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The thing that kept me in to "the bitter end" was the involvement of Lord Steinberg. To have a guy as Chairman and principle investor who spent his whole career involved in the gambling industry, made his investors billions, had a reputation for high integrity and, given the industry he prospered in, would have had experienced every scam in the book, gave me a lot of confidence that EGMI could not be a scam.
I just could not get my head around the idea that this man, Steinberg, could be involved in such a tawdry little affair.
The other kicker for me was the cash. I still would like to know how the auditors missed that there was no cash. Cash is HARD to fake so either the auditors were grossly incompetent ( my guess) or Cole et al came up with some incredible new way to fake out a thorough audit. I have never heard of an audited public company where the cash was able to be faked completely as is the case here.
What is scary is that if this could happen with EGMI then NO over the counter stock is safe. There is obviously not a high enough audit hurdle to keep scammers out so what can one trust?
Between the auditors and Steinberg estate there are some deep pockets out there that were involved in this snafu. I'd sure like to hear what is going on with the class action lawsuits. These people need to be brought to account if for nothing else as a cautionary lesson.
One last thought. What exactly IS the function of the SEC if not to prosecute frauds like this??? Where THE H are they???
Nope, nothing there anymore, I'd say. I've been hanging on to far too many shares all through the drama as I had seen no evidence of fraud and I did not think Lord Steinberg would be involved in fraud or taken in by shysters with his background.
Unfortunately I was wrong as we now have real evidence of fraud.
LS apparently now states that he has knowingly misled investors for 8 years by hiding a material transaction that, if true, would effectively strip EGMI of it's major assets and collapse the business. He has been Chairman of the board and signed off on years of filings that gave no hint that the money being accumulated did not belong to EGMI and it's shareholders.
This is simply fraud.
I intend to do just that but first we need to write an authorization for them to sign.
Any attorneys out there want to volunteer to help in this task? please contact rswalser@yahoo.com
We also need help gathering adresses for sharholders and institutions. Any volunteers?
"I just do not know what can be done externally to move this along."
How about if we organize and try to force some answers? What have you got to lose? Instead of just gnashing our teeth in frustration, lets at least TRY to get some answers. Please help us do so.
Not sure how it would "slow up" their efforts but if you actually think they are trying at maximum speed to get the questions resolved, fine, but I do not.
When this all started and questions arose about the cash account did anyone on this board think it would take this long to confirm a cash account? It was supposed to be cash, after all!!
Reviewing the financial documents does not have to be an obstructive exercise and , for my part, it will not be.
There are a few key questions we need answers to and I think I'm like most on this board in wanting to do so as quickly as possible and without hurting the business, if there is one here, going forward. I think this can be accomplished if we can get the shareholders support.
I think it is obvious that the current management has zero concern for our welfare. There is no way they would have let affairs get to this point if they did.
If the shareholders do not force action there is no telling when or if we will ever know what really happened. I would ask all shareholders to help us to reach the 15% needed to go forward.
I will agree to spearhead the effort but I, like most, have plenty to do in my "real" life and will need your help. We initially need an attorney to help us write the proper authorization and then we need help contacting shareholders.
Please contact me at rswalser@yahoo.com if you are willing to help get this mess resolved.
I think there is plenty of expertise on this board to get this done. I can put in some time and it sounds like Jacopec just volunteered. If we had an attorney to help us put together the petition so we know it is correctly done and a couple of us took the lead in contacting shareholders and getting signer authorizations, I think we can do it.
At the least it gets us on the start to organizing a response to the actions of the current board.
There doesn't appear to be anyone else looking out for our interests so maybe we better try. Perhaps we can't get enough support, but if we don't even try then we are sure to fail.
My email for this action will be rswalser@yahoo.com. Jacopec and anybody else willing to help- drop me a line and lets get rolling!
I do not necessarily intend to engage professionals to do a full blown audit, nor do I think this necessary. I believe a competent person, if given complete access to the records, as required by law, could make a pretty good determination of what is going on here.
If EGMI directors choose not to make a COMPLETE record of the financial affairs of the corporation available they would be liable for costs and penalties.
