Re: 5/9/07 - [PGWC] Motely Fool: Pegasus Falls to Pieces; Freeport News: Former employee claims Pegasus is a sham
Pegasus Falls to Pieces
By Seth Jayson (TMFbent)
May 9, 2007
It doesn't get much worse than this. The Freeport News reports that a former employee of Pegasus Wireless is claiming that the entire company is a sham [ freeport.nassauguardian.net ]. This is only the latest and greatest in the saga of the company [ fool.com ] that made news by acquiring Asian manufacturers and American system sellers, touting "insider buying," fighting "naked shorts," crashing and burning [ finance.yahoo.com ], torching cash [ fool.com ], voluntarily delisting from the Nasdaq, and then abruptly moving to the high-tech hub (ha!) of Grand Bahama [ fool.com ].
This has, according to Pegasus CEO Jasper Knabb, all been a part of his grand plan to produce and market a cutting-edge wireless-networking product, an ugly little box claimed to be better than anything Apple (Nasdaq: AAPL), Cisco (Nasdaq: CSCO), Netgear (Nasdaq: NTGR) or Microsoft (Nasdaq: MSFT) can offer up.
The latest list of charges is both long and amusing. Seriously, read this [ freeport.nassauguardian.net ], and then come back. If you must have the condensed version: This Pegasus whistleblower says Knabb has been a political opportunist, promising loads of jobs but, in fact, providing little training. He says only a few of Pegasus' latest products were ever assembled and that Knabb told employees further parts had disappeared on a sunken boat. Once in the Bahamas, Knabb, playing politics [ freeportarchive.nassauguardian.net ], tried to impress the locals by pledging cash [ freeportarchive.nassauguardian.net ] but seems to have ended up on the losing side [ freeport.nassauguardian.net ].
Even crazier, the welder-turned-whistleblower says Pegasus' Bahamas operations are just a front for Knabb's real operation: treasure hunting. According to previous reports [ freeport.nassauguardian.net ] in the Freeport News, Knabb purchased a boat with a long and sordid political history and has been using it to blow "holes 30-feet deep into the seabed and [mess] up the corals and vegetation." The former Pegasus welder making the allegations says he's been out on the boat and is the guy who fabricated the hole-blowing equipment for Knabb.
(Strange as it sounds, it seems to fit Knabb's M.O. In the past, he's talked about [ fspioneer.com ] his prowess as a diver, and this treasure-hunting rumor was reported to me months ago by a former employee of a Pegasus-related company. I noted it in my CAPS blog. [ caps.fool.com ])
As amusing as this is, there's a dark side. A lot of people lost a lot of money betting on Knabb. And not just the folks in Freeport who may be out of jobs. Shares once traded at a split-adjusted $85 each. They're worth $0.33 today.
When it was still floating on Knabb's continuous PR blitz, it was a half-billion-dollar company. Then reality struck, and unfortunately, Knabb's lame excuses were validated by the naive reporting of one Forbes writer who bought Knabb's entire naked-shorts story, along with his claims that a company spending next to nothing on research and development could come up with a product to top Jobs, Gates, and the rest of Silicon Valley.
Amazingly, this happened even though Knabb's past history as a stock operator was well-known from the pump-and-dump special Beach Access/BioFiltration Systems, a crummy little operation that was panned at the time by Stock Patrol [ stockpatrol.com ] and even appears to have been the original source for the chat-board myth of the "paid basher." [ thestreet.com ]
It would be nice if those responsible for aiding Knabb would step forward and come clean about what they've done. But don't hold your breath.
As for Knabb, the final paragraph of the recent article tells you all you need to know about his trustworthiness. The Freeport News reports that he told the paper Pegasus "is worth over $100 million a year and has over $700 million sitting in the bank."
That would be a pretty incredible deal for interested stockholders, since the company's market cap is actually $7 million. But it appears to be a complete fiction. Pegasus' latest annual report shows $1.9 million on the balance sheet, or 1/350th of the sum Knabb claimed.
The truth hurts. Here's hoping it hurts the right people for once.
Comments? Bring them here.
At the time of publication, Seth Jayson had shares of Microsoft but no positions in any other company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. Microsoft is a Motley Fool Inside Value recommendation. Fool rules are here.
fool.com
=====
Local/National News
Former employee claims Pegasus is a sham
By LEDEDRA MARCHE
Senior FN Reporter
lededra@nasguard.com
A former senior employee of Pegasus Wireless Corporation is blowing the whistle on the company, calling it a sham and claiming that the government has been duped.
Welder Foreman David Carey, who was with Pegasus since the plant doors opened in Freeport, said Monday it is only a front for what Chief Executive Officer Jasper Knabb really came here to do – treasure hunting.
But when contacted for a response yesterday, the Pegasus boss told The Freeport News he is not interested in commenting on anything else, except to congratulate the new government on winning the election and to say that the company is back open.
