Part II
E) Robert Gordon/Executive Compensation: ===================================================================
1. What great performance in your management of TSIG during 1998 justifies doubling your pay and granting you 5 Mm shares of the company? After all, you reduced the sales by 50% only while the losses have been reduced by only 30% and will you voluntarily reduce your pay back to the level of 1998 until you show you can indeed grow the top line as your intentions indicates and stop shipping a $1 dollar product wrapped with a $12 dollar bill (roughly the performance of last year, the year before you managed to wrap those sales a little less costly, each dollar of sales was wrapped with a $9 bill).
ANSWER: This was discussed in earlier posts I made from St. Petersburg almost two weeks ago. IMO, Rob Gordon is underpaid for the enormous number of hours he puts into our company and for what he has accomplished in such a short time. However, and this is an important “however”, I saw the payroll sheets for 1998 and 1999 to the present. Rob Gordon did not take his salary for many months in 1998 and has not drawn a salary check so far in 1999. The salary will accrue, however, and will be owed to him when the company can afford to pay him. He obviously is doing his very best to assure that this company is successful.
2. What justifies establishing option plans of 47.5 MM shares for a company which had only 30MM shares at the beginning of 1998, is there a model of any other company where such a ratio is practiced?
ANSWER: The justification is, IMO, quite simple. If we all want TSIG to become the major force and eventual superstar we anticipate, then it is incumbent upon the Company to hire the best personnel and staff and consultants possible. Some are paid in cash, but as in most companies where people who are considering coming on board see great future growth potential, the options they receive are far more important to them then their salary. If anyone questions this I suggest they pay a visit to Silicon Valley. They will learn very quickly that the options employees receive are far more important to them than their salary. Once the cashflow becomes positive and as these management people continue doing their job and bringing in additional business… the entire matter, IMO, becomes moot. The shareholders of Amazon.com (which showed a recent loss of $1.89/share) has over 150MM shares outstanding and just raised the authorized to 1.5 Billion (yes… BILLION) shares… and I don't see their shareholders crying. TSIG will, IMO, become far more profitable and in a much more rapid time frame than any other company in our sector.
3. What is the distribution of these 47.5 MM shares between the various executives of the company, how many of these options were actually granted so far, and does this number include the 30 MM shares or so exercised last year.
ANSWER: TSIG.com has established three separate Employee Benefit and Consulting Services Plans totalling 47.5MM shares. All shares covered by these plans have been registered in seven separate Form S-8 registration statements. Shares and options under these plans have been granted to qualified consultants, advisors, officers, directors and employees of the Company and its subsidiaries.
Many of the shares and options under these plans were granted as long ago as 1996 to consultants, advisors and employees who are no longer with the Company. Approximately 40MM of these options have been exercised, the underlying stock sold, and the shares included in the float, so there is very little “overhang”. Of the remaining 7.5MM available, the majority have not yet been granted.
The directors and senior management of TSIG.com own “options” as follows as of 12/31/98 (per 10K): (fixed font would have given better allignment, but would have spread it across the entire page... it should be easily understandable)
<Person> <Approximate Total> <Vested 3/1/99>
Robert Gordon 0 0
Paul Henry 1,150,000 853,360
Michael Gordon 125,000 41,665
John Hwang 1,750,000 503,572
James Guild 1,750,000 194,438
All these options are exercisable at 0.30/share. The options for Messrs. Henry, Hwang, and Guild vest over three (3) years, while Michael Gordon's vest over one (1) year.
Directors and senior management own “shares” as follows as of 12/31/98:
<Person> <approximate total>
Robert Gordon & Family 14,060,000
Paul Henry 35,000
Michael Gordon 304,000
ALL shares owned by control persons have to be sold pursuant to a registration statement or under Rule 144.
4. What is the status and intention regarding the 41M shares/options RG holds.
ANSWER: This is a complete misconception. Robert Gordon does NOT have 41MM shares or options or a combination of either. His shareholdings and granted options are listed above. In order to protect the company's financial viability, it signed a contract with Rob Gordon that IF in the event the company needed cash (which it obviously does not since the PP was put into place and with the other alternatives being worked on) and IF Rob Gordon gave the necessary funds to the company at the time… then and then only would these options (so many shares per contract) go into effect. As of this date, this is also a moot point and Rob Gordon has no further options than are listed above… i.e.: zero.
5. In light of the fact that to date TSIG has not been profitable, how is the huge salary increase for Rob Gordon justified?
ANSWER: asked and answered (see above)
7. Would Rob Gordon consider waiving this salary increase until after TSIG becomes profitable? Pay for performance?
ANSWER: asked and answered. De facto, that is exactly what he is doing. Although his salary will accrue and be payable to him at some time in the future when the cashflow is positive and can sustain it… he is not drawing any paychecks at this time at all.
F) Reverse Split: ===================================================================
1) What is the likelihood of a reverse split?
ANSWER: There are no plans for a reverse split and there have been no discussions about it.
G) Good new coming ??: :~) ===================================================================
1. Is there significant good news coming which might raise the stock price?
ANSWER: “We expect a continued stream of meaningful news announcements… as there have been.” Based upon my own personal observations of flowcharts and workcharts on the office walls of upper management, IMO, we are in for some very large and pleasant surprises.
