FAvS Poor First Quarter Results Demonstrate Continued Management Failure.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- The Wynnefield Group, the largest minority shareholder in First Aviation Services Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : FAVS FAVS Fabbrica Armi Valle Susa FAVS Fighter Attack Visual System ), today issued the following statement in response to management's press release announcing FAvS' first-quarter 2004 financial results: "Management's attempt to place any blame on FAvS' minority shareholders is merely a smokescreen to hide management's continued failure to develop and implement a consistently profitable business model. FAvS' 'loss' release spends more time attacking minority shareholders rather than explaining the true reasons for its ongoing losses from operations. After more than six years of financial losses and diminished shareholder value, it's time It's Time was a successful political campaign run by the Australian Labor Party (ALP) under Gough Whitlam at the 1972 election in Australia. Campaigning on the perceived need for change after 23 years of conservative (Liberal Party of Australia) government, Labor put forward a for FAvS' Board and management to respond to the concerns of its minority shareholders. 1. How could FAvS have increased year-over-year quarterly revenues by 20% (or $4.6 million) this quarter and STILL have posted a $426,000 decline in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , resulting in another losing quarter? Isn't it time to develop and implement a consistently profitable business model, as minority shareholders have urged and as was endorsed by the independent proxy advisory firm Institutional Shareholder Services (ISS ISS See Institutional Shareholder Services (ISS). )? 2. A Board representative elected by minority shareholders would bring fresh thinking to FAvS' Board and enlist its commitment to develop and implement a business plan that delivers consistent profitability and shareholder value within a mutually agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations" stipulatory noncontroversial, uncontroversial - not likely to arouse controversy period of time. If discernible progress cannot be achieved, management should commit to explore transactions that would release value to ALL shareholders. 3. Management states that corporate expenses for the quarter ended April 30 increased by 90% -- or some $440,000. Yet, management's own proxy states that it had only spent about $60,000 on the proxy contest Proxy contest A battle for the control of a firm in which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the dissident group's slate of directors. Also called proxy fights. as of May 17 (and would only spend about $175,000 altogether on the contest). What really accounts for the huge increase in corporate expenses? Are there new and increased payments to First Equity, which ISS termed "a conflict of interest" that is "material" to FAvS' shareholders? Can FAvS' minority shareholders, who have no Board representation, really be responsible for FAvS' continued poor performance? 4. While FAvS' posted a sales increase this quarter, there is no mention of its now-lapsed contract with Piper which accounted for approximately 10% of revenues. 5. Once again the opaqueness of management's disclosure leaves shareholders in the dark. Why won't management and First Equity provide FAvS' shareholders with transparent financial disclosure and break out FAvS' sales results and other data by business segment? Our efforts to enhance value and reform corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. for all FAvS' shareholders were endorsed by ISS and by 60% of the unaffiliated shareholders at FAvS' recent annual meeting. Minority shareholders have patiently waited for more than six years for management and the Board to develop and implement a benchmarked business plan that would deliver value to all of the company's shareholders. Despite First Equity's majority control, Wynnefield will continue its efforts to support the principle of minority representation and maximizing value for ALL of FAvS' shareholders." ADDITIONAL INFORMATION: The Wynnefield Group is First Aviation's largest outside shareholder, holding 29.7% of the company's outstanding common stock. Wynnefield is a long-term investor Long-term investor A person who makes investments for a period of at least five years in order to finance his or her long-term goals. in FAvS, having first invested in the company shortly after its initial public offering more than six years ago. The Wynnefield Group includes several affiliates of Wynnefield Capital, Inc. (WCI WCI Western Climate Initiative WCI Wright Center of Innovation WCI Whale Conservation Institute WCI Waterloo Collegiate Institute WCI Warren Correctional Institution (Warren, OH) WCI Warrior Concepts International ), a value investor, specializing in U.S. small cap situations that have company- or industry-specific catalysts. WCI was established in 1992. Its founding partners, Nelson Obus and Joshua Landes, held senior research and institutional equity positions at Lazard Freres & Co. during the 1980s, and the initial Wynnefield investors included many of their colleagues at Lazard. The fund has grown to approximately $200 million under management. Nelson Obus currently serves on the board of directors of Layne Christensen Company (NASDAQ: LAYN) and additionally serves on its audit and compensation committees. More information about the Wynnefield Group's efforts to help provide value to all FAvS shareholders can be found at www.rescuefavs.com. |
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