With all due respect to your most recent comment and others on this board that may be upset such as yourself. You are correct in that it is not fun to kick someone when they are down. This story has 3 sides, Fin's, Angie's and Jim's. The three of them are truly the only people that know all of the facts of which some appear to be in dispute never to be resolved.
I think many of us come to this forum (thanks Jack) to discuss what went on and many of us have a lot of questions and opinions (as the saying goes opinions are like a$$holes---everyone's got one). For the most part I haven't read anything highly offensive on this board, just opinions, though some highly charged at times. I am guilty of that I will confess so if I have said anything that offended anyone I do apologize. Keep in mind a great business and tightly bonded community and customers within that community were impacted, some losing good amounts of monies.
As soon as we arrived at Jim & Angie's first ATC (2016) and observed how the event was being run, the new expensive van and other things some of us had a hunch things might not end well. I say this as there were numerous people making similar comments about their observations as well (new van with wrap, huge house that was seemingly excessive, etc.).
Before getting into my thoughts, a little about my background. Years ago I did several years doing analyst work for the SBA (Small Business Administration) going out into the community to help failing business's that had SBA loans nearing default. My job was to analyze the business, recommend solutions in order to save the loan and to prevent the company from having to file BK. I did this while in college and during this same time I also helped my parents run a mid size construction firm they owned during summer breaks. Owning a business is tough and risky. Usually there isn't much time for fun! I subsequently spent 15+ years as an Advisory Consultant/Director/Sr. PM in a tech firm managing projects of $500 million+ or more. So I have some decent business background in addition to about 29 years of snowboarding and some of that spent working and helping a couple of the business's in various capacities. As such I am a little familiar with the industry and our hb niche as well.
When they filed BK for Bomber I took a look at the detailed data in the BK filing documents as I wanted to understand what went down a little better (and I like to work on facts as much as possible). As you are aware Fin bought out his partners in around 1993. He successfully ran the business for about 22+ years until he decided it was time to sell and move on to something new. The business provided him with a rather solid income (I am sure lean in some years since the business is somewhat dependent on snow) and it also provided employment to 1 to 2 other individuals.
After reviewing the detailed financial information from the BK filing and later down the road taking a look at a detailed business prospectus that Fin put together (and it was VERY detailed) I spent some time running basic numbers because I wanted a better picture of things just for my own personal knowledge/understanding. Without getting into the "nitty gritty" here are some key facts/observations/opinions/questions:
1. The sale of Bomber according to records was in May of 2015 in the amount of $210,672. Agreement terms are unknown. As others have said on this thread the sale did not include the machinery (I think that went to a different company) and if my memory is correct Fin kept the bail bender (though I may be wrong).
2. Fin's prospectus was very what we call "T&L" tight and lean and also paying himself a respectable and reasonable salary. We had the opportunity to spend time in Fin's factory some years ago and I can personally say he ran a tight ship (he knew the inventory down to the screws).
3. Right out of the gate what is the biggest difference between Fin running the business and Jim & Angie? Besides Jim and Angie not having the equipment in house? A big difference that would have to be taken into consideration by any buyers is the fact that Fin produced a chunk of the goods in house on premises. Jim and Angie did not have that luxury and that is a big cost savings to Fin (live where you work).
4. Did Jim & Angie perform due diligence before buying the business? Did they have a firm look at the contract taking into consideration what their costs would be? Did they have a lawyer review the contract? Did they ask for copies of the past 3 years of tax returns? Did they do a projected cash flow? Did they audit receipts? I don't know the answer to this, but surely if that had been done some costs and overhead expenses (fixed and variable) would have been taken into consideration. Did they have a written business plan? Seems if they had truly done proper due diligence they would have gone into this with eyes wide open and known the relevant facts.
5. Did Jim or Angie have prior experience running a small business? Did they have intimate knowledge of the snowboarding industry? market? demographics?
6. Jim & Angie obtained a loan from Alpine Bank in the amount of $90K in May of 2015 (terms unknown) in addition to obtaining a loan through a private individual in the amount of $50K (terms unknown). I am not sure if they took other loans or had liquid assets available at the time of purchase. What we do know is that based on these 2 facts they had approximately $140K in operating cash to start with (and that operating cash was also debt). There are 2 pretty hard and fast rules about small business. 1) Likely failure is within the first 24 to 30 months and 2) Owner should have 18 months of operating cash on hand and access to an additional 6 months for a total of 24 months operating cash on hand/readily accessible.
