MangoSoft filings raise concerns about its future



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Nashua-based MangoSoft — one of the smallest public companies in the country - said it did “not have any commercial commitments or off-balance sheet financing” and warned that the financial statement raises “significant doubt about the Company’s ability to continue as a going concern,” according to financial forms filed last month. MangoSoft has no employees, an accumulated deficit nearly of $89 million and less than $642,000 in cash. The company, which started out selling Internet-based software, had one employee, Dale Vincent, the CEO. While steadily losing money, the company recently had an influx of cash due to a $2.3 million settlement in December 2008 of the company’s lawsuit against Skype Technology. But Vincent died suddenly on April 22, 2009, apparently of a heart condition, in his Long Island, New York, home. The company was left in the hands of its largest investors, Selig and Jay Zises, two brothers from Brooklyn, N.Y., who owned most of the stock. Selig became the interim CEO and outsourced all of its functions. Sales and service are handled by Built Right Networks, whose principals are all former MangoSoft employees, “but we can provide no assurances that Built Right Networks would remain solvent,” said the filing. Built Right also services other business software besides MangoSoft, including Intuit’s QuickBooks. Since then, MangoSoft software sales have slipped due to a “reduction in customers.” Last quarter, the company was down to $38,000, just a little more than half of what it was in the same quarter last year. That was partly offset by the fact that the company no longer paid Vincent’s $202,000 annual salary, though it did pay $15,000 in consulting fees to his widow. And the company no longer had to pay legal fees in pursuit of the Skype lawsuit. But that still resulted in a $48,000 quarterly net loss. However, most of the cash went to fund the Zises’ other company, CashLaw, which finances litigation — some $600,000 in the form of a loan made in January when Vincent was still alive and another $400,000 investment a month after his death in certain cases the company had financed (as well as another $93,000 investment in unspecified securities held in a brokerage account.). That left the company - which had nearly $2 million in cash and equivalents at the beginning of the year — with $641,813. But, the company warned, the financial statement might not be accurate. MangoSoft doesn’t have any full-time accounting personnel, and its interim CEO is also its financial officer. Such lack of internal controls is a “material weakness” defined as “more than a remote likelihood that material misstatement of the annual or interim financial statements will not be prevented or detected.” Days before filing this statement, MangoSoft filed several amended versions of its last annual and quarterly financial statements. The Zises brothers have been involved in a number of high-risk ventures over the years. Both created (and Selig was the chairman of) Integrated Resources, with the help of Michael Milken, the junk bond king of Drexel Burnham Lambert fame in the 1980s. The firm collapsed at the end of that decade and the Zises were named in a class-action suit, which was settled in 1995 for $10.6 million. MangoSoft shares were at 11 cents in midday trading on the OTC Bulletin Board, which trades penny stocks. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW Edit ModuleShow Tags