 was given to CCI while the company still owes the IRS.
d) Gordon has stealthily manuevered four key employees to a company called Teleservices Holdings, a private company. He can then dump TSIG and escape unscathily to Teleservices Holdings. He has tried to do this before between a private company he owned called Harvest International and Phoenix Information Systems until SEC stopped his "misrepresentation" with a cease and desist order.
[For logic's sake, I'll refer to the outline item, e.g. "1)" or "b)" , in the subsequent discourse so you can refer back to the outline in the middle of the paragraph.]
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prelude
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If it pleases all, at this point I like to insert another JAB's quote (Reply 1990, Paragraph 2) :
" ......Solid DD however, requires as a foundation reliable source material 'always check your references' is the watch phrase that merits application even when applied to company founders and CEO's....."
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poisontaster's verdict
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JAB is absolutely the crafiest, the most insidious and nefarious distortor of facts.
He uses a swarm of facts, twists and stretches them, to support his subtle but obviously maligned bashing assumptions, innuendos, and sometimes just plain unjust abuse. As he pulls the veil made of intricate webs of facts and lies, he gradually picks up steam; becomes more and more invective and bold in his "scenarios"; slowly becomes more spiteful, more disrespectful, more derisive of the intelligence of all the members in this board. Out of his own ignorance ,or nefariousness whichever the case may be, he has bashed TSIG with arrogance, disdain, and impudence.
This is how it breaks down.......
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The Cornerstones of His Argument Are Fatally Wrong
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There are two cornerstones to his argument.
Cornerstone number 1: the 5 million dollar loan is for show only.
Cornerstone number 2: Gordon sold his 6,480,000 in the open market.
Both of them are distortions.
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Cornerstone #1: $5 Million Loan
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Please open Exhibit 5B : Revolving Credit Loan Agreement
----JAB's Reply 910, paragraph 1:
".....While the money could very well be there and available to TSIG to help satisfy short term liquidity needs, it is by no means guaranteed to be there. Mr. Gordon has not parted with 5 mil of his own money. The note specificially states that the borrower may not be indebted in aggregate by more than 1 million at any given time. It also says that Mr. Gordon at his sole discretion may choose to veto any draws that the corp. may deem necessary to make. Additionally, the note allows Mr. Gordon the option of converting any indebtedness incurred under the loan at ANY TIME into TSIG shares at $0.15/share........"
=== [fact #1] ===
In Section (1.c.) the agreement does say:
" ...; at no time shall the aggregate obligation of Borrower (TSIG) to Lender (Gordon) exceed One Million U.S. Dollars (US$ 1,000,000)."
=== [fact #2] ===
In Section (1.c) the agreement does say:
"Advances under the Revolving Credit may be made, at the discretion of Lender (Gordon) in accordance with the terms of this Agreement, at any time prior to Repayment Date upon receipt by Lender of oral or written request therefor from Borrowere (TSIG).
=== [distortion #1]===
JAB said (Reply #910) ".. the note allows Mr. Gordon the option of converting any indebtedness incurred under the loan at ANY TIME into TSIG shares at $0.15 shares." That is an absolute lie, manipulation, and misinformation.
In Section (4), the agreement says:
"....Repayment of Principal and Interest in Common Stock of Borrower at Option of Lender. Lender shall have the right to demand payment from Borrower of all principal and interest due and payable hereunder and under the Note, inwhole or in part, in the form of restricted shares of Common Stock of the Borrower. The number of shares of Common Stock of the Borrower that would be issued to Lender in payment of any amount due to Lender would be determined by totaling all principal and interest due (the "Amount Due") as of the date that payment is due and demand for payment may be made under this Agreement (the"Demand Date") and dividing the Amount Due by fifteen cents ($.15)."
The due date of this loan is stated in Section (1.a)
"a. The term of the Revolving Credit shall begin on the datehereof and shall end on April 22, 1999, unless accelerated pursuant to Section 5 hereinbelow (the "Repayment Date")."
So the loan is due on April 22, 1999, unless TSIG defaults on the loan. See Section 5.
Therefore, contrary to JAB's claim, Gordon could not have converted these debts, if any, into $0.15 per share until April 22, 1999 or when TSIG defaults.
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poisontaster's assessment of Cornerstone #1
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In regards to fact #1-- "at no time shall the aggregate obligation exceed 1 million" --, I think this clause is subject to interpretation because it is poorly written. What is important to is to determent the intent of the signers. Given that it is in Section (1.c.) which deals with TSIG's ability to make advances on the credit line, it is not at all illogical to suspect that this particular sentence: "at no time...shall exceed 1 million" , is meant limit TSIG's draw on the creditline at $1 million on each draw. It makes sense to limit a draw amount each time so Gordon could come up with the money. The bad thing about this sentence is that it wrote " at no time" instead of "at any one time." <<POISONTASTER'S ASSESSMENT>>
In regards to fact #2, I don't think that is a problem for any intelligent individual. If you are Gordon, you must restrict the creditline so that it goes to the right expenditure. <<POISONTASTER'S ASSESSMENT>>
In regards to the debt conversion: Now that we know Mr. Gordon will not be able to convert the debt into common shares until Aprill 22, 1998, the loan does not seem so outrageously biased and wicked. If he is willing to put up the money until one year later, risking up to 5 million dollars, I think it is rather shows his faith and confidence in the company. So I personally don't mind that he's either getting 8% or $0.15 conversion deal. I think it's actually pretty fair. So now that we suspect the loan is legitimate, what we need to determine is whether Gordon intented to make this loan in earnest. Is it a front? Is it a backup plan to the private placement? Does he have the money? We'll deal with that in a little bit. <<POISONTASTER'S ASSESSMENT>>
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Interlude
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If it pleases everyone, (except maybe Jerry), I like include another quote from JAB (Reply # 1534):
"......I am however disappointed in your last post. In stating that my comments "are not DD and are pure and simple bashing" is completely unfounded. From your comments it is apparent that you also have not read the S-8 that was filed on 6/25........"
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An Example of JAB's bashing
based on distortion #1
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=== [ Reply #910 } ===
" .....After reviewing the terms of the note it would seem that if someone were truly bullish on tsig there best bet would be to contact the company direct and loan money to the corp under the same terms as Mr Gordon then convert the indebtedness into .15 shares........."
(con't in Part V(b)
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