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Maybe that's the case but again, the auditors should have been able to get someone with authority (whether it was LC, LB, KD, or the ghost of LS) to sign off on the confirm request so they could wrap things up.
Here's what I think, fwiw. The 'cash' account isn't really cash. It's been in some other kind of investment and reported incorrectly since 2006 OR, the auditors can't rely on the previous confirms because they can't be certain it was cash and not some other type of account subject to market fluctuations.
I would expect some kind of restatement on the balance sheet with a significantly reduced cash balance from what has previously been reported, and an increase to short-term or long-term investments for the remaining value. Remember, LC's statements said 'no change to net assets'. That doesn't preclude shifting the numbers around among the various asset classes.
Unfortunately, I've seen this kind of soap opera before in small, non-public companies where you can get away with antics just short of murder. But a publicly traded company behaving like this? I think KD is in over his head like someone else pointed out. He may have limited or no experience working within a publicly traded environment where finances and public reporting directly involved him.
I'm still holding a lot of shares, hoping the lawsuits don't decimate what is left.
PE ratio might be hurting this stock, especially for investors who run screens based on PE. At over 100, it looks awful.
So much potential here. I hope it gets legs soon.
Wow. With all the dirty laundry aired I sure hope they kept something back to cover their very over-exposed butts with. My god.
LC is no hero. KD is in serious trouble as well if he was bypassing the board on important decisions like mergers and acquisitions. However, it is quite clear after reading the Cole and Boyne letters that they are micro-managers who ruled the roost before KD's arrival. I find it astonishing they would imply or suggest the CEO shouldn't have access to bank account information and that they allowed games to be played where the audit was concerned.
I wouldn't be so sure the cash is still there. If LC and LB are cooperating, what the hell is the problem with the confirmation process? Even if it is, the lawyers have more than enough ammo to keep the company buried in lawsuits for a very long time. Good bye cash.
They all need to go. Every one of them is responsible for this mess.
Hi Demmo. I saw you sold your shares a couple weeks ago, or thereabouts. I had dumped mine a few days before. Took a small loss.
Anyway, appreciated your skeptical and challenging questions. I decided my lottery ticket money would be best used elsewhere.
Good luck to you in all your investing pursuits. I've learned some hard lessons recently with EGMI. Greed kills. And those guys were reporting financial information and appeared to have a solid balance sheet. After that painful experience, I decided to cash in my IDTA shares.
Good luck to all of you who continue to hold (and buy more).
No, about the time I was thinking of ordering a party pack of Pokens (say THAT 3 times fast), the entire Poken thing was history.
It's weird 'cause KD was proud of Poken, at least that's the impression I got when he emailed a link to the cover of the magazine featuring them (I can't remember what mag).
Hopefully they've saved a few of those party packs. Might need 'em. They could swap Thomas the Tank cards. I'm sure gambling is big in prison. They should take a few game cards with 'em too.
The sad thing is, even if the cash is there and the assets are intact, they may never survive the lawsuits that will linger after.
Wish we knew the story. Anyone know anyone who knows AH? Is she a heavy drinker with loose lips?
Perhaps they should be practicing their perp walks.
I knew that. If this is fraud, he and Boyne should go down, and hard. The only thing that gives me pause is why Boyne would make a statement at all. Why not just disappear to the Cayman Islands?
If you're lying about a large sum like $12 million, seems to me you would realize the jig was up and keep your mouth shut or go into hiding.
There's definitely a lot more to this story. Unfortunately, it will be months, if ever, until we get the whole truth.
I don't think AH was considered a financial person. Marketing, sales, right? That's probably her out, not a central target in any lawsuit.
Working capital equals current assets (cash, marketable securities, accounts receivable). Anything that is cash or can quickly become cash.
Current liabilities are the same. Liabilities (including debt) that is due in less than a year. Short-term notes payable, accounts payable, payroll taxes owed, and so forth.
So yes, it follows that if they had enough assets and little to no debt, there would be no working capital crisis. I think the investments on the balance sheet (the dubious ones) are longer term. I'd have to double check though. So even if they are worthless or seriously impaired, they may not fall into the definition of working capital if they're not listed as short-term. Although supposedly they were going to 'monetize' them. I wonder for whom...
I think your hunch is dead on. Let's say, for argument's sake, EGMI was legit, had lots of cash. Some genius makes the decision to park it with First London which turns out to be a scam. I wonder who made that decision and if any related parties were involved? Hmmmm.
Agree. Too many coincidences, too many related parties. One common thread.
I should check EGMI's past financials again. I wonder about the timing of LS's investment in EGMI. It's possible there was $12 million in cash as his investment was around $10M if I recall correctly.
Maybe the cash is there. I'm doubtful as it seems odd they had to bring in help to raise working capital. Working capital is current assets minus current liabilities. If they had the cash, there would be no issue with working capital.