A majority of the 100-plus employees were given two weeks off with pay by Knabb, who cited a politically charged climate as his reason.
The move was said to have come on the heels of an argument between two employees on either side of the political divide and the staff was to return after the May 2 general election.
The news incited talk of the permanent closure of the wireless plant, but yesterday the Pegasus CEO chided the media for such reports and confirmed the plant was back open and up and running.
"To put us in a middle of the political race was stupid and the media was incorrect in reporting that Pegasus was not reopening," he said.
In late January, Pegasus Wireless Corporation began the process of transforming a former crystal warehouse in Freeport into its corporate office and manufacturing plant.
Pegasus creates hardware and software solutions for broadband wireless networking and Internet access applications through its manufacturing facilities in China and Taiwan.
The company is a leading provider of advanced wireless solutions in the United States.
The 20,000-square foot warehouse situated on West Settler's Way was opened in mid-February during an elaborate ceremony and media tour attended by former Prime Minister Perry Christie.
However, Pegasus Wireless has been inundated in controversy, from negative reports of falling stock in the U.S., to hiring practices and the involvement of Attorney Pleasant Bridgewater, the former Progres-sive Liberal Party MP for Marco City, as his corporate legal counsel.
Confirmation of Knabb's purchase of the embroiled Otori fishing vessel, which was the mother ship of the Korean fishing boats that were at the centre of a major scandal in 2003, also turned heads as it was reportedly the wireless boss' intent to use the vessel for treasure hunting.
Nevertheless, Knabb, in an interview with The Freeport News back in March, denied any knowledge of the boat's political history when he purchased it in September and any to treasure hunt.
His real reason for buying the 210-foot boat, he said, was to utilize it as a dive vessel.
But Carey is convinced the Atlantis, which the vessel has been renamed, is being used solely for the purpose of treasure hunting and salvaging.
And, he said it is obvious that the wireless plant is only a shell as the Bahamian staff have not been given any type of exposure or experience to this new wireless world, despite the fact that Knabb boasted that they will show the world that The Bahamas can do the job.
According to Carey, the employees never built any of the CynaLynx boxes from scratch and it was simply a few pieces brought in, put together in about two weeks and shipped out.
Afterwards, he said the staff sat at the plant for weeks with nothing to do.
He noted that Knabb promised the staff that the parts were on their way and it was not until the day he decided to send the staff home and close did he tell them that the "mystery ship" carrying the parts had sank.
As for the altercation on April 20 which allegedly led Knabb to shut down, Carey said it had taken place between two male employees on the floor which was witnessed by a number of the staff and had nothing to do with politics.
"Absolutely nothing," he said, adding that it in fact had everything to do with locating of a piece of company equipment.
Carey said Knabb also used the opportunity, while he was giving everyone the time off, to invite anyone who wanted to join him on the boat and promised them two percent of their findings.
"The whole thing is a game," he said. "He has been playing a game from day one and he comes with a new story everyday."
Carey revealed that the deciding factor for his leaving on April 24 was the abrupt manner in which Knabb fired the chief of security the day before and, he said, he chose to approach Knabb about it.
"That was like the icing on the cake for me; how he had been dealing with people," he said "He respects nothing, he cares for nobody, he promises you everything, he gives you nothing. People would pass and you'll never get a good morning out of him unless one of Pleasant those or lawyers or some other investors are down there."
Carey insists the wireless plant is only a distraction for what the Pegasus CEO wants to do, pointing out that no legitimate training had taken place at the plant.
"He is basically playing with people's emotions," Carey said of his former boss, adding that everything changed after opening day.
"After that, everything else went downhill from there. Everything basically stopped, his whole attitude, he started talking about letting people go almost immediately."
"He got what he wanted as far as the plant (and) opening day on television with the (former) prime minister down. It looked legitimate. But the (former) prime minister and everyone as far as I'm concerned, everyone was duped."
What Knabb is really interested in, Carey said, is 50 miles or so north of West End and he is destroying the reefs, blowing holes 30-feet deep into the seabed and messing up the corals and vegetation.
Carey admits he has gone out on the boat at least four times over a month's period with Knabb as he was responsible for welding the very equipment that was being used to blow the holes.
He revealed that it is an all-day trip that takes two hours to reach the spot and the divers dive up until late into the night.
"He brags about how deep the holes were he was in," the former Pegasus employee said, pointing that he is certain that the treasure hunting or salvaging Knabb is doing, even if he has discussed it with the government, they are not aware of the damage it is causing.
A part of him was hoping the company was legit, Carey said, but after observing the operation, he is convinced it is going nowhere.
Knabb, however, yesterday claimed that the company has seen its biggest quarter ever, has more employees today than it had when it was open and is still moving forward.
"The employees' vacation is over. The plant did not close and at least you guys got it right that it is a big company and we are in four countries," he said, adding that Pegasus is worth over $100 million a year and has over $700 million sitting in the bank.
© 2007 The Freeport News
freeport.nassauguardian.net |
