Suzanne,
Happy New Year! It was great to hear from you. Here are some quick
responses to your questions.
(1) Affinity is an incentive-driven organization from the top down, Scott
Roix included. Affinity's cash flow is covering payroll taxes currently,
and has been used to pay down a significant amount of TSIG.com's debts,
including past payroll taxes. It is our plan to eliminate most of
TSIG.com's "legacy debt issues" in the first quarter of this year, with any
balance being paid on a disciplined schedule of installments thereafter.
(2) There are many public companies in which the CEOs earn tremendous
compensation, as you know. In our case, Scott Roix's incentive compensation
is based totally on results that can be measured objectively, in accordance
with the philosophy of Affinity.
(3) The shares paid to purchase Affinity are independent of any commissions
to be paid. In the current stock market environment, where cash flow is
king, I think it was fair for Affinity to receive 30% of the shares of the
company. In addition to generating more than $25,000,000 in revenues and
substantial cash flow in 2000, Affinity also brings TSIG.com a seasoned
management team. As you know, in 1999, TSIG lost $8,600,000 on revenues of
less than $400,000. In 2001, as a result of the synergies between the
companies, it is our plan for the consolidated companies of TSIG.com to
result in a substantial increase over Affinity's year 2000 numbers.
(4) I think that the Street will be delighted by the dramatic improvement
in TSIG.com's financial results, starting immediately. Also, many
shareholders have been concerned about the viability of the company, and
with continued strong financial results, these concerns should soon
disappear. If the company does tremendously well, and as a result the CEO
gets paid very well, then so be it. I know a bank president in Boston who
made more than $3,000,000 in 1999, and when the Board was questioned by
shareholders about it, they said they would be happy to pay that amount to
him every year if he achieved the same great results.
(5) We all are concerned about the decline in our stock price over the past
several days and weeks, but (a) we have not yet been able to tell our story
and (b) the NASDAQ has just suffered the worst yearly decline in its 30-year
history.
(6) Your first interpretation of Rob Gordon's deal is closer to being
correct than your second, in that we will be paying out no more cash to him
than his pay for the year 2000 plus $5,000 per month through the first
quarter of 2001. In addition, his past debts to the company are to be
forgiven, which in effect represents additional "compensation" to him.
Relative to your "business as usual" comment, I would disagree. Henceforth,
substantial cash fees paid out for business development will be based on
results achieved, and not on plans and expectations.
If you or other shareholders have additional questions, please feel free to
contact me at any time.
Regards,
Paul Henry
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TSIG.com e-mail: PHenry@tsig.com
100 Second Avenue South tel: 727.897.4036
St. Petersburg, FL 33701 fax: 727.897.4029
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-----Original Message-----
From: Suzanne Newsome
Sent: Saturday, December 30, 2000 9:38 PM
To: Paul Henry
Subject: Affinity 8-K
Dear Paul,
While it has been some time since I last corresponded or spoke with you,
perhaps you will remember that I am coming up on my 3-year anniversary as a
stockholder in TSIG/TIGI. The 8-K just released has raised numerous
questions which are being repeated ad nauseum on the threads. Perhaps you
could clarify some of these issues for us.
1) Scott Roix's compensation package has been very controversial. His
overall cash compensation could easily reach $1,000,000 per year. Is this
an appropriate level of CEO compensation for a company that cannot pay its
payroll taxes?
2) Do you know of any other publicly-owned corporation in which the CEO
takes a large percentage sales commissions on a weekly basis in addition to
an extremely generous compensation package?
3) In a response to another shareholder, Mr. Roix explained that his
commissions are on sales that he developed for Affinity in the interim
between the initial negotiations and the final agreement. Since the price
of Affinity went up from 4,500,000 shares to 35,000,000 shares during this
time period, does not the entire income stream belong proportionately to
all shareholders?
4) Given the concerns listed in items 1 ,2 and 3 above, will the Street
view the company as one being operated for the benefit of ALL shareholders?
Or does the CEO receive a disproportionate reward?
5) Is Mr. Roix concerned about the stock price declining some 20-25%
percent since the release of the 8-K?
6) After reading the section on the termination of Robert Gordon's
employment, some stockholders believe that Mr. Gordon will receive the
$5,000 per month consultant fee for 3 months, keep the shares he had, and
forfeit the remainder of compensation of his employment contract. Other
stockholders believe that in addition to the 3-month consultant fee, Mr.
Gordon keeps the shares he had, and that TIGI must pay Perch all the
compensation as stated in the employment agreement. Could you clarify this
issue for us?
Paul, as you well know the long-term stockholders in this company have
suffered great paper losses on this stock. Many have substantial real
losses. Mr. Roix in his web site letter stated that he was devoted to
creating real value for all the shareholders. It pains me to point out
that the 8-K seems to subordinate the interests of the common shareholder
in favor of the CEO's interests. Many of us would like to believe that a
new day is dawning. However, what we have seen so far is repugnantly
familiar.
It is my intention to post whatever reply I receive from you on the Silicon
Investor and Raging Bull threads.
Sincerely yours,
Suzanne Newsome |
