LE:
I don't want to beat a dead horse, but there looks to be something going on here that just doesn't make any sense. Remember that revenue declined 66%, that's two-thirds LESS business. Some operating expenses declined, as they should have, but the following actually increased:
1996 - 1997
Expense, Amount of Increase
Professional Fees $ 39,973
Travel & Entertainment 49,650
Office Expense 36,112
Automobile Expense!!! 54,740
Misc. Expense 35,306
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Subtotal 215,781
Consulting Fees 326,848
TOTAL $542,629
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There may be a valid explanation for this, but why would they grow these expenses while their business was drastically declining? Rent expense seems low, given the Wall Street office; I assume that the stated expense is for (much) less than 12 months. Furthermore, what are they doing with an office in Trump Tower given their financial position? Who received all the Consulting Fees (20% of S. G. & A)? The only thing that makes any sense to me right now is that some planned revenue was not realized. If that is the case, what and where is it? With all the "wonderful" things going on, that we were told about, why did revenue decline 66%???
It would make sense that the share increase was due to Adam, or Adam through a related party, providing much needed additional capital. I am beginning to wonder if there might not be a related company involved here.
How in the world could the officers of this company have publicly represented audited eps of .1085, if it was losing money big-time and they were managing cash flow through issuing stock and withholding payment of payroll taxes? How could they have publicly released a balance sheet, representing that it was audited, that showed the company to be solvent? I, AND MANY OTHERS, INVESTED IN THIS COMPANY DUE TO THEIR REPEATED PUBLIC REPRESENTATIONS OF PROFITABILITY. The discrepancy between their representations and the actual is so gross that there must be a reason. I just can't fathom that anybody could be so stupid as to publicly, and consistently, mislead the investing public to this extent. That's blatant criminal stuff. They owe us some satisfactory explanations fast. Failing that, I would imagine that at least a couple of governmental agencies will also be looking for some answers very soon. |
