IHI blames SEC actions for massive 2Q loss
Triangle Business Journal
International Heritage Inc. reported a net loss of $8.26 million for the second quarter of 1998, results it directly blames on actions taken against the company by the Securities and Exchange Commission.
The SEC was successful in temporarily shutting down the Raleigh-based network marketing company in late March, after leveling allegations that the company was an illegal pyramid scheme. The company strongly denied the allegations. The company resumed limited operations in early April.
IHI blamed $6.79 million in expenses due to the action since the beginning of the year. Without those costs, IHI would have reported a loss of $85,000 for the first six months of the year. Sales for the second quarter were $10.72 million, down from $19.72 million one year before.
IHI further claimed that court-imposed restrictions preventing it from raising capital derailed a planned secondary offering of stock which would have provided $25 million to $50 million. The actions also kept warrant holders from exercising their warrants, a move that would have raised $11.4 million, the company said.
International Heritage closed at $5.50, unchanged.
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