There are rally a couple of key items that would need to be audited in order to determine much about this company.
I would look for invoices evidencing sales of product. Corresponding invoices, bills of lading etc showing purchase and shipping of the product and bank records showing payment for the product. I would do the same regarding licensing revenue.
I would additionally look at all records pertaining to the cash account and it's movement.
Verification, or lack thereof, of these items would go along ways towards confirming what is going on with this company.
While I realize that the BOD may not wish to cooperate, a district court order could go a long ways towards ensuring that someone with access to the records does co operate.
I know my way around a set of books pretty well and would pay for my own flight or chip in to pay someone else's way there to take a look. No need, IMHO, to hire an audit firm. I am not looking for an audit that will stand up to SEC requirements, just a little truth!
Another interesting provision of nevada Corporations law:
NRS 78.347 Application by stockholder for order of court appointing custodian or receiver; requirements of custodian; authority of custodian; adoption of regulations by Secretary of State.
1. Any stockholder may apply to the district court to appoint one or more persons to be custodians of the corporation, and, if the corporation is insolvent, to be receivers of the corporation when:
(a) The business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that a required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or
(b) The corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets in accordance with this chapter.
2. An applicant on whose behalf a stockholder has applied to the district court for a custodianship pursuant to subsection 1 shall provide the following information, along with an affidavit attesting that such information is true and correct, to the district court:
(a) A detailed list of all previous applications to a court in any jurisdiction for a custodianship of a publicly traded corporation that were filed by the applicant or an affiliate or subsidiary of the applicant.
(b) If an application listed in paragraph (a) was approved, a detailed description of the activities performed during the custodianship by the applicant or the affiliate or subsidiary of the applicant.
(c) A description of the current corporate status and business operation of any publicly traded corporation for which the applicant and any affiliate or subsidiary of the applicant has held a custodianship.
(d) A full disclosure of any and all previous criminal, administrative, civil or National Association of Securities Dealers, Inc., or Securities and Exchange Commission investigations, violations or convictions concerning the applicant and any affiliate or subsidiary of the applicant.
(e) Evidence of reasonable efforts by the applicant to contact the officers and directors of the corporation for which the custodianship is sought.
(f) Evidence of a demand by the applicant to the officers and directors of the corporation for which the custodianship is sought that the corporation comply with the provisions of chapter 78 of NRS and that the applicant did not receive a response.
3. The district court shall order any applicant who is granted custodianship pursuant to this section to:
(a) Comply with the provisions of NRS 78.180 or 80.170, as applicable. The custodian shall submit evidence of compliance with this paragraph to the district court.
(b) Provide reasonable notice to all shareholders of record of a shareholder meeting to be held within a reasonable time after an application for custodianship or receivership has been granted. The custodian shall submit evidence of compliance with this paragraph to the district court.
(c) Provide the district court with a report of the actions taken at the shareholder meeting noticed by the custodian.
(d) Provide the district court with periodic reports, at intervals to be determined by the court, of the activities of the custodian and the board of directors and the progress of the corporation.
(e) Provide any other information deemed necessary by the court.
4. Within 10 days after being appointed custodian of a Nevada publicly traded corporation, the custodian shall file with the Secretary of State an amendment to the articles of incorporation containing the following information:
(a) Disclosures of any previous criminal, administrative, civil or National Association of Securities Dealers, Inc., or Securities and Exchange Commission investigations, violations or convictions concerning the custodian and any affiliate of the custodian.
(b) A statement indicating that:
(1) Reasonable attempts were made to contact the officers or directors of the corporation to request that the corporation comply with corporate formalities and to continue its business.
(2) The custodian is in fact continuing the business and attempting to further the interests of the shareholders.
(3) The custodian will reinstate or maintain the corporate charter.
(c) Any other information required by regulation to be submitted to the Secretary of State.
5. The Secretary of State may adopt regulations to administer the provisions of subsection 4.
6. A custodian appointed pursuant to this section has all the powers and title of a trustee appointed under NRS 78.590, 78.635 and 78.650, but the authority of the custodian is to continue the business of the corporation and not to liquidate its affairs or distribute its assets, except when the district court so orders and except in cases arising pursuant to paragraph (b) of subsection 1.
