Expo Holdings Inc. (EXPH)

[Santa Barbara Broker]

Here is a brief history of the company and it’s principals. This history should provide ample circumstantial evidence that Expo Holdings, Inc. will neither survive much longer as a viable corporation or that the actions of the officers who are solely responsible for the destruction of the corporation deserve any defense or support from shareholders whatsoever.

In my opinion, there is no possible way Expo Holdings, Inc. can survive under current circumstances let alone prosper and grow as a business. I believe that to imply growth in the cabinet industry is even possible for a simple product display company like Expo Holdings is disingenuous at best. There are no “conspiracies” or “stock manipulations” at work here by forces outside or unknown to the principals of the company. And none of the legal actions taken against Expo Holdings, Inc, D&D Displays or James D. Brown and Glenn Harrs (Harris, et al) are frivolous or meaningless as has been claimed. Here are the facts (with supposition where necessary or logical) as could best be vetted from the archived history of questionable and possible illegal activities perpetrated upon and endured by Expo Holdings, Inc. common shareholders over the past five years:

5/2006: Expo Holdings, Inc. is formed: ….by a reverse merger of the private and financially troubled company D&D Displays owned by Glenn Harrs and JD Brown. The corporation is set up to sell stock on the public markets and begins immediately to make private placements to raise capital. Harrs and Brown’s first major financial action is to shift the burden of a prior existing loan to themselves by D&D Displays of approximately $312K to the shareholders of the new public corp and loan themselves an additional $75K in these so called “shareholder advances”. To date, the “advances” which were assumed to be financed by a loan initially secured by Expo at $10K per month interest (an effective 25% per annum rate at a time when 5%-6.5% business interest rates were common) have still not been paid off by the principals and presumably continue to cost shareholders the interest rates on any loans outstanding to maintain them.

3/2007 Sale of the Shaver Street Complex: Brown and Harrs decide to divest the public company of it’s only true hard assets of the land and buildings at the Shaver Street complex. They sell the land and buildings for a reported $ 826,129.00:

PG 20/23 http://www.otcmarkets.com/financialReportViewer?symbol=EXPH&id=14127

This precipitated an exchange of assets for an estimated $220K annual liability (exclusive of any tax benefits) in rental costs to the shareholders. Herein begins the speculation. It is never discussed where the asset proceeds go. It has been speculated that at least a sizable portion of the net proceeds following any required mortgage payoffs at closing found their way into the pockets of Glenn Harrs and JD Brown, but no evidence exists to substantiate this speculation or what existing loans exclusive of any mortgages, if any, the proceeds were used to pay off. It has been further speculated that Harrs and Brown have long been in bed with one Scott Nafe who became Expo’s landlord following the purchase of the property. Once again IMHO, the building and land were sold below comp at that time and the rental charged following the purchase was estimated to be at least 1.5 times the going warehouse SF rate in the area at that time. Speculation that some of this rental was kicked back to the principals of Expo in exchange for favorable terms and treatment remains to this day. It has been speculated that the recent (2011) decision of Expo executives to lease warehouse space to NRS was a method of breaking ties between Nafe, Brown and Harrs once the situation had been openly discussed online in several stock forums. The rationale being that Brown and Harrs were moving to set up a direct collection of a portion of the previous rent that may or may not have been part of a "kick back" from an earlier deal that would have seemed highly inappropriate had it ever been made public. This is pure speculation however and no hard evidence exists to substantiate this conclusion.

7/2008: Expo announces they plan to buy Southern Candle: …a company owned by their good friends. Much speculation has been focused on this “deal” which, had it been pulled off, would have no doubt resulted in massive dilution to common shareholders and a bonanza in cash to Brown and Harr’s buds Randy Whittington and Gary Jordan. Strangely enough, despite the July 23, 2008 PR stating clearly it would be a done deal in two weeks, the subject never came up again after a follow up PR July 31st discussing the agreed valuation of $2M for Southern Candle consisting of $100K in cash and the remainder in EXPH shares. It simply disappeared and was forgotten. First off, one can’t even begin to imagine the warped logic and twisted thinking that determined some major economic synergy could be expected from the M&A of a candle and novelty company by a products display manufacturer. So there is little doubt the deal was solely engineered to enrich the four participants at the expense of the common shareholders of Expo Holdings. But there is also the unexplained underlying cause for it’s interruption and I speculate this may have been due to improprieties discovered in EXPH stock transactions. Form 3/4s filed by Brown and Harrs could possibly shed some light on this but as those filings will never see the light of day, it is a moot point. Interesting however that these same circumstances would come back to haunt them once again in the bizarre and again aborted ETC spin-off proposal initiated the following year.