7. They moved from their rental house to a larger house assuming a new liability of $4K per month in rent living in a much larger space, but not manufacturing from the space. The business did not warrant a retail showroom especially given the location and little to no foot traffic nor retail storefront visibility. At $4K per month that is $48K PER YEAR in rental expenses!
8. They purchased a 2015 Ford Transit 350T for a purchase price of 49,650.20 amounting to monthly payments of $819.17 over 60 months. They wrapped the van for an unknown cost (best guesstimate is 4-5K). They could have purchased a used van for a reasonable price and kept the graphics to a minimum.
9. Their payment to Alpine Bank on a loan of $90K was estimated at about $1,800 per month.
9. Their monthly payment to Fin was an estimated amount of $3,500 (assumes $210K paid over 60 months).
10. Their monthly payment of a personal $50K loan is unknown, so an estimated monthly payment of say $500 over 60 months.
11. At the time they purchased the business Angie was making a salary of $61K (though collecting $71,500). Jim's salary is unknown, but per BK filing not substantial. For ease of calculation let's assume after taxes she brought home $4,200 per month (no dependents).
12. Monthly expenses that we know from the above (does not include other expenses which we do not have facts for) = $10,619.17 and this is a low number, excluding other personal and business expenses for which I don't have detailed information. My best guess is total monthly was running around 14-17K taking product and other expenses into account.
13. We know they had approximately $140K cash (also debt) on hand when they started the business plus access to Angie's monthly salary of an estimated say $4,200 net per month. This right here is a red flag. The bare bones minimum of expenses (which is well under actual) is 10-11K per month. Keep in mind this amount excludes production and acquisition of products.
14. Did hardgood vendors (boots and boards) provide a line of credit to Jim and Angie or were the account(s) on COD? This too impacts cash flow.
15. Did Jim and/or Angie have the skills to tweak existing products? Develop new products? Did they have access to more capital to do R&D?
16. Numerous people have stated they had a poor customer service experience during Jim and Angie's tenure.
17. Assuming the cost burdens of putting on ATC in the winter of 2016. Perhaps this should have been a off year while they got the business up and running and on solid footing.
18. They had to rely on others to manufacture the goods (excludes boots and boards). This is a weak spot and does not appear to have been taken into consideration during the due diligence process (or lack thereof).
19. While I don't have access to review the buyer/seller agreement I did look at the detailed data in the prospectus Fin sent and the numbers work (though tight). I trust Fin and don't believe he was dishonest. At all. Period.
20. Owning a business requires blood, sweat, tears and shrewd finances.
21. Assuming $15K (see #12, $10,619 + say $4K) per month in expenses (very very rough estimate based on above plus padding for product, materials etc) in my humble opinion they would have needed to have access to $360K in funds to safely sustain them over a 24 month period. In my humble opinion the business didn't have a chance from the start because they took on unnecessary/high expenses combined with irresponsible personal spending (at least according to the news reports). At the $15K per month estimate they would have blown through their cash from the loans within about 9 months. They started the company on about day 1 with approximately a total debt of $400,322.20 ($210,672+$90,000+$50,000.00+$49,650.20). According to the paper and warrant the theft started 11/2015 which is about 6 months from the time they purchased the company. It is also worth noting they really didnt have any personal skin in the game as it appears the did this using loans (other people's money). This isn't the most optimal way to start a small business or any business for that matter. High debt, low cash and high expenses:(
The above is just some basic information. Sit back and take a closer look. They took on large and unnecessary expenses, combined with $400K in debt out of the gate and only $140K in cash on hand. It appears they failed to do proper due diligence to make sure the deal would work for their financial situation (which was much different than Fin's) and lack of sufficient operating capital needed to sustain the business and get it on a solid footing within the first 24 months from date of purchase.
I am truly sad for Fin, for all those that have experienced less than than professional customer service and those that paid for goods that were never received. The alarming part in all of this is that the website was up and running and still taking orders when they knew that they could not fulfill the orders and were preparing to file BK.
While bad things happen to good people this whole sad thing that has happened could have easily been avoided. It is going to be a tough road for Angie and Jim (especially Angie). The consequences of her actions will impact her life for years to come. At least she admitted to what she did when she was caught (though would she have admitted to it if she wasn't caught?) If the court/jury finds her guilty or Angie gets a plea deal and she accepts/completes her punishment she will have paid her debt to society and we hope that she will somehow land on her feet.