Wednesday, November 02, 2022 10:48:29 AM
We reminded him countless times when he gave Eric .0001 shares it set a precedent for the future Reg A solicitation. As we stated to him no savvy "qualified" investor is going to pay .001 when he gave Eric .0001 -- he should have known that from the very beginning.
Eric is a slick cookie but CEO Josh has worked with him before so he knew the can of worms he was getting into. The thing is we get the impression he wanted $MSTO to be a better project than the last. But when you have Eric shoving cash in your face and you didn't stick to your business plan (oh where is that??) it is no surprise we ended up here.
Then the Q filings become problematic as previously discussed. We would like to know who pushed the Baird Road property on him especially since it was "wetlands" and there is a whole bunch of hoops to jump to get that project thru the county and that takes cash... if one reads the county COC reports he has a long way to go to clear that property.
Navarre is another issue. He is over priced pushing into a soft market and needs that COC loan based on an escrow buyer. We don't see that property selling at that price or even close to it - just look at the recent comps.
So where does that leave us? We think CEO Josh needs to hit the brakes for a minute and see how deep he is into Eric for, then figure a way to clean the books up to clear the audit.
As noted, getting pass an audit requires a solid paper trail. One past company we had sat thru a forensic audit to settle a key person death and it was not pretty. We have some ideas for him but they will not fly because he has his hand too deep in the cookie jar thinking he "deserves" some rich scheme payout. You cannot continue to encumber the company books with back compensation payments and SBQ 30% entitlements and then expect the company to grow - especially as an OUT-OF -STATE owner. That is outrageous. He has been in the construction industry long enough to know those situations require a bunch of finesse, ingenuity, and some good fortune to pull off.
His top priority is laying down the money paper trail. We have a hunch as stated many times before and to him it's dirty and he will have to come clean on some of it.
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