7/2008: The Announcement of the $22M “Milestone Project”: Most probably part of a grand scheme to run the shares of EXPH up after the Southern Candle deal, Brown persisted in carrying through the entire $22M hoax as if it were a done deal. He went so far as to invite Congresswomen Foxx of NC to “endorse” the deal on July 28, 2008 to give it that much more an air of legitimacy. It is nearly impossible to believe using 20/20 hindsight that there was ever even the slightest chance that the estimates put out by Brown of $22M in total revenue were anything but a complete fabrication in the run up to the 2008 P&D of EXPH shares (a situation which become an annual September event through 2010). He continued to pump the $22M into September announcing on the 9/12/2008 that they were ready to start shipping part of the $22M in orders “in just a few short weeks”. It should also be noted that the much touted “$1M line of credit” provided to Expo at the time was nothing more than a factoring account set up to advance payments from the “Milestone Project”. The fact that Brown had the ability to con Crestmark into even vetting the Milestone participant’s credit to set up the account to begin with is testament to his con artist skills, IMHO. By May of 2009 well after the P&D effects had been garnered by Brown, Harrs (if they participated) and/or any other potential participants, Brown made a “slight revision” of 90% in his Milestone revenue estimates reducing them to “between $2-3M”. With the exception of a few minor mentions in subsequent PRs, the “Milestone Project” was forgotten until in a pique of dead PR air, Brown dragged it out again as a pump to the PPS following the dilution in April 2010 where he announced that it would resume in 4-6 weeks…once again with Crestmark approving the factoring account.

http://ih.advfn.com/p.php?pid=nmona&article=27424556
http://ih.advfn.com/p.php?pid=nmona&article=28111081
http://ih.advfn.com/p.php?pid=nmona&article=37705443
http://ih.advfn.com/p.php?pid=nmona&article=42252186


2008/2009 PR Blitz Up To P&Ds: If it has never been read, it is worth the time to peruse the historical archives of the PRs released by Expo Holdings in the periods 6/08-9/08 and 06/09-9/09 as a reference. While you are in there, 6/2010 thru 9/2010 are worthy of a read through as well. Brown had relaxed the frantic misrepresentation considerably by then, but it is still interesting as a historical archive of the doublespeak and sleight of hand verbiage being employed in their press releases. If there has ever been any doubt about whether or not the company was participating in at least the appearance of running up the stock price using deceptive or misleading “news events” as fodder, that should erase most of it. Rather than list each and every PR from the archives, I simply relay the data distilled from reading them in general and present it:

Total revenues confirmed in PRs for 2008 (not including millions in alluded income not specified in exact dollars amounts): $7,137,000.00. Total projected revenues Sept 2008: $5,500,000.00. Total actual revenues for 2008: $ 2,372,590.00. Actual Loss for 2008: ($ 943,349.00)

Total revenues confirmed in PRs for 2009 (not including millions in alluded income not specified in exact dollars amounts): $ 22,730,500.00. Total projected revenues January 2009: $ 6M. Total actual revenues for 2009: $ 1,608,576.00. Actual Loss for 2009: ($ 541,840.00)

1/2009 Revenue Projections: While the basics are consequently outlined above, it is still noteworthy to point out that Brown was reportedly still making verbal private assurances to shareholders from Sept 09 to as late as mid-month December of 2009 that the revenue projections of $6M for the year were still “on target”. Despite issuing several “Statements” and “Corporate Updates” in or just ahead of or into the fourth quarter (some of which heavily touted Expos “profitability”), no mention of 2009 revenue revisions can be found. Even though a shareholder meeting was held and Brown is on record (in writing) of touting revised revenue forecasts of $9M to $11M down from $17M for 2010, not a word was mentioned on December 2, 2009 of any possible revision to 2009’s $6M in revenues. Lending, IMHO, credence to the possibility that shareholders claiming Brown’s personal statements to them of $6,000,000 in revenues being “on track” during the fourth quarter were essentially accurate. Expo total revenues in 2009 were less than $1.7M with an overall loss exceeding $(540K).

http://ih.advfn.com/p.php?pid=nmona&article=39714717
http://ih.advfn.com/p.php?pid=nmona&article=40056865
http://ih.advfn.com/p.php?pid=nmona&article=40271598
http://ih.advfn.com/p.php?pid=nmona&article=40613261


