May 23, 2007

NetWolves Corp. On The Endangered Species Lists

Did the news media really cause NetWolves Corp. to file Chapter 11?

According to a
Michael Hinman article in the Tampa Bay Business Journal Scott Foote CEO of NetWolves Corp.:

“In a press announcement about the bankruptcy, Foote blamed the need to file for bankruptcy on "certain press reports" that he said "inaccurately attributed statements to the company about continued operations." Because of that, Foote said, some of NetWolves' (OTC BB: WOLV) vendors tightened their credit terms and began to demand payment on accounts.”

If the articles printed such substantive inaccuracies, then liability should be attached and they could be argued to a positive outcome.

Nowhere on the NetWolves web site do the list any of their facilities or staffing.

From the article:

“In reporting its third quarter results to the SEC last week, the company's 10QSB filing said, "The company's main source of liquidity has been equity and debt financing, which has been used to fund continuing losses from operating activities. Based on the company's cash position of approximately [$800,000], and further taking into account ongoing litigation expenses as well as the current maturity dates of the company's long-term debt, the company believes that they may not have sufficient cash to meet the company's funding needs through March 31, 2008 ...”


Anonymous said...

I don't believe, based on what the media stated, was the reason why Netwolves filed for Bankruptcy protection.

I do believe, there is malfeasance involved, in order for certain individuals to personally enrich themselves. Scott Foote(CEO of NetWolves) and Peter Castle (CFO), have already been given pay increases, as reflected in documents filed with the bankruptcy court. In my opinion, the are gross acts of abuse caused by the management of this company. It is shocking that the trustee involved would allow such an award.

Furthermore, it appears that these individuals orchestrated the removal of the Co-founder and former Chairman and CEO, for their own personal enrichment. The former CEO, Walter Groteke, had filed suit against the company, citing wrong doings.

I find the actions made by this company's Board, Scott Foote, and Peter Castle to be despicable, and I am hopeful the "long arm of the law," will eventually catch on to them.

Fred Adelman said...

Good comment.

We need more light thrown on the double dealing that many executives engage in. Most of the time this is at investor, shareholder and employee expense and needs to be written about (honestly) on the web.

Anonymous said...

According to filings with the bankruptcy court, there was a motion made for Scott Foote and Peter Castle, which called for salary increases. Believe it or not, the motion was granted. I believe they made these motions due to "increased responsiblities."

I find it appalling, that the individuals who are responsible, for NetWolves filing reorganization, have the gall to award themselves a pay raise, at the expense of shareholders and other creditors. Do these people have no shame?

Ps. This information can be found using an online line service through the "pacer" network.

Fred said...

Dear A:

I wasn’t aware that the Pacer Network even existed, but I can appreciate how Pacer would be a must use resource to a true investigation. Unfortunately, most writers and reporters aren’t interested in going that in-depth.

As far as NetWolves goes, I can think of two reasons why Foote and Castle got a raise. First would be that the judge does not what the mess dumped into his lap and second is that they have a good attorney.

Since I am most comfortable working with facts and figures, the “thin gray line” blog forces me to deal with more subjective topics. What drew me to NetWolves was an attempt to find out how many people were going to be put out of work and where they were. It’s hard to find a company that will not give the smallest amount of credit to their employees. This made me feel that the obvious obfuscation put out by Foote and Castle, was only the latest.

Keep that light shinning.


Anonymous said...

you must be joking. Did this company ever make money under Walter and Daddy?
Did this company ever have a working, sellable product under Walter or Daddy?
Did the stock do anything but go down under Walter and Daddy?
Self dealing? Walter and Daddy?

PhotonJunkie said...

Did the company ever have a viable product? I believe the answer to that is yes. I can only speak of the company's original product-line - when it was first introduced it provided a good level of functionality for the then-extant problem of simple, effective internet security for the non-tech savvy office.

I believe that everyone involved with the company at that time was quite committed to the product, its viability and its potential for strong placement in the marketplace. That would include the company's founders, financial officers and certainly the many engineers that devoted much time, ingenuity, creativity and intelligence to the product's design and construction.

Watts said...

I blundered here after searching "Walter Groteke" on a whim, as I've been watching NetWolves from afar myself -- I was an engineer there for a year and a half, although after Daniel Stephens had left the company. (Ironically, I'm pretty sure I interviewed with Dan at USF once, although the hiring manager [who wasn't Dan] didn't hire me.)

The original product was reasonably good, but even from the time I got there in 2000 there was an identity crisis: they wanted to get into Fortune 500 "enterprise" companies, but wanted to develop the product in a way that was more appropriate for SOHO customers. Except when they wanted to add telecom-only stuff (BGP support?). And when they wanted to become a services company and put the hardware line into maintenance mode. Did we mention educational services? Long-distance telelearning for gas stations? Information kiosks in Bass Pro shops? And keep in mind that before I'd gotten there, the engineering staff had experienced over 100% turnover in a 12-month period. Not only was no one left who'd been an original developer, no one was left who had worked with an original developer.

With all respect to Dan, Walter "Junior" always came across as chiefly committed to making money. And I'm not saying that this is a bad thing for someone who wants to run a company--making money is obviously pretty important--but he didn't know technology and didn't care to listen people who did know technology if they told him things he didn't want to hear. This left him chiefly guided by people who were better at being yes-men than being actual system architects. I'm mildly surprised NetWolves survived as long as it did.

And technically they're still around, although now that they've come out of bankruptcy as a private company there's not even a semblance of transparency, and I'm not sure anyone I worked with is left.