From someone who says they attended annual meeting (and thanks):
By: andre726
21 Jun 2007, 03:40 PM EDT
Msg. 12381 of 12381
Jump to msg. #
Annual meeting
Real quick as I've got much to do during this return trip to the Boston area:
Started out with a recitation of the vote results. Interestingly, votes withheld ranged up to 800,000 for EACH of the directors. Never happened before in my experience. Still, all votes passed with 8 million or so FOR.
Official meeting adjourned. Chairman Little went through a presentation about MFIC. Not bad....perhaps even good....which included the company's alleged objective of being listed on AMEX within twelve months.
Then, questions. I was the only one who asked. There was apparently an investor or two there aside from me...but they remained silent.
First question: operating expenses far too high, sales expense in particular too high. I compared Q1 2006's $3,050,000 and Q1 2007's $2,800,000 revenues and pointed out that Q1 2007's selling expense was $200,000 plus thousand HIGHER despite its revenues being $350,000 LOWER.
Chairman Little pointed out that operating expenses were about the same as Q4 2006 (which, in my opinion, is nothing to brag about since revenues were a whopping $2,240,000 lower) and then asked Dennis Riordan to comment. He then went into his "we already answered that during the conference call and it has to do with adding new salespeople" response.
My response: "Yes. I know that's what you said during the conference call. And as I knew that the conference call was being recorded for prosperity, I didn't pursue the matter any further than I did...."
Suffice to say they had no answer to my question as to how Q1 2007's sales expense was $100,000 higher than Q3 2006 when Q3 2006 was a $3.553 million quarter (i.e., $750,000 higher than Q1 2007), especially since the new salespeople had been hired BEFORE Q3 2006. They had no answer to my question about "are they being paid $300,000 each in base annual salary in light of four new sales resources being paid $300,000 more during a single quarter as compared to Q1 2006 (the lesser Q1 2007 revenues resulting in $97,000 less in commissions being paid out such that the increase in sales expenses was actually closer to $300,000).
Dennis Riordan tried to say something about Q1 2007 actually being a $3.5 million quarter if those $800,000 worth of equipment had been shipped out by the end of Q1 2007. I asked him if any commissions were paid on those sales in that it was my understanding that commissions are paid upon shipment. He acknowledged, "No".
He then said it was something he would look into.
Second question: Japan sales. 2004 average: $625,000 per quarter. Q4 2006: $125,000. Q1 2007: $196,000. Suffice to say that, after hearing the same BS about constant pressure reducing the need for replacement parts (20 years of lab equipment sales involved NO constant pressure and only a handful of constant pressure production machines were sold to Japan since 2005), there was general recognition that there was a serious problem that needed to be looked into immediately as a top priority management exercise.
Third question related to the horrendous inconsistency in the messages delivered on March 29 and April 2.
Chairman Little said that was the last question (I actually had several more) and asked everyone to make their way to the new lab.
I figured that the lab would look very much like a lab....and left to proceed with my day.
So...the Board of Directors have been made aware of some things to be looked into. We'll see if any positive changes occur as a result.
IG was there sitting apart from other Directors. I was not made aware of any new hiring of a new IR person.
(Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong Buy)
Send stock manipulators to: enforcement@sec.gov-and to jail.
