To: Anthony@Pacific who wrote (64293 ) 12/9/2000 2:54:41 PM From: StockDung Respond to of 122087 SEVU been shipping those thingiemagigs, I hope that this does not happen to them. Just a reminder that Charles Abrahms of Videocom Inc filed a 144 for 100,000 shares of SEVU stock and was a principal shareholder of Elcom Technologies. Angel: Lennart Hagegard Investment: Elcom Technologies His loss: $135,000 For most of his career, Lennart Hagegard was a middle manager in large multinationals like engineering giant A sea Brown Boveri and furniture retailer Ikea. Four years ago the 56-year-old native of Sweden, who lives in a Philadelphia suburb, retired to dedicate himself full time to fund startups. "You can make more of an impact on small companies," he says. "You can really make a difference." It hasn't been easy. When Hagegard invested in Malvern, Pa.-based Elcom Technologies Corp. in January 1996, the chief executive took the money and scrapped his advice. So much for making a mark. Founded in 1993, Elcom sizzled. Its products—ezPhone, ezOnline, ezTV—supposedly received audio, video and data signals over electrical wires. No phone lines or TV cable needed. A home with just one phone jack could use ezPhone in any room: simply plug it into the wall outlet. Hagegard heard about Elcom in an angel network and was wowed by a demo in December 1995. "We made calls over the electrical wires. I had never seen anything like it," he says. A month later he put up $100,000 for just over 1% of Elcom stock. He was betting on Elcom's silver-tongued boss, Robert Vito, then 33, a former Price Waterhouse consultant. Vito had raised $22 million from more than 300 individual investors between 1993 and 1996. After handing over the money, Hagegard tested some products at home and found abundant glitches. He says he warned Vito to spend more time on product development, but Elcom pushed ahead, putting prototypes into production. The gizmos, priced at $100 to $150, hit the market in April 1996 and had a promising start. Elcom projected $10 million in sales over the next year. Three months later a local investment bank raised $7 million in venture capital finance for a 30% stake and set plans to take Elcom public in the fall. Hagegard put in $35,000 more. Weeks later retailers started returning 50% of their inventory. Yet Elcom kept cranking out product, hoping the gadgets would improve. They didn't. "Vito's aim wasn't to create a successful company, it was to do a fast IPO," says Myrddin Jones, former vice president of strategy. The company never got that far. In 1996-97 it spent $6 million to make 100,000 units; only half of those sold. In March 1997 the investment bank ousted Vito. One year later, with scant cash and a warehouse of dead products, Elcom filed for Chapter 11. Now it's out of business; the intellectual property, such as it was, got sold for $187,000. Asked to comment, Vito says high return rates are common for breakthrough products. Given more time and money, Elcom would have gotten it right. Cell phones had high glitch rates at first, he notes. They exist today "because investors stuck with it and got the financial backing to make it happen." Hagegard? He now says he should have hired an expert to evaluate the goods. Source: Silvia Sansoni, Forbes, April 19, 1999 google.com