Part 2 of 2: The bad news
Well, it’s not all bad news. Christie, as reported, was very capable, and definitely an asset to the company. I witnessed her handle a couple of touchy situations like a real pro.
Anyway, on with the report. Immediately upon entering the production/retail area, we saw a wall of Seaview kits, complete and ready for shipment. Open up any box on top, and there was a complete Seaview camera kit. The impression given was one of substantial inventory. Problem is, most of the boxes were EMPTY. Yep, I removed a few boxes on top, and found the ones underneath empty. Then I discovered I could tell if a box was empty or not by tapping on the side with my knuckles (the full boxes made a distinctly different sound than the empty ones). Turns out MOST were empty. At one point as I’m doing this, Mr. J R Cox sees what I doing and ask me how the “sound”. I reply that they sound like some are full and some are empty, and replied with something to the effect of “Yea, that would be about right.” I did find it disturbing that the “wall” of Seaviews was not what it seemed.
One good piece of news from the open house: the UL listing is not an issue, period. I saw a letter of approval from Intertek Testing Services NA Inc. It was report #22868A, issued 9-30-00, and revised 10-30-00. This report certified that SecureView was in compliance with UL standards. By UL procedures, the only thing left for you to able to see a UL sticker with a UL # is for mass production to begin, at which time a UL representative will take a piece off the production line for inspection. Upon verifying compliance, the UL stickers are then applied.
On questions of production, I got the distinct impression that the problem is money. Rich stated that he had a deal completed with a major brokerage company for funding, using his personal shares as security, but the deal fell through when the stock sank below $3 per share. He also stated that he receives 2-3 offers EVERY day to fund production, but the cost would be excessively dilutive. He stated his current plan is to fund mass production by internal revenues. He used the example of priming a pump (yep, he really did choose that example) by generating revenues from sales of hand assembled SecureViews.
The question was raised of what business Seaview has buying an interest in the Springs. Rich’s answer to this was to not answer the question, but to state that the 20% interest in the springs was a gift from him to the company. It was then pointed out that in fact the company did issue 150,000 for that 20% interest, contingent upon these shares being repaid by Rich within a set number of days. Rich stated that this has been done. The question was then asked how that was possible, since he had just shown us all his original share certificates. His reply was that there are things we don’t know, as we haven’t seen the Q4 reports yet, that he had acquired additional shares, and could, as CEO, give himself more shares anytime he wanted to!!!
A little background is necessary to understand the next series of questions. Originally, there were 100 shares of Seaview, a Florida corporation, all owned by Rich. There was also a public shell called Gopher, Inc, with no assets, and 1,000,000 shares outstanding. At the time of the reverse merger, Gopher issued 5,000,000 shares of its stock (and $250,000 cash) for the 100 shares outstanding in Seaview. In effect, Seaview became Gopher, which then changed it’s name to Seaview. So now Seaview has 6,000,000 shares outstanding (1,000,000 to the original owners of Gopher and 5,000,000 to Rich). However, the stock certificate Rich showed us representing his original ownership position is for only 3,830,000 shares. Rich was asked what happened to the other 1,170,000 shares. His replay was that it was a complicated transaction, involving things such as “Founders Shares” and such, but he could assure us there was not a block of 1 million+ shares missing. In other words, he didn’t answer the question. What happened to that other 1,170,000 shares?
More background. The day after the reverse merger, Rich issued himself 2,700,000 shares in the new Seaview for consulting services. We saw this certificate; it was certificate # 2131, dated 5-11-1999. But the certificate for the original 3,380,000 was certificate # 2448, dated 2-16-2000, a full nine months later. Rich explained this by stating that the original had been misplaced, and what we had seen was a re-issued certificate to replace the missing one.
According to SEC filings, there were 200,000 shares issued during the 2nd quarter, and 300,000 shares during the 3rd quarter, for one cent per share, for the exercise of warrants relating to the original Holders of Gopher, Inc. When asked why the existence of these warrants had never been previously disclosed, his answer was that disclosure would be in the forthcoming proxy. When asked if there were more warrants outstanding, his response was no, he had cancelled all outstanding warrants. A follow-up question then revealed that there were additional warrants exercised during the 4th quarter. I found it interesting that the exercise of warrants during the 4th quarter was not disclosed when we on that subject, but only in response to the specific question being asked.
I did not see a GSA number. We were told that the GSA # was listed under New Technology Management, and the number could be verified “electronically.” I did see the order from Tandy, it was from June of last year for 2 units at $399 each, and the order from J C Penny’s was for under $2,000.
Overall, I left quite disillusioned, and sold most of my shares on Monday.
AI
