The Ugly Truth About North & South

Below is the president’s report of North & South, Inc. I recognize that by publishing this report here, I am airing dirty laundry. However, a lot of people are losing a lot of money due to the rank incompetence of the president of the company and his supporting cast of yes-men, far more than I am losing. I simply could not stand by and allow it to happen without the world knowing and understanding that the investors are being stripped of the company’s only asset for nothing but the assumption of the debt by a not-for-profit company that will probably be used as the personal piggy bank of the president.

PRESIDENT’S REPORT

It will come as no surprise to anyone if I remark that U.S. economy is in bad shape. Thus far North & South’s subscription base has held up and I am working day and night to find new sources of subscribers. We should also have our website back up soon. Retail sales are as far as we know also holding steady (overall magazine sales in the U.S. are down 25%) though there is always so much time lag with the numbers that our data is several months old.

We have been adversely affected in two ways, both serious. (1) Names and Addresses, who marketed our mailing list, went bankrupt owing us $12,000. (2) advertising budgets have been widely cut and among those making the deepest cuts are book publishers—our principal sources of advertising revenue. Although advertising revenue has not (yet?) fallen it is clearly now impossible to reach the goals we had set ourselves and without which the magazine will continue to lose money. The loss of revenue from the Names and Addresses bankruptcy meant we could not pay our print bill. I have taken action as follows:
(1) Reduced the number of pages in the magazine from 100 to 84. I have done this in such a way that each issue will still have 5-6 articles, each being slightly shorter than of yore. I am hopeful this will avert any negative reaction from readers.
(2) There will be less color (2 signatures rather than 4).
(3) We have eliminated foreign retail sales and domestic outlets with lower rates of sell-through. This pretty much means North & South will retail exclusively through book stores.
(4) I negotiated with three print companies and finally persuaded our existing printer to meet the lowest bid and work with us in such a way that we can off the unpaid bill for issue 11.2 by September 30th. This means that our bill for 11.3 (which mailed three weeks ago) is reduced to c. $10,000 and from 11.4 on will be c. $9400. This is a reduction from $18,000 per issue.
(5) I have also been able to effect certain other savings. For example, the layout bill is reduced by 16% as a result of reducing the number of pages (though this partially offset by the decline in the value of the U.S. dollar in relation to the Chinese yuen—remember the magazine is laid out in China).

The overall effect is that, if no other major problems occur, the magazine will just be able to pay its way. This is just as well, as I can no longer subsidize the magazine or work for a pittance. The company has a credit card debt of c. $100,000 for which I am personally ultimately responsible. Like around 50% of Americans my home is now worth less than my mortgage. Although I am attempting to refinance it, there is a 90% probability that I will lose the house in the next four months.

The board of directors has voted to transfer ownership of the magazine to the Civil War Society, which is a not-for-profit corporation. This has a number of advantages (e.g. paying less for illustrations, possibly getting a grant) and stands the best chance of safeguarding the interests of subscribers (as well as relieving N&S Inc. from the subscription obligation of c. $130,000). The Civil War Society will also assume certain other obligations. You should vote for or against this move either at the AGM or by mailed-in ballot.

This of course leaves the shareholders–myself included–with a corporation that is effectively an empty shell, albeit one with less debt than before. Our shares at this point are worthless (irrespective of whether the magazine stays with N&S Inc. or goes to the Civil War Society). Intellectually and educationally the magazine has been, and is, a great success; financially it is not.

I am painfully aware that friends and acquaintances have invested in the company, though I hope no-one is in as dire a position as I am. I hope eventually to be able personally to repay investors the money they put into the company itself cannot. Obviously this is not a legal obligation, but it is a strongly felt moral one. By the end of the year, if I can stave off personal financial disaster, I may be able to offer you some hope in this direction.

Please do not hesitate to call me with any questions or suggestions.

Sincerely,

Keith Poulter

So, there you have it. The whole ugly truth. If the proposal is approved by the shareholders–since Poulter and his ex-wife control enough shares, it inevitably will be–we will be left with a corporation that has no assets and nothing but debt. Poulter’s rank incompetence, with the rubber stamping of his board of yes-men, has caused a LOT of good people to lose a LOT of money. In my case, it’s about $20,000, gone forever due to his horrific mismanagement. All lost for the retirement of some debt. It bears noting that this is now the SECOND publishing venture of Poulter’s that his incompetent management ran into the ground; had I known that another venture of his had failed before hitching my wagon to North & South, I never, ever would have done so.

One other observation is pertinent here, as to the bankruptcy of Names and Addresses. Poulter very disingenuously would lead us to believe that the alleged $12,000 lost here would tip the balance. He seems to be saying that this tiny straw broke the company’s back, and worse, he’s using it as one of two key reasons for this bogus transfer to the Civil War Society. This fails to pass the old reliable smell test and comes across like an empty—and transparent—excuse.

I have voted against the proposal and against the current slate of directors, and I urge EVERY shareholder of this company to join me in doing so. We may not control enough votes to prevent it, but perhaps it will send a message.