The past will always teach about the future. More detail and another Conference Call. I wonder how many shares were unloaded into that informal PR? You've got to read these if you're really serious about your money.
Message 5401488
To: gambler (3075 )
From: JEFF BERRY Tuesday, Aug 4 1998 12:34AM ET
Reply # of 30428
Gambler, Thanks for setting up the CC.
I will be traveling on Wednesday. Due to the uncertainty of my schedule I will post additional areas of concern that I hope will find time for address during the CC.
I will also send you my E-mail address so as to be added to the CC list, as I will attempt to arrange my affairs, if at all possible, so as to participate on Wed.
Gambler, During your CC with Mr Gordon on 6/30/98, Mr Gordon made statements regarding his recent sale of 6,480,000 common shares of TSIG. (Post #1594)
Message 5066597
While you were away, I challenged the accuracy of Mr. Gordon's claims regarding the sale of his shares. (post # 1990 & # 2650)
Message 5188398
Message 5272073
The issues that were raised in the above two posts have yet to be addressed. Additionally, the SEC filing that would be neccessary to validate the truthfulness of Mr. Gordon's claims has yet to be filed....A filing that under SEC law is required.....if Mr.Gordon's claims are indeed true.
Concern regarding the selling of such a substantial number of shares by the CEO is indeed a matter of concern for any investor.
But in the case of TSIG and CEO Mr. Rob Gordon, concern is especially heightened in view of Mr. Gordon's role in the recently bankrupt Phoenix Information Systems (a company founded, controlled and influenced by Mr. Gordon) and the sale of virtually all shares owned and controlled by Mr. Gordon just prior to Phoenix's demise.
During the 6/30 CC, Mr Gordon that he had resigned as CEO of Phoenix "Nov. 2 years ago" and that his "only remaining role at that point was a position on the board"
Mr. Gordon, deflected all responsibility for the failure of Phoenix, saddling all responsibility on the new management team.
However, the public record paints an entirely different picture then the one portrayed by Mr. Gordon.
Background:
Phoenix was founded by Mr Gordon in 1986. The Phoenix business model was surprisingly quite similar to that of TSIG's. Phoenix provided reservation and call center operations, servicing the travel and tourism industry.
Phoenix and TSIG have many other similarities. Most notably, the lack of revenues and huge ongoing losses.
The 3/31/97 annual report comments: "Phoenix has not generated any significant revenues, earnings or history of operations from inception through March 31, 1997. Consequently,Phoenix's continued existence has depended primarily upon its ability to raise capital."
For the 12 month's ending 3/31:
.. Revenues Losses
1997.......................$1,135,368.........<$12,393,872>
1996.......................$770,535...........<$9,704,318>
1995.......................$289,645...........<$4,841,828>
Accumulated deficit: as of 3/31/97 ........<$32,373,968>
The 3/31/97 report goes on to state:
"Although management believes material progress has been achieved
toward acquiring the necessary funding to meet the Company's existing
obligations as well as contemplated capital requirements, as of the date of this filing substantial additional financial capital is required and, consequently,there is substantial doubt concerning the Company's ability to continue as agoing concern."
The above represents a true picture of Phoenix's state of affairs as of 3/31/97. A picture quite different then the one painted by Mr. Gordon during the 6/30 CC.
Under the leadership of Mr. Gordon as long time CEO and COB Phoenix was on the verge of extinction.
According to the 8-K filed 3/11/98: "In early 1997, the Phoenix Board replaced the company's management. The new management prepared a revised business plan that pushed back the date when the joint venture's software would be up and running an additional nine months
or a year, to March or June of 1998. The company then went back to raise cash. During the period from May of 1993 through December of 1996, the company had raised (and spent) approximately $39,000,000."
Why did the board move to replace the existing management, including the CEO, Mr. Gordon?.....It's safe to say that the decision was made, not because of the good job they were doing!
The first addition to the new management team was on 2/10/97. The press release issued 2/11/97 stated:
"Mr Delbert f. Bloss has been appointed Chief executive officer effective 2/10/97. As CEO Mr Bloss will oversee all daily operatios, including marketing,sales,financial and administrative matters. Mr Robert P. Gordon, Phoenix's Chairman, will remain actively involved in the Company and will continue to direct the company's long term strategic plan."
Thus, although Phoenix did act to replace Mr. Gordon as CEO, Mr. Gordon remained actively involved in the company as COB, responsible for continuing to direct the Company's long term strategic plan.
In fact, Mr. Gordon's active role in the Company is validated by virtue of the salary increase that Mr. Gordon was granted on 1/28/97, increasing his base salary from $180,000 a year to $204,000 per year.
