Stephen Dymszo
21m ·
I understand that many people are upset about the excessive delays in getting the HAL 9000 product delivered and the recent total lack of response from Master Replicas Group. To be clear, I officially resigned from MRG on May 15th, after I had laid-off all of the staff (including myself) in early-April. Several of the remaining management personnel/share-holders are still there, and they have been running the company since my departure.
I have made numerous attempts to communicate/ask questions/suggest conference calls to discuss the company moving forward, and to-date I have received no response from anyone other than their lawyer saying “We will get back to you soon…”
The situation is absolutely unacceptable and customers are entitled to know what happened. I can’t post everything, as I have no desire to engage in a legal battle with the company I started, but I will try to clarify as much as I can. I would like to add that in the three years of our operation, we shipped many thousands of orders out (often the same- or next-day) so we were generally very successful there. The delay currently affects ONLY the HAL product.
On July 23, 2020, MRG filed for chapter 11. This has been posted elsewhere on FB, so it is not a secret. Please note that this is a reorganization, not a dissolution, and I understand that there is a plan to move forward with the company and its share-holders (I am one of them). I don’t know any more than that, as the current management has refused to share any information with me for the last few months.
I want to say to everyone, I am SO sorry this has happened. I spent three years of my life trying to make sure this did NOT happen. I even hired two financial consultants to provide an on-going third-party review of the company and finances to see if we were making any mistakes so we could correct them in real-time. I took this business extremely seriously and the responsibility of people pre-paying for our lead product heavily weighed on me on a daily basis.
This was the company that I and my family started and were supposed to be working for, for many years. I hoped for this to be my last big business before I retired. Because of circumstances well-beyond my control, I am now unemployed, along with the rest of our staff.
Having experience with unethical business partners in the past, I had hired several qualified family members and outside consultants, so we could have a core-staff of people that we could trust. We all knew that this would be successful and we all agreed to work together to make great products and absolutely no “screwing around” with the finances. We were always extremely careful how we spent money. There were no excessive purchases and all larger expenditures were run past our investor and other managers first, before we paid out any money.
Almost every person who worked here also took a pay cut to be at MRG. I personally took a $30k/year pay-cut to serve as CEO. So, I lost about $90,000 working for this company, only to now be out of a job. I sacrificed a big salary because I felt that the rewards would come “later”. Unfortunately, other people had different plans. I will not name names, so please do not ask.
This company had enormous potential. My staff and I had designed numerous amazing products that may now never see the light of day because others had “different plans”. Many of them were completely designed and developed, but never put into production, because we didn’t want to spend too much money, too quickly.
This situation is tragic for everyone involved. I have no words to express how I feel about this.
I will summarize what I can here. I want to be clear…I was the CEO of this company, and the business is ultimately my responsibility. However, as I hope you will see from the details below, there was a long-term plan to have me removed from the company and have it be taken over by other people. All of our staff, our consultants, and several of MRG’s vendors also know exactly what happened in the last three years, so I am not being paranoid or blame-shifting.
This will be a data-dump, so things are not necessarily in date-event-order. These are just the FACTS as they occurred. I cannot share any more information than what I am including below. I also cannot interact with people asking me the obvious next-million questions, as I cannot risk that. I hope you can understand and respect that. Any further answers will have to come from the current management of the company. I have not/ cannot reply to e-mails or messages on this subject. I am not ignoring you. I was warned by their lawyer to not do so.
EVERYTHING I write below can be verified by 9 or 10 direct witnesses and almost every person has agreed to testify to these facts if needed. I also have kept a printed file for the last three years, and many times when there was an “incident”, I documented it in an e-mail and printed it out for my file if things ever fell apart. So, the following information contains ONLY indisputable, verifiable FACTS:
Approximately three years ago, we formed the company, obtained an investor, and started conducting business. As everyone knows, we did a crowd-funding to test whether the HAL project would even be viable. It was very successful, so we moved forward. I had informed our investor that we needed X $$$ to do everything we needed to do. He initially invested 1/3rd $$$, but stated that as we progressed and met various milestones, he was good for the full amount. That sounded perfectly fair, as we had received the Indiegogo funds to offset some of that, so we got started.