(Added to NRS by 1991, 1188; A 2007, 1317)
Stockholder Audit
I just received a copy of the articles of incorporation. Not much there but I will post them a bit later.
I did find an interesting provision of the revised Nevada Statutes that requires all Nevada corporations to allow an audit of all it's financial records within 5 days of being asked by any holder or group or shareholders that together hold at least 15% of the outstanding stock.
I am posting the law below. In order to certify such a request we would need written authorization of the stockholders.
Can we get 15% of the holders to authorize such a matter? I own 160,000 shares and will gladly authorize such an audit. Anyone else game? How many shares do you own? Lets see what we can do.
I am willing to organize if no one else steps up, although I am rather busy this time of year I'll make the time, but I'd rather turn this over to another qualified individual who agreed to pursue diligently and to immediately share whatever was found in the audit.
NRS 78.257 Right of stockholders to inspect, copy and audit financial records; exceptions; civil and criminal liability; penalty.
1. Any person who has been a stockholder of record of any corporation and owns not less than 15 percent of all of the issued and outstanding shares of the stock of such corporation or has been authorized in writing by the holders of at least 15 percent of all its issued and outstanding shares, upon at least 5 days’ written demand, is entitled to inspect in person or by agent or attorney, during normal business hours, the books of account and all financial records of the corporation, to make copies of records, and to conduct an audit of such records. Holders of voting trust certificates representing 15 percent of the issued and outstanding shares of the corporation are regarded as stockholders for the purpose of this subsection. The right of stockholders to inspect the corporate records may not be limited in the articles or bylaws of any corporation.
2. All costs for making copies of records or conducting an audit must be borne by the person exercising the rights set forth in subsection 1.
3. The rights authorized by subsection 1 may be denied to any stockholder upon the stockholder’s refusal to furnish the corporation an affidavit that such inspection, copies or audit is not desired for any purpose not related to his or her interest in the corporation as a stockholder. Any stockholder or other person, exercising rights set forth in subsection 1, who uses or attempts to use information, records or other data obtained from the corporation, for any purpose not related to the stockholder’s interest in the corporation as a stockholder, is guilty of a gross misdemeanor.
4. If any officer or agent of any corporation keeping records in this State willfully neglects or refuses to permit an inspection of the books of account and financial records upon demand by a person entitled to inspect them, or refuses to permit an audit to be conducted, as provided in subsection 1, the corporation shall forfeit to the State the sum of $100 for every day of such neglect or refusal, and the corporation, officer or agent thereof is jointly and severally liable to the person injured for all damages resulting to the person.
5. A stockholder who brings an action or proceeding to enforce any right set forth in this section or to recover damages resulting from its denial:
(a) Is entitled to costs and reasonable attorney’s fees, if the stockholder prevails; or
(b) Is liable for such costs and fees, if the stockholder does not prevail,
Ê in the action or proceeding.
6. Except as otherwise provided in this subsection, the provisions of this section do not apply to any corporation that furnishes to its stockholders a detailed, annual financial statement or any corporation that has filed during the preceding 12 months all reports required to be filed pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934. A person who owns, or is authorized in writing by the owners of, at least 15 percent of the issued and outstanding shares of the stock of a corporation that has elected to be governed by subchapter S of the Internal Revenue Code and whose shares are not listed or traded on any recognized stock exchange is entitled to inspect the books of the corporation pursuant to subsection 1 and has the rights, duties and liabilities provided in subsections 2 to 5, inclusive.
(Added to NRS by 1971, 863; A 1977, 659; 1997, 3092; 2001, 1368, 3199; 2003, 3092)
Sorry for the repeat but want to keep this available for new members. I intend to post the info I recieve on every site with an active EGMI board to try to get enough shareholders on board to force a special meeting. If anyone knows of any boards they think should be included please post them here.