The 8-K of 3/11/98 continues:
"The Board hired an investment banking firm, Benedetto Gartland, to assistthem in raising funds. Benedetto Gartland management and Board members made extensive efforts to locate new sources of funds. They sought to have the company's stock listed on the American Stock Exchange or NASDAQ, but were unsuccessful. They approached China Southern, potential partners such as EDS,Kemp Gemini, IBE, and Siemens, institutional investors such as AIG, Deutsche Bank,Hambrecht & Quist, Schroeder Capital Partners, Peregrine Direct Investments, Walden Group, Barton Capital, Furman Selz, and wealthy families
in the U.S., Europe and Asia, all without success."
Of the 39 million that had been raised and spent between 93-96 due to Mr. Gordon's deal making prowess, the majority, 34 million was contributed by two noteworthy investment groups headed by Mr Soros and the Hunt family.
However, both Soros and Hunt declined further investment in Mr. Gordon's company, refusing to perpetuate the existence of Phoenix, "on life support", by throwing good money after bad.
The S-8 continues: "Phoenix was running out of cash and in January of 1998 would have to pay an additional $1,800,000 into the joint venture. Once more the Board attempted to raise cash from institutional investors. This time a special committee established by the Board contacted over thirty firms, without success."
On 12/3/97 Phoenix files for bankruptcy....A very unfortunate event for the common shareholder.
In the Spring of 97, during the time that the new management team was being assembled, hopes were running high on the part of the common shareholder. After all, "Why would so many talented and skilled professional's join Phoenix, if it were a sinking ship?" (reasoning that is often used on the TSIG thread as well) However, enthusiasm was soon replaced with despair, as Phoenix's life comes to sudden an unexpected stop.....just a few short months later.
Did Phoenix fail due to incompetency on the part of the new management team?
Notice the comment contained in the 9/30/97 Quarterly report, reflecting 6 months of the new management team's efforts:
"For the six months ended September 30, 1997 net cash used in operations declined by $1,643,379 or 32% from the six months ended September 30, 1996, principally due to lower losses"
Questions for consideration:
a)Does Mr. Gordon sugar coat his role in the failure of Phoenix by suggesting that he had nothing to do with it's demise?
b)Is it reasonable to conclude that Mr Bloss and the new management team, a team that was touted as the brightest of the bright, a team that substantially reduced losses and cash consumption, a team with a tenure of just a few short months, was completely responsible for running Phoenix into the ground?
c)Does it make sense that Mr. Gordon, Chairman of the board, drawing an increased salary, responsible for directing the long range stategic plan would allow himself to be "cut out of the loop"?
It does if you believe Mr. Gordon.
Where was Phoenix located?....Was it perhaps in some far away remote location providing difficult access for Mr. Gordon the COB to stay in touch? Not hardly! Notice the proximity.
Phoenix address: 100 Second ave. South, Suite 1100
St. Petersburg Fl.
TSIG's address: 100 Second ave. South, Suite 1000
St. Petersburg Fl.
Mr. Gordon claims to spend 80 hours a week at TSIG and yet claims that as COB of Phoenix, with a highly responsible salaried position, was cut out of the loop from a company located within his own eyesight and earshot?
Can we truly accept that Mr. Gordon would accept a $204,000 salary, charged with the responsibility of the ultimate long term strategic success of Phoenix, possessing the most powerful position in the company, with authority as COB to direct the hiring, firing, and pay of management personnel, and yet makes weak claims such as:
"I was cut out of the loop" "It was not my fault"
Such claims are entirely unacceptable from a person in Mr. Gordon's authoritative position!
To accept Mr. Gordon's claim of faultlessness in the Phoenix folly is equivalent to claiming that Mr. Gordon would be completely faultless if TSIG were to file bankruptcy in the near future, due to failure to raise sustaining capital.
Would it be reasonable to conclude the the fault for such a failure of TSIG would be solely that of the new management team?
....It is if you believe Mr. Gordon.
The foregoing background is a prelude to a series of questions directed to Mr. Gordon regarding the sale of virtually all of his Phoenix shares just prior to Phoenix going under.
Questions that are of utmost importance to all TSIG investors, as it relates to Mr. Gordon's recent sale of 6,480,000 TSIG shares, and his ongoing filing authorization to sell another 7,520,000 shares of TSIG common stock.
Questions that raise considerable doubt as to Mr. Gordon's ability to overcome the past, so as to complete the PP that is desperately needed to sustain TSIG from following the path of Phoenix.
I will address those issues, concerns and questions in a post sometime tomorrow.
Best Regards, JAB
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