Pugs,because you were so concerned,Chip must have seen you still have a little room in your mouth...(IMO,this speaks volumes about the company's intentions on keeping shareholders abreast of the company's standing)
Dear Kenneth:
Thank you for your e-mail. The following is an attempt to answer your
questions.
1) How many shares are currently outstanding? About 48 million.
2) Have all debentures been converted? No. All debentures except for
debentures held by two debenture holders have been converted. One
debenture holder holds about $225,000 in debentures. The other holds about
$900,000. The latter has never converted any of its debenture.
3) Will we be asked to increase the number of authorized shares to
accommodate the conversion of any remaining debenture holders? Yes. By
the terms of the debenture, we are required to ask for the increase. This
can only be accommodated through shareholder approval.
4) Will we be asked to increase the number of authorized shares to
accommodate/defer the financial agreement with APS? Yes. We are required
to ask for shareholder approval but, even if authorized, the increase is
really nothing more than additional security. APS cannot convert its debt
into stock without the consent of the Company unless the Company is in
default and the initial shareholder approval is obtained.
5) Has the company been able to make the $40,000 monthly payments to APS?
Are these payments current? I cannot answer these questions fully because
to do so would require the disclosure of non-public information. The
Company is not currently in default with APS and is in a position to make
its next scheduled monthly payment.
6) How many shares are held by insiders(144 or other (form 4))? I don't
have current data, but let me say that the last time that I checked (about
4 months ago) that insiders (including management employees who are not
required to file Form 4's) held about 4,000,000 shares.
7) Have any insiders purchased or sold any stock recently (144 or other)?
Assuming the term "recently" means within the last two months, some stock
has been sold and repurchased for tax loss. Other stock is in the process
of being sold and repurchased for tax loss. The Company hopes that its
stock purchase plan which did run into a glitch will be fully operational
within 30 days. Employees of certain subsidiaries, especially KR
Industrial Service of Alabama, Inc., have expressed strong desires to make
purchases.
8) On Sept.5, EXSO announced that it had entered into an agreement with
Harold ''Butch'' Adams. What has Butch accomplished? Mr. Adams worked with
the Company toward resolving some accounting problems. In about November,
1997, he began working on an "as needed" basis. He has returned to his own
practice. I believe it is fair to say that he provided assistance in the
following areas:
* providing guidance concerning debt management;
* providing input in regard to the 7-7 financial situation;
* providing guidance into tax payments and withholding; and
* providing guidance into accounting operations.
As a side note, let me also say that the position held by Butch's wife,
Susan, who was formerly in investor relations at the Company has been
eliminated as part of the overall cost cutting of the Company.
9) What is the status of refinancing EXSO's debt for more favorable terms?
I'm sorry but I cannot answer this question because it constitutes inside
information.
10) Since hiring Butch, has Ed progressed on the Brownfield initiative.
No, Ed has been involved in other matters. However, other persons inside
the Company have progressed on the Brownfield matter.
11)How are the different subsidiaries performing (current financial status)?
* KR Industrial Service of Alabama, Inc. -- performing well in my judgment;
* Larco Environmental Services, Inc. -- performing well in my judgment;
* Eco-Systems -- performing well in my judgment;
* SpilTech Services -- performing well in my judgment;
* 7-7 -- not currently a cash drain on the Company and the current
situation is under
evaluation;
* CESI/Cierra - Not operational;
* Exsorbet Industries (Ark. subsidiary) - holding assets and not generating
profit;
* Administrative and Other Non-Operational Subsidiaries -- N/A.
Overall, the industrial service sector (not including 7-7) seems to be the
future of the Company. In my opinion, this division is performing in an
efficient fashion.
12) What is 7/7 current and future situation (financial, contracts etc)?
We are currently evaluating the 7-7 situation. 7-7 is currently not a
drain on the parent company's finances.
13) Is 7/7 up for sale, or do you have intentions of putting it on the
"block"?
We are uncertain as to the action that we will take and are continuing to
evaluate 7-7. Any further information would constitute non-public
information.
14) Has the company received any new contracts, if so please elaborate?
Yes. The Company has received several new contracts, but I do not have
adequate information to elaborate. Let me say, for example, that KR
Industrial Service of Alabama has entered new contracts, at least one of
which was a multi-million dollar contract. Under the direction of Messrs.
Connors and McDonald, I believe that the industrial services sector can
keep just about all equipment that they have, or hereafter acquire, busy
with current or future clients (i.e. new contracts).
15) My stock value is currently at a 59% loss, why should I continue to
hold and not cut my losses and sell now?
1996 was not a good year for the Company. In 1996, the framework was
established for the price of the Company's stock to plummet downward. When
Jim Connors took over control of the Company as President and CEO in
February, 1997, he inherited numerous financial and other problems. He has
managed those problems and developed a business plan which has kept the
Company from being required to filed for relief from its creditors.
Jim Connors personally lost close to $1,000,000 in the stock himself. His
interest is certainly aligned with the shareholders because he knows that
the only way that he will ever recover his losses is to increase
shareholder value.
While 1997 will certainly not be profitable (remember the second quarter
losses), 1998 is a new and exciting year. We personally believe that 1998
will guide the future of this Company and that the end of the current year
will certainly be better than the beginning.
NOTE: CERTAIN STATEMENTS MADE IN THIS DOCUMENT ARE "FORWARD-LOOKING
STATEMENTS" (WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995) REGARDING THE PLANS AND OBJECTS OF MANAGEMENT FOR FUTURE
OPERATIONS AND THE RESULTS OF FUTURE OPERATIONS. SUCH STATEMENTS INVOLVE
KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE
ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS
INCLUDED HEREIN ARE BASED ON CURRENT EXPECTATIONS THAT INVOLVE NUMEROUS
RISKS AND UNCERTAINTIES. THE COMPANY'S PLANS AND OBJECTIVES ARE BASED, IN
PART, ON ASSUMPTIONS INVOLVING THE COMPANY AND ITS BUSINESS. ASSUMPTIONS
RELATING TO THE FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER
THINGS, FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS AND FUTURE
BUSINESS DECISIONS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT
ACCURATELY AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY.
ALTHOUGH THE COMPANY BELIEVES THAT ITS ASSUMPTIONS UNDERLYING THE
FORWARD-LOOKING STATEMENTS ARE REASONABLE, ANY OF THE ASSUMPTIONS COULD
PROVE INACCURATE AND, THEREFORE, THERE CAN BE NO ASSURANCE THAT THE
FORWARD-LOOKING STATEMENTS INCLUDED IN THIS DOCUMENT WILL PROVE TO BE
ACCURATE. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE
FORWARD-LOOKING STATEMENTS INCLUDED HEREIN, THE INCLUSION OF SUCH
INFORMATION SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR
ANY OTHER PERSON THAT THE OBJECTIVES AND PLANS OF THE COMPANY WILL BE
ACHIEVED.
Thank you for your inquiries,
Chip Sexton
Executive Vice-President
Consolidated Eco-Systems, Inc. |
