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Non-Tech : Versatech (VITC) -- Ignore unavailable to you. Want to Upgrade?

To: jperry who wrote (333)	5/6/1998 9:26:00 PM
From: Sid Turtlman	Respond to of 435

Jperry: Thanks for your comments, and enjoy your trip. <eom>

To: jperry who wrote (333)	5/6/1998 11:17:00 PM
From: Da Cat in Da Hat	Respond to of 435

I am happy that DHMG may be discussed without emotional bias. One way or the other, I would like the facts to emerge. I have perceived most of the comments to have been biased in the past and I would much prefer a more rational discussion. I hope the conversation continues along these lines.

To: jperry who wrote (333)	5/31/1998 11:17:00 AM
From: Sid Turtlman	Read Replies (1) \| Respond to of 435

JPerry: DHMG just filed its 10-Q for the March quarter. I won't do any big analysis, just point out two items. 1. The results were pretty bad. Sales were only $950,339 for the quarter, and the company lost $112,000 from operations. But things were actually worse than that, because once again a good chunk of sales were to an insider or insiders who didn't pay cash for what they supposedly bought; instead, they just gave DHMG $316,000 of its own stock back. Thus cash flow from operations was minus $426,000 in the quarter. In addition, the sales tax that Universal was delinquent on to the state of Florida (a footnote in the 10-K) remains largely unpaid. Given that states have been known to put people in jail who charge sales tax but keep it themselves, the fact that it wasn't paid despite DHMG acknowledging the existence of the liability is a sign of a company with a severe liquidity problem. That might explain the incredibly heavy recent dumping of the stock by insiders, who were making sales even below $2 per share. 2. The other point I'll make is not really an accounting thing as much as a common sense thing. Check out this quote from a DHMG news release from May 13, 1998: "D.H. Marketing acquired Universal Network through a stock exchange agreement in December of 1997. Universal Network Inc. has over 25,000 Retail Distributors in the United States and Canada and has plans to enter the European market in the fourth quarter of this year. In addition to distributing tangible asset collectibles, consisting of rare signed lithographs, historical documents, numismatic coins and fine jewelry, Universal Network has recently introduced a line of consumable health and beauty products available for both men and women." Something strike you as strange? It took more than 25,000 sales people to generate sales for the quarter of $950,000. Keep in mind that DHMG supposedly has a business independent of Universal. There must have been some business done by the non-Universal part of DHMG in the quarter, since the gross profit margin reported is a lot higher than anything Universal was ever able to do, and the rest of DHMG specializes in "selling" things at huge margins to buyers who would give them some sort of funny paper rather than money. But let's pretend that the old DHMG did no business at all in the quarter, and all of the sales were done by Universal's 25,000 distributors. $950,000 divided by 25,000 equals a glorious $38 worth of valuable collectibles sold on average by each distributor in the quarter, or a whopping $0.42 per day. I could have some fun suggesting possible valuable collectibles that might go for that price, but I will just state the obvious: The claim of Universal having 25,000 distributors is almost certainly fraudulent. A figure of about 1/100 that might make sense for that volume of sales, and I wouldn't be surprised if the real number is even lower than that. Perhaps DHMG bought a mailing list of direct sales reps, and sent them all a postcard anointing them distributors, but it is impossible for that many people to actually be selling what DHMG says they are selling and have sales be that low.