4/2010: The Massive Dilution Begins: Despite reputed claims by shareholders that Brown had repeatedly guaranteed them personally there would be no dilution in the near term, the first of an astounding 2.33 billion shares (representing a 280% year over increase in common shares) to be issued over the following 10 months began to make their way onto the market in April 2010. And, at a time when the company was so desperate for cash they needed to issue shares in the one-hundredth of a cent rate to keep the doors open, Brown and Harrs were out sponsoring a truck race using at the very least $10K in cash. Two things should be noted as a result of this bizarre behavior. 1) Obviously Brown, given a choice, will never be truthful with his shareholders about anything pertaining to bad news. 2) The tendencies of Brown's Messianic ego really begins to manifest itself in viable and destructive actions at this point in time. Despite the company being in sad financial shape, the urge to act like the big time corporate executive and get out into the pit area rubbing shoulders with NASCAR drivers and team owners just overwhelms what should have been prudent common fiscal sense. It is a known statistic less than 25% of NASCAR fans pay the slightest attention to truck racing, particularly little known drivers. How this “investment” could possibly have paid off for D&D Displays or CIMA as much as an investment in travel and face to face client meetings for product promotion is incomprehensible. That is until the ego factor is taken into account of course.

4/2010: The 941 Withholding Tax Evasion Begins: The first quarter of 2010 is the first 941 tax withholding delinquency reported on the August 2, 2011 Form 668 Federal Tax Lien filed by the IRS against D&D Displays. Through March of 2011 D&D would ignore the 941 assessment filings and pocket the money the continued to withhold from their employee’s paychecks. Brown and Harrs must have been aware of this in a formal notice not much after May or June of 2010 and persisted in basically pocketing their employee’s SS, MC and payroll taxes. Despite what was going on, the PR engine continues to paint a bright and exciting picture with D&D’s future looking great. To compound the problem, Brown and Harrs don’t lay off workers but ADD an additional 19 employees from Builders Choice…a bankrupt company who had basically been in the same financial and legal troubles as Expo. The act reveals itself as even more maniacal when it is discovered the main BC employee hired bails soon after being "rescued" by JD Brown and reportedly goes off to form a competitive company. The mind boggles at the idiocy of such an act when it is understood the principals knew the company was out of cash and floundering and speculation at the true nature of what was going on is justified. I have theorized that once again Brown’s Messianic tendencies overwhelmed judgment and the BC worker’s were brought to the EXPH G&A feeding trough so that Brown would be seen in the “Savior” and community hero roles he had always imagined and pictured himself in. There are more sinister theories which I will leave to the reader’s imaginations.

9/2010: The P&D finale, Shareholder Meeting and The Router: As an annual tradition now, the September P&D was brought to its frenzied heights just prior to the 2010 annual Shareholder Meeting (SM) once again raising speculation as in 2009 that Brown and Harrs may have sold shares. By now there were questions galore and Brown and Harrs were there to set everything straight once and for all. New CEO? Well, he’s working for us and will be named by 1/1/2011. Form 3/4s? Coming. Financials? On the way shortly. Dilution? No chance, none being planned, over for now. Reverse split. Not a chance. Did you sell your shares? Nope, not a single share has ever been sold. How is the CIMA/ETC cabinet thing going? Major retailer will be buying significant amounts of cabinets and distributing them through their 100+ outlets soon. They will be named within 10 days. How many direct lies and how much simple misleading information was released at that meeting one may never know. But suffice to say, there were plenty, IMHO.

The “new CEO” speculated widely to have been Jimmy Kendrick not only wasn’t present at the meeting, but no “new CEO” was ever named. It will be a year from the date of this writing next Friday and still nothing. At this point it isn’t even known if Kendrick works for Expo any longer or even if the speculation about him was correct. He is scheduled to be at a 6:30 PM meeting 300 miles away from Expo’s 2011 SM which will be held at 3:00 PM the same day…Sept 22nd. (note...the SM was later cancelled as predicted on 9-15-11)

There was never the first known cabinet sold to any retailer having 1 or 100 outlets and the name was never announced. It was doubtless a total lie used to maintain the PPS through the meeting to allow additional share dumping in preparation for the billion+ more shares to be issued in the following months.