One of our founders was an electronics engineer, so he would design the HAL electronics and specifications with another one of our staff. I would coordinate the project, but mainly stay out of the specific details for the majority of the project.
Two people (not me) were given pretty much exclusive freedom to design the HAL project. I interjected information and feedback where needed. This project should have taken about 6 to 9 months to design from start to finish. It took over 24 months. Because of these delays, I sent dozens of e-mails and conducted numerous phone calls (over 100?) pleading with everyone involved to get the project done because of the critical timing and the fact that we would run out of money before the product ever shipped.
These emails were always responded to, but in practice, were ignored. I therefore brought in two additional outside engineering consultants to help shepherd the project to production. Both parties eventually resigned, stating that they could not work with X and Y. X and Y often reviewed the design of the HAL with me and now that I HAD to become more involved in the specifics of the project, I provided hundreds of feedback e-mails and phone calls that the design was overly-complicated, too expensive, and was not manufacturable. Once the product design was finally completed and submitted to the factory, they reviewed the CAD files and their response was: “Not manufacturable as designed.” (Again, their words, not mine).
X and Y were warned numerous times during the project that this was going to happen by myself, and others. The three of us all have engineering degrees and have over 90 years of manufacturing experience between us. We were essentially ignored.
As I said, because of the mounting delays, we brought in two engineers from the original MR to shepard the product through manufacturing in China. Almost immediately, it was obvious that there was friction between the co-founders and the engineers. Our consultants stated that the product was “being wildly over-designed” and that it would not be manufacturable. During conference calls, I acted mainly as a referee, as the parties literally screamed at each other. I kept issuing deadlines, stating that these were not to be exceeded and that ALL work had to be completed by that date. Those were always discussed, but were functionally ignored and one deadline after another passed for one reason or another.
As predicted, it took over 24 months to get a final design from our staff and once submitted to the factory, they told us it was “not manufacturable as designed”. The design also FAR exceeded our original estimates for tooling and per-unit cost. Both engineering consultants warned me about this.
Our investor also had his CPA review our financials every month and we would have a phone call every month to discuss our burn rate, expenses, planned purchases, accounting methods, etc. EVERY month, he told us he was “very happy” and to “keep up the good work”. Our accounting staff went through this process religiously every month to make sure that no one could come back later and say we were doing anything that was unauthorized or unethical.
I and our financial consultant met with our investor around June of 2019 to discuss the company finances. I provided extensive financial reports and a proposed going-forward plan. I emphasized that the company would run out of money between December 2019 and February 2020, if no additional funding was supplied. I reminded him that the original business plan was for $XXX and that the company had started out under-capitalized, and he had promised us more funding. The investor said not to worry and that “when the funds were needed, they would be available”. He asked me to create a use-of-proceeds document and said that once the document was reviewed and approved, funding would be provided. This never happened, obviously. Around July or August of 2019, the investor stated that he was now going through a hardship and that his assets were now all tied up for some indeterminate amount of time.
Y informed me last year that he was owed $127,300 by the corporation. I asked for some type of documentation. None was ever provided. Keep in mind that this was never discussed, agreed, or approved by anyone. The debt simply came out of nowhere. Y claimed that it was for “excessive amounts of time that he had spent working for the company”, but no prior warning was given that this was coming. Y then submitted to me a loan document which required approximately a $9000/ month repayment. All of this despite the CEO's noting to everyone that the company could not take on any more major debt and an additional funding was needed. Furthermore, the loan documents stipulated that if any one payment was missed, that Y would acquire all property and goods of the company, both tangible and intangible. This means for a $127,300 “loan”, Y would acquire approximately $600,000 worth of inventory, plus all of our contracts, intellectual rights, designs, etc. I told that person that there was no way ANY CEO would ever sign an agreement like this. I had several finance and legal professionals review the contract and they all said the same thing. (redacted).