"I have an expedited order in to the Nevada corporations office for a copy of the articles of incorporation. Should have them Monday (4.26.2010) if they are available electronically. If they are only available as copies I've asked for them to be shipped Fedex so might be here Tuesday. I'll post procedures for calling a special shareholder meeting as well as recall of BOD members as soon as I get them. I would imagine there are enough angry shareholders to force a shareholder meeting and try to get some actual answers.
We own this company and need to get involved."
How much money is there?
LC states the bank account was invested in RIC asset management which is a large hedge fund based in Luxembourg. If this was done late last year then the $10.6MM should have grown by at least 10 to 20% or more the last 6 months and there , presumably, would be more flowing into the account over the following 2 quarters.
Might be a pretty nice amount there by now, if it's invested as stated.
Personally I believe LC. What he says explains Anna H saying she had not been paid for months even though the money was there. LC is the only one who is actually offering any explanation and he is either knowingly committing fraud in a VERY public way or he is telling the truth. I just do not believe he is lying about where the money went. It would serve no purpose I can imagine and it's not like the laws in the UK regarding this sort of thing are that different from here. If he is lying and has absconded with the funds he is going to prison, it's that simple.
It sounds to me like he believes KD and Schiff were trying to not only waste the assets of the company but were then trying to cover their tracks. I'd say he thinks KD, at least, is dishonest and can not be trusted with the cash account and so , before resigning, he placed it in this hedge fund where it will be difficult for KD to get his hands on it without going through the proper procedures which may be impossible with the board blowing up like it has.
This RIC asset management claims on it's web site to have over 1.5 Billion under management so it is likely a great place to have the companies cash while this turmoil persists. With the run up in worldwide stock markets over the last year LC would probably be right that the assets have increased in value since the last financials.
I talked to the Nevada Secretary of State recently about getting a copy of the EGMI articles of incorporation which should set out procedures for shareholder initiation of a shareholder meeting as well as recall of BOD members. I hope to have a copy tomorrow or early next week and will post what I find. This nonsense has gone on long enough. We shareholders must now assert our rights and find out the truth so that we can elect a new board and get things on track or shut the company down and try to hold the appropriate people responsible if the assets have been lost.
I'm betting the cash is still there but unavailable to KD et al, which suits me just fine. I hope we can get to the bottom of things before he gets his hands on it and does who knows what with it. I sure didn't like the sound of that "extremely generous settlement" with Anna Houssels LC mentions that KD is trying to push through.
As I've posted a few times before on Yahoo bd etc, these "investments" are probably worthless and may end up being the source of the greatest writeoffs. We can only hope writeoffs are limited to this.
It beggars the imagination to believe Rosario, for instance, is worth more than $36MM when no one seems to even be able to find them!
Yeah Gramp's, I'm sure he is lying and that new law firm? They just thought it was a good idea to put it in an 8K, yeah that's it, I'm sure! They just never realized that putting an outright lie into a doc you file with the SEC was not such a good idea. Wow, what naifs! And KD? He probably doesn't have a clue what the company is doing either but just figured, What the heck, I'll sign!
You are unrelenting. Give it a rest, please. You singlehanded give real Grandpa's a bad name!
Rawnoc,
I guess I am ignorant of the mechanism for exactly how new shares are created and sold. I always assumed there is a very robust system in place to ensure that this is difficult and definitely traceable. Perhaps you could illuminate this process a bit.
Is it your understanding that these "phantom" shares could be created and sold to the public with no record of how or who did this?
If not, then do you have any candidates for who might have perpetrated such a fraud? I would think that the possibilities are rather limited in a company of only 10 or 11 employees and with likely very few of which could effectuate such a process.
Be interested to hear your thoughts on this.
There are a ton of investors/traders/speculators out there that do not care what happened yesterday. They are all, rightly or wrongly, looking to tomorrow.
If EGMI gets it's house in order and moves forward on even one of the potential deals we were so excited about last year, pretty much all will be forgiven and a new crop of buyers will take the stock price back up. The class actions will be somewhat of an overhang but these drag on for years and any outcome is uncertain and unlikely to "kill" the company in the end, if it's got a good business. The legal fees, if there are any, will just be another expected expense item until settled.