H) Paul W. Henry: ===================================================================
1. Is Paul Henry the same Paul Henry that was mentioned on this thread earlier that had problems with the SEC? And if so, can we have an explanation of the facts surrounding the case?
ANSWER: No. Had Paul Henry (from TSIG) had ever had any problems with the SEC, this would have been a required disclosure item in the Form 10K.
I) Insider selling/buying: ===================================================================
1. Please explain the 144 filings for the sale of stock by insiders. Who has sold, and how much?
ANSWER: Most of the 144 filings are not by “insiders”, but by former private placement investors.
2. Why are there no filings for insiders to buy stock if they feel TSIG is undervalued?
ANSWER: Such filings are not required for TSIG since TSIG is not a 12(g) reporting company. Also a substantial portion of insider pay comes from stock options. Have any MSFT (Microsoft) employees ever bought stock?
J) Burn rate:
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1. What is the current monthly burn rate.
ANSWER: Can be deduced from the Form 10K and previous Form 10Q. Approximately $400,000. per month plus spending for various projects.
K) Break Even for TSIG:
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1. According to the current business plan, what sales level will bring a "break even" situation?
ANSWER: This is inside information, but looking at the “burn rate” and comparing it to known already existing contracts should make it quite obvious that we are getting very close. See answer to next question.
2. When is that breakeven expected to happen?
ANSWER: The company plans to generate rapidly escalating revenues from Q2 to Q4 and to reach breakeven in Q3 or Q4. With what is already known from PRs and existing contracts and what appears to be “on the Boards”, I sincerely believe this is not only possible, but quite probable.
L) Gross Margins: ===============================================================
1. What gross margins are expected on let say the three major activities.
ANSWER: This is both inside information as well as information we would not want the competition to know. Suffice it to say, I believe them to be substantial.
M) VSI:
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1. It seems that the filing under bankruptcy of one of the divisions leaves TSIG with residual liabilities (particularly IRS), what is the size of these potential liabilities.
ANSWER: The Chapter 7 filing of VSI relieves TSIG of substantial debt and contingent liabilities… substantially more than $5MM. As an additional plus TSIG will have a substantial taxloss carry forward which should increase its speed to profitibility.
N) Accrued liabilities:
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1. How fast does TSIG need to payback the $6 MM in accrued liabilities (as of Dec 31, 1998).
ANSWER: The Chapter 7 filing of VSI will wipe out most of these liabilities.
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Additional Commentary: I sincerely hope this has answered many questions that investors had. I have tried my best to share with my fellow shareholders what my two and a half day visit (plus many, many more hours on the phone) to the company (and most particularly with its officers and employees) gave to me. I can find absolutely nothing but positives in the responses I received… and I can assure you they were double and triple checked. I truly believe that we are in for many, many pleasant surprises in the weeks and months and years ahead.
I hope I am wrong, but I anticipate certain well known “bashers” (and probably others dragged into the scene by these same individuals) to make their appearance after this is posted. As I am doing it in Word and will be “cutting & pasting” it into SI and RB, I hope it comes out in legible and readable form. My response to these individuals is quite simple:
(1) If you are not an attorney specializing in SEC work or cannot reference one by name who has gone over TSIG's filings we have nothing to discuss… nor should anyone else pay heed to your “bashing”.
(2) If you are not familiar with the sectors in which TSIG is in, you have no justification to make commentary until you have educated yourself as I have taken the time to do. The profit margins, cash needs, cashflows, etc., etc. all vary according to the sector a company is in. One does not compare the overhead and profit margins of a financial institution with a manufacturer or with a high tech company or with an internet company… they all differ. I believe Dr. Hed would concur with this statement.
(3) If you are not satisfied with the answers I have gotten, rather than continuously ignore questions posted to you (which is ever so evident to all), pick up the telephone and call the company and continue to dig (pun intended in one instance) until you get an answer that is pertinent and answers your question. To do otherwise puts you, IMO, into the manipulator category… and that is trying to be polite. But, obviously your self image is not very good if you continuously post statements out of context as if they were facts and totally ignore questions put to you and refuse to confirm your commentaries (other than by going to other threads of non-experts to ask if what you have already posted is accurate).
I am not an analyst or advisor, but I have availed myself of every possible and reasonable method of determining my personal position in TSIG… including consulting with outside experts. Now that this is posted I feel free to continue my accumulation of TSIG stock… although my DD will be never ending and I have full intentions of sharing it with my fellow shareholders. I once said that, IMHO, TSIG would be the “superstock” of the next generation and I feel fortunate to have the opportunity to be here early. My opinion has not only not changed, but as news starts to break and the word “international” starts to have real meaning, and Golin/Harris starts doing their job to give TSIG “name recognition”… I believe other shareholders will understand my reasoning. We are a new generation internet company that, IMO, the world will soon know all about.
For obvious reasons… such as a wife and family who have not seen me for a few weeks now… I will not be able to respond to all the PMs and e-mails. I hope all will understand. The company is perfectly willing to answer shareholders' questions as long as they do not violate SEC rules… and I am most willing to ask those questions, but all should feel free to make their own calls. Just realize that everyone at TSIG is working at 110% effort and without watching the clock or taking lunch breaks except perhaps to go downstairs to get a sandwich to bring back to their desk… so they are busy. Don't be upset if you don't connect the first time… try, try again… or let me know the question and I'll try and get the answer.
In closing…
Be Right!!!… Sit Tight!!!
Best always,
Marty
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