Because THAT didn’t work, Y then sent an email last year directly to our factory in China that is manufacturing the HAL product with a contract directing them to acknowledge that he owned 100% of the design of the HAL, stop manufacturing it immediately, and if that was violated, he would take legal action and all damages were payable directly to him personally. The factory refused to sign this contract, obviously. This was never discussed this with me prior, nor did they even CC me on this email. The factory contacted our manufacturing engineer, who called me immediately and sent me a copy of the contract. That was the first I knew anything about this.
Note again, that at the start of the company, we had all signed a covenant that ALL products designed at MRG were the property of the company. This is a direct violation of that covenant. I reminded Y about this and he said that he "Didn't recall ever signing anything like that".
Because Y incorrectly informed the factory that he now owned the design of the HAL with no prior warning or discussion (which was in violation of our original covenants and agreements) AND threatened to sue the company if we used HIS design without some written agreement and the repayment of his $127,300 “loan”, I hired X and Z to completely re-design the HAL as a 100% MRG-owned design and take it to production. This caused months of additional delays. This is the design that is currently held by the factory in China.
Unfortunately, because of all of the misdirection, delays, and now-24 months of redesigning, re-re-designing and general drama, by the time we had a viable design to go to production, the company had burned through almost all of the funds needed to pay for it and the investor subsequently backed out of his agreement to provide additional funding.
Because of numerous incidents with two people, the company spent approximately $70k in legal fees that would not have been necessary if everyone worked together properly. In addition, the company wasted $40k paying a settlement to a person so we would not be sued for “wrongful termination”. He was also paid for two months for no work, while he was on temporary furlough until we could determine what to do with him. Our HR manager made sure we did everything “by the book.” This should never have happened.
In addition, we hired X and Z to redesign HAL numerous times and wasted hundreds of hours arguing over details that were a total waste of time. This resulted in racking up about $60k in excess engineering consulting fees to correct a design that should have been done correctly ONE time. Not over and over and over.
Our investor assured me that this was not going to be a problem and he said: "Keep going, more money is coming". Our consultants will testify to hearing and seeing this.
I repeatedly warned everyone for the last two years that this was coming. I provided financial documentation every month as proof. While they would always respectfully listen and discuss, no one actually took any real action to prevent it from happening.
Then, after all of that…
Because of Covid, our 2020 sales dropped by about $400,000 over the last six months. Our investor also stated that his businesses were hit very hard and he could now not invest any additional funds. We had already paid the factory an enormous amount of money for development, prototyping and tooling of the HAL. We actually received a full production unit from the factory that thousands of people saw at various conventions and on the internet in 2019. We were all very excited to finally get this product moving into final production.
On another note, our products were hit with a 15% Chinese-import tariff starting in 2019, so the HALs would cost us about $60,000 to $90,000 more than planned. That was manageable, but very, very painful.
For the last six months, I have submitted financial plans to keep the company going on a much-decreased basis and try to slowly rebuild. I have created several financial documents that were sent to all parties showing recommendations on how to accomplish this. I have continually stated that we should find some way to fulfill the HAL orders so as to not burn our customers. Our engineer even got the factory to agree to split up the product into regular, smaller shipments, so we could get them out faster.
I stated that I would NOT accept bankrupting the company and we had numerous other options to be able to move forward. Every one of my plans was rejected. The investor unequivocally stated that we should close the company. Other board members clearly sided with this action as well. On a conference call, Y told our investor to not put any money into the company, as it was not viable. I was out-voted, and that pretty-much sealed the fate of the business.
In summary, I tried everything in my power and even brought in outside help, but still could not stop this. It is very clear to me now that my vision for the company was NOT the vision that other people had for it.
Again, please be aware that for every single statement that I have made here, I have witnesses and documentation to back it all up. I am so sorry this has happened and I hope that the new management will make everything right with the customers. I tried my best for three years, but could not stop this from happening.
