Since the last report on Spear Jackson, Stocklemon has received a plethora of correspondence from employees of Spear Jackson, tool executives in the UK, and stockbrokers who have been talked into buying this stock from International Media Solutions.  While maintaining dignity and refraining from publishing information that would put people in jeopardy, this report will attempt to further on what has been established in Part 1.

Pension Plan Blocked From Employees

In the first part of this story, we mentioned how it was never explained by the company how a $31 million liability magically turned into a    $15 million asset with one swoop of the accountants pen.  Stocklemon believes that if such a transaction were legitimate, the company would have footnoted the filings and explained the change.  In this case..nothing.  We have now learned that the people who work for Spear and Jackson have their pension plan BLOCKED FROM ALL TRANSFER.  Click here for a letter sent to all employees the blocks the transfer of pension funds.  Don’t forget, this is a company with no pension committee.    (0096vz.pdf)

Spear & Jackson Lose Their Largest Customer

Toolbank was by far Spear & Jackson largest customer for 30 years.  Yet, Crowley decided they became an unnecessary evil.  Because Toolbank is a distributor of tools, SJ could not put out a news announcement every time a sale was made, maybe real business got in the way of a stock promotion.  In one emotional phone call, SJ wiped out its largest customer.  Please read the below link for full explanation.

(008yjw.pdf)

Our sources tell us that without the orders from the Toolbank account, SJ is going to have an abysmal 4th quarter and no hope for a real future in the tool business.

Toolbank has a 100+ sales force and distribution centers nationwide.  The loss of them as a customer is not only devastating on the financial position of the company immediately, but it also will make other distributors hesitant before placing orders with Spear Jackson for the future.

Rumor has it that there might be an impending lawsuit between Toolbank and SJ.  It seems as if SJ has dumped over £2 million of product on Toolbank that they contractually must take back but they have refused to.

Defection of Employees

Since Dennis Crowley took over, many of the senior management resigned or got fired.  It seems as if nobody wanted to be a captain on the Titanic.  Below is a list of the senior management of SJ and the fate they faced.  It has come to the attention of Stocklemon that if you ask too many questions about business, you are shown the door. Therefore, SJ is currently lacking any seasoned executives.

Steve Barnes , National Accounts Controller ( Resigned )
Jim Murphy ,  Export Controller ( Resigned )
Rachel Corton , National Accounts Manager ( Resigned )
Richard Carr , Key Accounts Manager ( Resigned )
Steve Derbyshire , Sales Director ( fired )
Paul Lamb , Managing Director ( fired )
Ian Askwith , MD of Eclipse Magnetics , ( fired )
David Wolstenholme , Group MD ( fired )
Mike Taylor , National Sales Manager ( fired )
Pat Lynch , National Accounts Manager ( Resigned )
John Crawley , Sales Representative ( Resigned )
Martin Hume , Sales Representative ( Resigned )

International Media Solutions (IMS)

Stocklemon has received much correspondence from stockbrokers around the country telling us about the barrage of phonecalls they have been receiving by IMS regarding purchasing stock in Spear Jackson, among other companies that IMS represents.

Since our last report, complaints have been filed against IMS by many of these brokers with the NASD, SEC, and Florida State Department of Securities.  Again, it cannot be understated that the phone people in the IMS boiler room get paid per transaction, therefore, they violate SEC law that was established in the first report.  Stocklemon still believes that this is a time bomb waiting to explode.

Crowley Barred from the Securities Industry

On July 11, 2003, writer Carol Remond wrote in the Wall Street Journal online that Dennis Crowley had been barred from the securities industry for unauthorized trading in a customer account. Although this is not a mandatory disclosure, Stocklemon questions if the “phone chimps” at IMS are telling this to the brokers to whom they are speaking.

Who Cares Press Releases

Stocklemon believes that Crowley has made it clear to his management that press releases will be the key to success for the company.  Sounds like a stock promotion to us.

An example of abuse of a press release is evident in the July 7, 2003 press release where the company announces a deal between Eclipse Magnetics and Kelloggs.  This is a deal that has been in place for many years and is a small net sale (less than £15k per year).  This is neither newsworthy nor will it ever have a material affect on earnings.  http://biz.yahoo.com/bw/030707/75226_1.html

In a most recent press release, SJ confirmed earnings for the third quarter.  We warn all shareholders to take this with a grain of salt.  Whether it is deferment of liabilities or channel stuffing, we must remember that these numbers come from the same people who have created the promotional machine that we know today as Spear Jackson

We recommend that all shareholders not just look at the press releases, but press management to show how these releases will ever affect the bottom line.

Conclusion

Stocklemon believes there might be a future for Spear Jackson, but not as a public entity and not under current management.  According to Stocklemon’s valuation, the company was sold to Mega Pro Tools for around $1.2 million U.S.  In the past year, the reputation of the company has been damaged within the industry and we believe the company is not current on its liabilities.  But being generous and forgiving, we will now say that they company is worth twice the amount of the purchase..$2.4 million. 

Therefore, the stock would be worth a price of .17 Cents per share..  See ya’ there.

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