The purpose of this letter is not to make excuses, or elicit sympathy, but rather to give an honest reflection on the events and circumstances that led to the closing of WebSmart.
WebSmart was born out of a perceived opportunity. At the time WebSmart was formed, the idea behind it was sound. The teleservices industry was at a peak, the demand for the services was high, and Minot had been able to create a cluster of companies in this industry. We saw it as an opportunity to create something positive not only for ourselves, but the community where we have lived, raised our families and continue to reside.
Unfortunately, this venture did not turn out as we had planned or hoped. We feel terrible for WebSmart's employees, its suppliers and banks, and for our families that have had to endure so much during these last months. Financially and personally, this situation has been devastating. We have personally invested and lost more than $620,000 of our own money in WebSmart. We are also personally obligated to pay another $1.9 million in loans. Our other partners, Buzz Stitzer and Patrick Connor, also invested and lost over $100,000 personally.
We tried as hard as we could to keep the company afloat. We faced a suffering economy that devastated industries that typically utilized telemarketing services; there was increased competition for the services WebSmart provided. When our client, Global Financial, informed us in late April 2003 that they couldn't pay WebSmart the almost $1 million they owed, the shareholders simply had no additional money to invest to cover payroll or keep the company running.
WebSmart's board also decided to deed our building back to First Western Bank. We did so to ensure that Phase 2 would come to Minot. First Western held the mortgage on the building. When we stopped making payments, we knew that First Western would inevitably get the building back as collateral on our loan. By deeding the building to First Western, Phase 2 could avoid the negative publicity and potential lawsuits of dealing with WebSmart and lease the building directly from the bank. Phase 2 began operations a few weeks later and now employs over 100 people.
ADVERTISEMENT
As for First Western, despite the fact that they got the building in lieu of foreclosure, they still stand to lose over $400,000 from loans made to our company.
We have now hired a Georgia attorney to try to collect the money owed to WebSmart by Global and we are going to aggressively pursue collection of those amounts. Any money we might get will not go to the shareholders, but rather all funds collected will be used to pay WebSmart obligations, and hopefully, WebSmart employees. We have also paid all health insurance premiums due WebSmart employees before our closing.
We don't expect sympathy from anyone, but while the avalanche of accusations and untruths make for great press, they are hurtful. We accept the criticism that WebSmart failed and that 600-plus employees didn't get their paychecks, but to suggest that we haven't suffered or that we are crooks and thieves is unfair and grossly untrue. We personally invested everything we had, trying to make WebSmart work; but in the end, we failed. Just be glad it isn't you.
Lamont and Skowronek, Minot, N.D., are owners/partners of WebSmart, a failed teleservices company that was the subject of a two-part Forum investigative report Oct. 26 and 27.
