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Today's Q1 2009 Earnings Conference Call: Questions Submitted to Patrick Byrne

Updated's (NASDAQ: OSTK) earnings conference call is scheduled to start on Wednesday, April 22, 2009 at 3:00 PM Eastern. Therefore, I have submitted the questions below for CEO Patrick Byrne to answer. Before asking each question, I provide the context of my questions. Let's see if the masquerading stock market reformer Patrick Byrne has the guts to provide a detailed truthful response to each and every question.

To Patrick M. Byrne:

Senior Note Repurchases

As of December 31, 2008, reported that $67.5 million of Senior Notes were outstanding. Those notes were issued in November 2004. Since that time has disclosed that there were material weaknesses in internal controls and that its revenue accounting did not conform to GAAP and SEC disclosure rules from the company’s inception (day one).

In addition, financial reports from Q1 2003 to Q3 2004 (periods before the Senior Notes were offered) have been restated twice. Recently, has been buying back such notes at a discount or profit by paying investors less than the face amount of such notes.


Do you believe that investors would have purchased such Senior Notes under those same terms and conditions in November 2004, in light of’s subsequent disclosures about material weaknesses in internal controls, departures from GAAP and violations of SEC disclosure rules, as recently disclosed by the company?

Is it fair to say that you are taking advantage of investors in Senior Notes by buying the debt at a discount to face value?

James V. Joyce Resignation and Contract Termination Fee paid to Icent LLC (run by Mr. Joyce)

On April 1, 2009, James V. Joyce resigned from’s board of directors. In an 8-K report filed with the Securities and Exchange Commission, disclosed that Icent LLC (a company run by Mr. Joyce) received $1.2 million to terminate its contract with According to the proxy statement, "...paid Icent LLC $360,000 annually, and paid approximately $75,187 of reimbursable expenses to Icent in 2008."


Please describe in detail the services rendered by Icent LLC to What factors justified the huge $1.2 million contract termination fee which is approximately 3.5 times annual fees paid to Icent LLC?

Is it’s view that its agreement with Icent LLC and any amendments thereof are considered a “material definitive agreement” under SEC rules?

Please explain in detail’s position of that point.

Does intend to disclose as an exhibit in a future filing to the SEC copies of any agreements made with Icent LLC?

Please describe any contract termination provision in any agreement with Icent LLC.

Assuming that the original contract with Icent LLC had a contract termination provision, was it ever amended?

Did the original contract with Icent LLC call for a contract termination payment of $1.2 million? If not, was it agreed to at a later time?

Did James V. Joyce or Icent LLC render any services that relate to Deep Capture LLC or

Smear Campaign

You have viciously retaliated against me and other brave journalists and bloggers with innuendo, smears, and lies for having the courage to expose your misdeeds. Recently, your paid internet stalker Judd Bagley posted smears, innuendo, and lies about my ongoing matrimonial action in an attempt to discredit me. He even threatened me to "settle the case." (Details here)


Do you deny orchestrating a retaliatory smear campaign against your critics through your funding and admitted control of Deep Capture LLC, compensating individuals such as Judd Bagley and Mark Mitchell to post smears, innuendos, and lies about your critics on Deep Capture's web site and internet public chat boards?

Do you deny ever violating’s Code of Business Conduct and Ethics?

Please explain your answer in detail.

Do you deny ever lying or misleading investors or the public about’s financial performance?

Please disclose the exact nature of the relationship between and Deep Capture, including but not limited to any resources used by Deep Capture, whether past or present.

Recently, Judd Bagley who claims to be compensated by Deep Capture LLC, a company that you funded, posted innuendo, lies, and smears about my divorce on the Yahoo message boards.

Do you approve of Bagley’s behavior towards me and other critics?

Recent Amendments to Financial Reports recently filed amendments to prior financial reports filed with the Securities and Exchange Commission. Each of those amendments contains an “Explanatory Note” detailing the changes in certain disclosures and the reasons for such changes.

From Q2 2007 to Q2 2008, violated SEC Regulation G by using a non-compliant EBITDA and the company materially overstated its financial performance. In Q3 2008, revised its non-compliant EBITDA disclosure and called it “adjusted EBITDA” to try to conform to SEC Regulation G. also revised its previously reported (Q2 2007 to Q2 2008) non-compliant EBITDA disclosures in those amended reports. However, there is no explanation why such non-GAAP disclosures were changed.

Question: Please explain why made no reference to using a non-compliant EBITDA in its “Explanatory Note” to amended financial reports and provided no reason for changing such non-GAAP disclosures.


Lee Webb from Stockwatch analyzes's responses and lack of responses to my questions (detailed here).

Written by:

Sam E. Antar (former Crazy Eddie CFO and a convicted felon)


I have no position in securities, long or short.


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