STAT-TECH ANNOUNCES PRELIMINARY RESULTS FOR YEARS ENDED 1989, 1990 AND 1991 AND FINDINGS OF ITS INVESTIGATIVE COMMITTEE INQUIRY
STAT-TECH ANNOUNCES PRELIMINARY RESULTS FOR YEARS ENDED 1989,
1990 AND 1991 AND FINDINGS OF ITS INVESTIGATIVE COMMITTEE INQUIRY
PUEBLO, Colo., April 16 -- Stat-Tech International today announced preliminary results of operations for the years ended Sept. 30, 1989, 1990 and 1991. Gross sales for each of these years were as follows: 1989 - $114,437; 1990 - $42,160; 1991 - $64,670. Net losses from operations for these years were as follows: 1989 - ($331,740); 1990 - ($231,400); and 1991 - ($218,000). The audit for these years is expected to be completed shortly. To date no evidence has been ascertained that sales occurred at the levels previously reported by the company.
The company also announced the findings of its Investigative Committee inquiry. While there has been no judicial determination as to the correctness of the findings of this committee, the three month investigation which commenced earlier this year did include review of voluminous documents including corporate, financial and stock transfer records and interviews with approximately 30 persons. Among the persons interviewed were the company's former attorneys, and former and current accountants, stock transfer agents, employees, consultants, officers and directors.
The findings of the investigation were that: (1) no audits were completed for the years ended Sept. 30, 1989 and 1990 and audit reports in the Form 10-K financial statements for those years were fabricated; and (2) the 1934 Act Reports for the years 1989, 1990 and 1991 and other information disseminated to the marketplace contained numerous material inaccuracies, most notably that sales were grossly overstated and it was falsely reported that the company was profitable.
Facts determined through the investigation establish with reasonable certainty that the company's former President and CEO Raynard M. Fenster: (1) knew that no audits for those years had been completed; (2) knew that the financial information released by the company was false; (3) created false documents in an attempt to confirm reported sales for the fiscal years ended 1989, 1990 and 1991; (4) failed to disclose his securities transactions to the board and to the marketplace; (5) effected transactions in the company's securities based on inside information; (6) caused the company to authorize improper securities transactions; (7) caused shares to be issued on exercise of warrants when he knew there was no effective registration statement; and (8) caused these shares to be issued to himself and others at his direction, but failed to make payment due the company for these shares. Fenster has admitted that he exercised these warrants and did not pay the company.
Fenster failed to cooperate in any meaningful manner in the company's investigation and he destroyed, altered and removed company records. In addition, Fenster has refused to date to provide the company, an accounting of, among other things: (1) his transactions in, and substantial proceeds received from, his sales of the company's securities; and (2) his transactions with the company, including cash withdrawn from the company without authorization or supporting documentation.
The company has been in close contact with the Securities and Exchange Commission concerning the results of its Investigative Committee inquiry and is fully cooperating with the SEC in this matter.
The company has severed all relationships with Fenster and intends to pursue appropriate legal action to protect the company and the interests of its shareholders.
A.M. Skip Marson, acting CEO, said, "Our new management team is focused on the business opportunity that exists for Stat-Tech. Since we began in mid-January of this year, we have preliminarily determined that the electrostatic dissipation business has merit and we intend to try to build this business in what might be characterized as a business 'restart'."
Marson continued, "Previous reports that the company had received Federal Aviation Administration (FAA) approval for use of the Static Buster Wick on aircraft are not true but we are pleased that AMR COMBS has agreed to assist Stat-Tech in seeking such approval for use in general aviation from the FAA. The Wich must conform to certain specifications and regulations before it can be certified for use on aircraft and having AMR COMBS join us in this effort should enhance our chances for success. The company's preliminary estimates of the market size for Wicks is $15-20 million and is considerably smaller than previous estimates."
The company also has made significant improvements in the quality and performance of its Static Buster product for use in different environments with high static electricity. To this end, Stat-Tech has signed a consulting agreement with one of the world's leading electrostatic discharge independent research laboratories for technical assistance and product development. The company also has established a master distribution agreement which will allow entry into the U.K. and European Community markets and has begun to seek distributors for these individual markets. Stat-Tech also has hired an experienced individual who will represent the company in selling the Static Buster to U.S. government agencies and has begun seeking sales representation for developing channels of distribution nationwide.
Marson concluded, "We are diligently attempting to turn things around at Stat-Tech. Shareholder support is critical to our success. Whether new management's efforts will result in the development of a healthy company remains to be seen, but without shareholder support it will be much more difficult to achieve a successful turnaround."
Stat-Tech International Corporation is engaged in the application of advanced electroconductive materials for the control and elimination of electrostatic charges.
/CONTACT: Skip Marson of Stat-Tech International, 719-543-5005/ CO: Stat-Tech International ST: Colorado IN: SU: ERN SM -- NY056 -- 9259 04/16/92 11:48 EDT