That was the dumbest PR they could've put out, in my opinion. Especially following on the heels of the 'no material misstatements' BS. I find it interesting that KD supposedly couldn't be found to issue that PR. Perhaps he didn't want to be found or he had a very smart attorney advising him not to say anything. Let Boyne fry if it's not true.
I've thought about this bank confirm fiasco. Here's what I wonder. Based on Pontiac's sleuthing isn't there a connection to First London by Lee Cole and company? The only way to fake a bank confirm is if the bank has employees or insiders colluding with management in the company being audited.
That's the only way to fake a confirm. The auditors NEVER EVER allow the confirm to touch management's hands. They have them type up the basic information, then it goes back to the auditors, who mail the confirms directly to the bank. The bank returns the confirm directly to the auditors.
Unless somehow the chain of custody was broken, or there was a colossal mistake of epic proportions, it's got to be fraud. I'll be more than ecstatic if there's cash there, but I have serious doubts that is the case.
I got caught in the poop dump on this one.
I had that same thought on the Poken deal. What if they couldn't come up with the money and someone at Poken started asking questions?
There was a reason the PR went out on Friday. Good news is usually released earlier in the week, not on Friday.
He wasn't there is 2008, this fiasco dates back way before his time. Imagine taking a great new job, having someone like Lord Steinberg as your mentor, and then suddenly finding yourself in the middle of a sh*t storm.
I sure hope the appropriate parties are made accountable for this.
I'm with you, Grampie. Sad to say. The theory that KD alerted the SEC over a power struggle doesn't seem plausible, or that he alone has hired an investment banking firm to raise 'working capital' to hire accountants to save the day. No one in their right mind would go to the SEC and call attention to themselves as CEO presiding over a mess like this. They would resign. Like the new CFO, who apparently took one whiff and didn't like what he smelled.
The cash isn't there or it is locked up and subject to claims by other parties or some issue that is preventing the company from using their own robust 'working capital' to fix the mess. If they truly had $12 million on hand and almost no debt, they wouldn't need to raise working capital.
I was one of the folks who got suckered into buying more shares, thinking the worst was over. Boy, am I sorry.
I also don't think the issue was with new management, if there's fraud and blatant misstatement of the cash position and other assets. Look to the current directors, former CFO's, CEO's etc. Not KD. If the rumors are true he was drunk in bed, who could blame him.
The money could have been there but embezzled, or tied up in a legal dispute over assets that transferred with the sale of the original bank. Who knows.
Based on what Pontiac turned up a couple days ago, it's looking like any cash they may have had was siphoned off.
Unfortunately, market, you're probably right. That was my first reaction too when I read the press release. None to little cash available or there wouldn't be mention of 'working capital' needs. What a cluster-you-know-what this fiasco has been.
And then there's potential dilution in the works too, although I don't know how they can successfully raise capital with the gigantic mushroom cloud overhead.
I was hopeful. Now I'm just plain disgusted.
Concur 100%. It's the investments and possibly the need to confirm bank assets behind the cash account. IMO.
Happy Birthday Pontiac! Don't get too close to the candles...:)
It's SEC requirements and accounting firm protocols to review and approve everything filed by the entity you're auditing. The CPA firms always file a statement with the Q's & K's saying they have reviewed and approve the publicly filed docs.
I don't think that's correct but I could be wrong. What I believe the M&B letter is stating is that they consent to EGMI filing that specific comment (ie, they approve that it is worded correctly). In other words, they consent to filing the statement they have withdrawn the opinions.
I could be wrong.
Saw that. Been on a nice run. Hoping for a double.
This is by far their most iffy investment. As you pointed out, largest one too.
I saw the google info re: Rosario Wireless. Could not find a shred of anything on Rosario Technologies Ltd. Seems that if the company name/org structure had changed, EGMI should have disclosed exact name in the financials.
Good luck. I hope you find something.
I agree with you Steven. New management (KD, Houssels) are too new to have been involved in something going back 3 or more years. It won't absolve the CEO though, if there's fraud. Those Sarbanes-Oxley certifications leave no room for pleading ignorance.
With 4/15 the deadline with extension, could be one and a half months of sideways trading.
I don't see this going anywhere unless there's another PR with significant news beforehand.
Sometimes companies who file late do so because of their accounting firms. Too many clients to juggle and it's just too easy to file those extensions.
We'll see.
If the deal was inked by 12/31 then it could be Q4 but most likely Q1 2010. At any rate, I'm optimistic the cig and hog feed sales in Q4 will make for a good quarter, although hopefully margins for products remained robust and admin costs didn't increase significantly.
Will they report on time or file an extension is a question I have. Looks like they've had a history of late reporting, or at least a couple times in recent years.
Won't there be a similiar one time gain in Q4 from the land sale? That was Q4, correct? Might be less than $500 k though, I can't recall the original purchase price (sold for 5.9m).
Pontiac, I shared with my husband a few of your posts. He was immensely impressed by your comments about Pappy.
By the way, when I broke the EGMI news, I started out with all the bad news for the day. When I finally said 'and just for icing on the cake...' he chimed in 'EGMI went bankrupt'. So anything better than bankruptcy was good news.