The big thing the recent letters and 8K tells me is that there is something here worth fighting, and possibly ruining careers, over. From the outside these guys might be complete Bozo's for taking a management dispute this far, but none of them appear to have been stupid people and they all had successful careers going prior to joining EGMI. I just can't see them blowing this deal up so publicly if they each didn't see a heck of a lot of potential value here.
Now that the management split is resolved, for better or for worse, I think we will start seeing information flowing out on a much more regular basis. My prediction is that in 45 days we'll have a pretty good handle on what actually happened and where we stand.
My GUESS on what happened:
EGMI generates almost all it's revenues in Europe while the new management team is mostly based in the US. I'd guess that Lee Cole controlled the cash coming in to EGMI UK and that there has been resentment building as he saw US operation, with new highly paid staff, month after month needing infusions of cash while generating no revenue. Poken comes along causing a further split as LC thinks it's a distraction and waste of their efforts. Kevin Donavan meanwhile is going merrily along organizing Sundance etc and putting out PR's about this great new frontier for EGMI.
As LC sees the cash going out and , in his opinion, being wasted, he starts to tighten the screws by making it harder and harder for the US side to get cash from UK, finally resorting to not sending any funds at all. He might have gone as far as moving the accounts to keep any other signers from having access. This explains the lack of bank verifications that Anna H mentions as occurring in late fall 2009 as well as the lack of paychecks.
When the Lord dies, things break down entirely and LC refuses to pony up the $ for the Poken deal,effectively killing that. KD et al refuse to sign anything binding that LC needs to consummate any deals in Europe and thus we "revert to licensing" deal in Europe as mentioned by LC.
People tend to get pissed when they aren't getting paid. Most don't have the ready cash to keep body and soul together after a few months and AH and possibly others become increasingly angry about the deadlock and not getting paid. The auditors get wind of the issues concerning the bank accounts in UK being transferred and, as LC won't co operate with US team, things quickly spin out of control and the audit opinions are withdrawn and the SEC suspends trading and here we are at $0.21!!
It's only an educated guess, but I think it fits the sequence of events pretty well and explains the overall situation better than "it's all a scam and always was" as some here would propound.
yep, I added also. Kind of surprised it's only up 4 or 5 cents, but I think most of us are somewhat shell shocked from the months long ordeal.
You might be right that the cash is now some other asset although I sure hope not! Can't imagine how they could go through 12.6MM in 4 months or so, but then there's a lot here I could not have imagined a few months ago. Scheesh!
I'm not sure I understand why so many think there will be such massive dilution.
If the cash is there and the biz model is intact then where does the need to raise significant capital come from?
The thing we all loved about this model is that it is basically a software company with a contract manufacturer that can expand revenues very rapidly without the need to have much capital.
If their was a real business there, which I think we mostly believe at this point, and it had the margins it claimed then the really interesting thing was that they could go from $15MM in revenues to $100MM in revenues with very little capital and the potential for huge cash generation as long as the margins held.
Now I know the lawyers and the accountants will take their cut, but one can get a HECK of a lot of accounting done for $1MM and I can't see a company this size needing that much even if they needed to review every transaction for the last 4 years.
Now lawyers can run up a big bill and they are going to have to defend what looks to be a pretty bad position, but if they have insurance, this will pay for much of the defense and if they don't it will likely take a while to churn through $2MM in fees and meanwhile the biz keeps generating cash.
Now I know they could suffer quite a judgement if they lose a class action, but that's likely years down the road and who knows what the company looks like by then.
Like I said, if the cash is there and the business model is intact, why do they need to dilute?
He's also not much of a judge of people as he met these Bozo's and then gushed over them like a school girl crush!
Does anybody now doubt there is a real business here?
Some might still have doubts about the cash but I'd think the rumors of "they never sold anything it's all a scam" should be dispelled with the latest filings and letters from BOD members.
We aren't "there" yet but the news seems like big progress to me.
So if we take these two letters at face value, what do we now know?