There were never a single Form 3 or Form 4 or a single quarter of financials released save those for the fiscal year end 2009 released 9/17/2010. Speculation has it that this could be due to reconciliation and balance sheet problems with finding a sub-heading for stolen 941/940 payroll taxes, but vetted answers have yet to be forthcoming. The absence of the Form 3s simply continues to fuel speculation that the principals have sold common shares. They have stolen money from the US Treasury (allegedly) and have been proven to lie to their shareholders. What on earth would keep them from selling shares under the personal financial conditions they have found themselves in since the beginning of 2009 is unknown.

Dilution? They had to know at the time they were out of cash and desperate. There was, IMHO, little doubt they strongly suspected they’d be diluting within weeks but they needed an excuse. Apparently a plan was devised to create an idea so broad and encompassing as to excuse away everything they lied or exaggerated about at the SM. When the router broke down ***voila’*** all prayers were answered. Some “there are no parts to fix it in existence” here, a little “we have to send to Germany to have them custom made” there. Six weeks down and the perfect excuse is born. Dilution continued into February 2011 along with a near complete lack of explanations as the defenses became more impossible and the troubles grew even worse.

4/2011 Wurth Wood Group Sues Brown, Harrs, D&D and wives for $300K+: At this point the walls were crumbling. Not only were they not paying their Federal taxes, it was now apparently becoming impossible to pay their suppliers. This is the only suit found to date that has been filed by a supplier. There is no telling if there are others filed or in the process:

Wurth Wood Group, Inc./Hardwood Group Inc. vs. D&D Displays Inc./Glenn Harrs/Donna Harrs/James D. Brown/Michelle Brown, $302,444, plaintiff, Case No. 11 CVS 3660, 08/05/11

It would seem this was not the first time Harrs and Brown had trouble repaying the Wurth Group what they had agreed to in a prior contract, just the first time as “Expo Holdings, Inc.”:

Filing Chain for a Debtor
Filing Type: UCC
File Number Filing Date Documents Lapse Date Pages
Open the Image 20050022137C
3/7/2005 Initial 3/7/2015 1

Record Type Name and Address
Secured Party The Hardwood Group d/b/a Charlotte Hardwood Center
4250 Golf Acres Drive Charlotte,NC 28266
Debtor D & D Displays, Inc
116 Shaver Street North Wilkesboro,NC 28659
Open the Image 20100014521H
2/24/2010 Continuation

http://www.secretary.state.nc.us/ucc/FilingChain.aspx?FileNumber=20050022137C#


8/2011 Southern Community Bank Sue Brown/Harrs and D&D Displays: Southern Community Bank files suit against D&D Displays. On page #23... half way down the first column. This explains, IMHO, the “pay down of $50K in debt” they were touting in May as if they were making huge progress in “cleaning up their balance sheet” :

http://edition.pagesuite-professional.co.uk/launch.aspx?referral=other&pnum=23&refresh=f04HZd198Ka0&EID=972f6ba5-ac22-45e3-9265-6fe8f6e013a4&skip=&p=23


8/2/2011 IRS Files Form 668 Tax Lien Against Assets of D&D Displays: With a debt of $127K+ in 941 assessments, penalties and fines riding and apparently no cooperation from the legally beset and presumably broke Brown and Harrs representing D&D, the US Treasury Department has no choice but to file a property lien against all assets of D&D Displays…which basically equates to most every asset of worth Expo Holdings has remaining. Attempts are made to brush this off as a “joke” but it is hardly such. This brings the known total of liens and lawsuits pending against Harrs, Brown and D&D to over $477,000 in 2011 alone. Debt that well exceeds the true net worth of the company (I have estimated the actual accounted net value of the company as of 9-16-2011 as a negative (.00024) of a cent). That is not even beginning to take into account the possibilities of other overdue invoices from suppliers, possible pending NC State income tax and UC withholdings due as well as their personal debts to the company.

http://www.secretary.state.nc.us/taxliens/Taxlien.aspx?EventLogId=19777626

As would seem to be fairly obvious, Expo Holdings will not likely survive much longer. Since this document was originally produced, the shareholder’s meeting scheduled for September 22, 2011 has been cancelled. In addition, another $22K+ in IRS tax liens have been filed encompassing the missing 2nd quarter 2010 from the original lien and some previously illegally retained 940 FUTA assessments. I sincerely doubt the shareholder’s meeting will ever be held, that any of the federal tax assessments will ever be repaid or that Expo Holdings, Inc. as we currently know it, will survive much beyond October 31, 2011.

All the above where not documented, IMHO.

*Originally written September 10, 2011, edited for content September 16, 2011.