Been checking ChinaLot news on the outside chance they might make an announcement about EGMI deal but not seeing anything. Everything was shut down over there through Feb. 19 for Chinese New Year.
Pontiac, did you notice that Prize Mobile is publicly traded? I don't believe that investment should be in question, should have been easy enough to verify share price.
The only thing I noticed was Prize Mobile's statements ended June 30, 2009 stated EGMI owned 10,000,000 shares or approximately 14% of the company. In an EGMI SEC filing between June 2009 and November 2009, EGMI stated their percentage of ownership was around 19%.
Reciting this from memory, I too have been surfing the net for hours on end. I tried to find evidence of Thomas the Tank game cards or quizz cards and couldn't find anything listed for sale that resembled an EGMI product at their official website. Don't know if that's significant or not.
I agree, the PO box is not a huge deal if the company were in flux. Seems like it wasn't that long ago they discussed the move to CA.
Concur on Pontiac's great sleuthing work. And that all is not lost. The biggest hole I see is the investment value of Rosario Technologies. Like another poster previously commented, I can't find any info on this company whatsoever.
We'll all take a beating until the dust settles, but perhaps out of the ashes the long term investors will do okay.
I'm with Pontiac. A China Lot deal would be the tourniquet to stop the bleeding.
Interesting. Maybe this is a question of bank liquidity and ability to back their assets. Not familiar with what protections the UK may have for bank deposits.
Maybe it's down from traffic overload. Or, it could be they have content that's been called into question as to accuracy.
Damn, limbo stinks. We need info and soon.
I don't believe this company is a complete fake. For one thing, they've made public presentations discussing Thomas the Tank and American Idol brands. If they were making this stuff up, those companies would have sued them blind by now.
I just hope there's still a chance for China Lot deal. If deals were pending, an SEC probe might give other parties second thoughts.
With some on this board planning to exit as soon as the stock trades, I'm not very hopeful for anything less than a complete haircut.
FWIW, I agree it's probably not a good idea to contact other companies about EGMI, although the SEC halt is hardly a secret.
I don't think it's a good idea to bombard IR at EGMI either. They've got their hands full and let's face it, they're not going to divulge any information until they can issue a press release. That's not going to happen anytime soon.
I haven't looked yet, but didn't EGMI originally begin as another company or merged with another company around 1999 or so? That could be why the domain name is registered to another company name.
On my way to the office so I don't have time to check. Just something I thought of when reading your post.
Yeah, my timing was great too. Invested another $5K into EGMI the day before the halt. Already owned around $20k. Praying for a miracle or enough time to recover. Not sure my lifespan will be long enough to see a full recovery. Live and learn.
I've done real well with the China plays. Another one I like to buy and sell is FUQI. I also own a few shares of TPI. At one time I owned CNOA, CHNG, NEP, CSGH, CMTP, CPHI, CAEI and a few others. All of those I held very short term and sold at nice gains.
Should've done the same with EGMI. Sold a few blocks last year and locked in enough gains to break even if I lose everything I currently have.
Hope CKGT and ALIF are more torpedo proof than EGMI. What a disaster.
Been tempted to buy more but I've got way too much CKGT and even more ALIF.
Still smarting from the EGMI debacle.
Hey guys, aren't there rules against name calling? C'mon. We're all in the same ugly boat. I'd like to believe there's a chance an acquisition was in the works but the other side of me says 'not likely'.
We'll just have to wait and see what happens. Most likely we will be crying in our beer (or drink of choice).
The effort by all to dig into things and share what they find (believe) is appreciated (by me anyway!).
Schiff did not sign off on the 9/30 quarterly. They were filed in November, well after he left. Certified by Cole and Boyne.
Did Schiff sign off on the 9/30/09 financials? That would be a key indicator that he resigned for reasons other than D&O. By October 31, his resignation date, he would have been busy compiling the data for the 10Q and thus, may have encountered issues he was not comfortable with.
Confess that I haven't re-read the 9/30 statements for certifications. Will do so shortly.
Thanks, I will take a look at that. CTFO is a gamble, I noticed significant insider selling and a few issues on the financials. They're not debt free, receivables are growing but comparing to industry norms, they're not out of line.
The Forbes ranking was interesting, did you read that?
I took a small position to diversify my China holdings across sectors.
The acquistion theory has merit. Ballys would be very interested in EGMI if EGMI had closed the ChinaLot deal. Ballys would stand to gain tremendously just from the licensing deal. Looking at EGMI's potential versus current market cap, owning the entire pie may have been much more attractive to Ballys.
Sure, no problem. Keep in mind my track record with EGMI is less than stellar, so take my suggestions with a grain of salt.
I'm going to check into the one you mentioned too. Problem is I don't have a lot of cash laying around now that my EGMI is tied up. Don't want to sell CKGT and pretty happy with the rest of my holdings.
Never enough money. Or time.