We know that US operations are spending (expensing) 300K a month while EU operations are generating 9MM a year from licensing.
At least one director could not find out how much cash the company had for months but she does seem to confirm that the cash was there as of last Sept 30, 2009.
US bills and salaries were not being paid from November 2009.
At least one director was unsure how many shares of stock have been issued.
New management and sales team have not generated any sales or income in over a year of being on the job.
The deal in EU has "reverted" to a licensing deal generating $9MM a year. Anyone know who this license might be with?
If these statements are true, how could anyone not think this is good news? If true they remove the doubt that this is a going concern generating real cash and that, as of last September the cash was real.
Management turmoil and chaos can be sorted out. Stolen cash and nonexistent business is hard to cure.
Happy trails to all!!
Well Rip Van Gamecard WAS just sleeping after all. Up $0.25 tomorrow!
Seems unlikely that anyone without knowledge of what the REAL scoop is would be accumulating shares in these quantities, MM or not.
200K at $0.175! Wonder who is selling and even more who is buying?
Not too familliar with this pink sheet stuff. Could a 200K share movement be made up of numerous smaller sales or is it one transaction on both sides of the sale?
This increased volume means something. If we start to see low $0.20's then I'd guess a positive PR is close.
ML: While I generally agree with much of your comments re the meaninglessness of opinions expressed on these boards, I believe you give too much weight to the effect of the stock price and the associated turmoil on the actual business operations of a company like EGMI.
If there is an intact business plan etc then all this tempest would, IMHO, have pretty much no effect on the ongoing business of EGMI outside of the management time that is diverted to work on the accounting and legal issues.
As long as EGMI is providing product people want to buy, pays it's bills on time, ships what and when it is supposed to, the turmoil in the stock price won't be of any concern to most of it's B2B partners and particularly not to the final customer.
You've got to remember that the business plan is predicated on EGMI having proprietary technology that the customer can not get elsewhere. So long as the business keeps functioning why would the customer care whether the stock was $4.00 or $0.04??
Most of the business was supposedly not with large companies that might have some rules about getting in bed with thinly capitalized vendors.
If the sales are there and the company ships then the business can run merrily along while the share price languishes and chaos rules on these BB.
If EGMI was a fraud, what might an eventual recovery look like?
Many are assuming there will be only a few cents on the dollar, if that, but could this not be way too low?
If there was a fraud involving low or no actual sales and missing cash then I would guess that the auditors would be held at least partially responsible. Mendoza Berger is a fairly good sized regional firm and they do audits for a number of public companies so they should have insurance coverage of at least several 10's of millions $. There is the liability insurance carried by EGMI itself,if they have it. There are the personal holdings of the management and board, past and present, which I hate to say, but includes the estate of the former COB, Lord Steinberg, which is extensive. With losses of less than $100MM in mkt cap we might make up more than normal in these sorts of deals.
I know these cases can take quite a bit of time and are costly, but it seems to me that there are some deep pockets involved here and recovery might not be as low as we have been assuming.
I'm not of the opinion this is a fraud, but I certainly concede it could be and I'd be interested to hear from members more knowledgeable than me on what we might expect in the eventuality. It would be particularly interesting to have some idea of how much insurance a firm like Mendoza might carry.
Pontiac: That crow can be tasty, if prepared right, LOL . Had many a fine meal on that bird, myself ;)
Had a friend in HS whose Dad bought him a new 1968 Shelby Cobra Mustang. Some kind of anniversary edition. Had gold metal flake paint with black racing stripes. Man that car was one wet dream for a 17 year old, and I've loved em since! Nothing against Firebirds really, just first love, you know, sticks with you.
Anyway, no harm, no foul, when your playing for the same team!
When we're in this deep, we've got to all hang strong for a better day. GLTA.
Gee, what a surprise!
You are "calling me out"? Oooh, what are you 10 years old?
I, personally do not care if you believe whether I have shares in EGMI or not. Actually I wish I was a "poseur" and had no shares, but unfortunately, I am stuck, just like many here, holding far too many shares in, who knows what.
The fact that you believe that a company with a market cap of 1.34 B would produce 24.5 BILLION!!! gamecards on spec tells me all I need to know about your critical thinking skills. Just think that one through. Lets say these games cost only $1.00 each to produce. Why in the heck would anyone build an inventory worth over $24B and how would they finance it? And you think they not only produced it but are now holding it for some unknown reason! The whole idea is absurd and I would not waste my time even trying to look into it.
Guess I never did care much for Firebirds. More of a Mustang guy!
for those with a brain, there is a good discussion today on the Yahoo bd re the legal situation of EGMI. Worth a look.
I've seen this mention of SGI supposedly producing 24.5 BILLION!! game cards in the past a couple of times now.
Does anybody actually believe this to be true? There is no way anybody outside of government would do something so stupid.
No, but I didn't try to ask that. Most were pretty skittish about saying anything.
Does anyone know if Berger and Mendoza were named as defendants in any of the class action lawsuits? If the $12MM is not there then it would , on it's face, indicate gross negligence on the part of the auditors. I would guess this regional firm would have a pretty healthy line of liability or error and omissions insurance.
I am not personally of the opinion that the $12MM is gone, but if it is, I would think Berger etc are hanging out quite a bit here and might represent the deepest pockets, after the BOD for recovery.
Just FYI, I spent some of this past week reaching out to all the institutional holders of EGMI stock I could locate. At each firm I was able to speak with the individual handling this investment.
Several would not say much of anything but they all asserted they were not in possesion of any news outside of what is public. Several did say that they either knew the people on the board or had researched them prior to investing and that they believed fraud was unlikely since most had long histories in the financial communities and none of them were thought ill of prior to the current problems. I ran this thesis by the folks who wouldn't comment on anything else and even they confirmed that they felt this way as well. They basically all said that they would not have invested in EGMI if they had not done their homework and that they had originally had faith in the BOD.
A couple commented that they thought there was an internal power struggle over the future direction of EGMI and that this had led to the current debacle.
I do not believe that the institutional guys think there is much of a possibility that there was (is?) no "real" business there.
Not sure what my take-away on this is, as these professionals obviously miscalculated as much, or more, than we individual stockholders, but I have to believe that these organizations do not enter these small companies without knowing the history of the principles involved pretty well.
Take what comfort you will, it's still a crap shoot IMHO. Even without fraud, tiny companies like this often do not survive such a severe blow to their fortunes.
Losing, what is your reason for thinking Monday is a make or break date??
From your lips to God's ears!
I do not agree that, given the info available, one can conclude that "there is definitely nothing there".
While from the outside the silence can seem damning, once the lawyers get involved we can only expect silence until there is definite resolution of major issues.
I've been involved in situations where major trauma occurred in a company and the lawyers immediately told EVERYONE to shut-up.
The lawyers usually do not know enough about the situation to approve even reasonable information being released, even when not releasing damages the company.
The vast majority of info posted here is nearly groundless speculation. We do NOT KNOW there was any fraud and to believe there was one has to assume that Steinberg, Berger and Mendoza and others were either in on it or mindless dupes. I am unwilling to assume this so I do not believe that the accounting concealed a fraud that either stole the 12MM or never actually generated it.
While it seems strange that they would hire an investment firm to raise investment capital, speculating that this indicates the money is gone is just that- speculation in the absence of facts.
There are large sophisticated investors that were involved beyond Steinberg and they certainly look at the reputations of the principals of tiny companies like EGMI. They know the people involved and their reputations from previous ventures far better than our "googling" will ever reveal. I do not believe the likes of Tricadia capital would invest in a company run by Lee Cole if he was the fraudster many here seem to think they have found by "connecting the dots". This would not be information unknown by sophisticated management companies. These guys are professionals and they have contacts and they definitely check people out.
I just do not believe it is as simple as fraud and if it is not then there WAS a real business here.
Does anybody know where one might find a current list of major stockholders, particularly institutions? The list of major holders listed on yahoo seems out of date.
Additionally does anyone know where EGMI is incorporated? I'd like to get my hands on a copy of their articles of incorporation.
Thanks