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Broadband provider sends troubling financial signals

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Omnicity Corp., a consolidator of wireless broadband services that moved its headquarters from Carmel to Rushville last year, is severely behind in loan payments to a lender, the Muncie Industrial Revolving Loan Fund.   

The company, which last year drew Indiana Gov. Mitch Daniels to Rushville to help announce its headquarters expansion, is already fighting allegations of not fully paying owners of three firms it acquired in recent years.

“They’re delinquent,” confirmed Bruce Baldwin, administrator of the Muncie loan fund. He said Omnicity officials have been in contact, saying they intend to catch up on the payments.

Under terms of the loan to help with broadband expansion in Delaware County, Omnicity is required to pay the fund $4,750 a month. It has an outstanding balance of $249,225, according to Omnicity’s most recent financial report that shows the company hasn’t made payments since midyear.

Phone messages left with Omnicity were not returned. The company has about 12,000 broadband customers in Indiana and Ohio.

Omnicity’s latest financial statement, filed this month with the Securities and Exchange Commission, states it has a working capital deficit of $4.12 million and a $1.6 million stockholders’ deficit, among other challenges.

“All of these factors combined raises substantial doubt regarding the company’s ability to continue as a going concern,” the report states.

A review of the company’s previous financial statements show such a warning has been issued for years–including prior to the Indiana Economic Development Corp. in August 2009 offering Omnicity up to $25,000 in training grants and $110,000 to Rushville officials in the form of a grant to help the company improve infrastructure.

At the time of the state’s offer, Omnicity had a working capital deficit of $2.7 million.

In return for the incentives, Omnicity said it would create 100 jobs within the next three years by investing $2.5 million in wireless infrastructure and a new corporate headquarters. Generally, state grants are performance-based, with a company not receiving the benefit until it meets its obligations.

Omnicity has posted losses in each of the last four years. It had a net loss of  $400,027 on revenue of $1.3 million in the quarter ended Oct. 31.

That compares with a loss of $644,136 on sales of $617,000 in the same quarter a year earlier.

Among other long-term debt obligations is $599,038 owed the Wabash Rural Electric Cooperative and $198,925 to company chairman Richard Beltzhoover of Carmel.

Beltzhoover was a former investor in the company who took over the company as CEO in 2008 as part of a management shakeup. Current CEO Greg Jarman, Omnicity's former chief operating officer, replaced Beltzhoover in June 2009. Lately, Beltzhoover has been helping the company try to raise additional capital. He could not be reached for comment.

Omnicity’s business model is predicated in part on growth—by acquiring numerous wireless Internet service providers nationwide. Among its partners are rural electric cooperatives and municipalities.

In October 2009, Omnicity announced it had won a contract with the Indiana Department of Natural Resources to provide wireless broadband at the Mississinewa Lake and Miami State Recreation Area.

According to its most recent financial report, the company is negotiating to raise $2.5 million in equity from private investors by Friday.

The company has about 50 employees.

Meanwhile Omnicity faces lawsuits from the former owners of three broadband firms that sold their firms to the company, alleging they’re owed a total of $1.2 million.

Steve Narducci, former owner of Alexandria-based NDWave LLC, filed suit last September in Rush Circuit Court, alleging Omnicity still owes him more than $405,900 stemming from the February 2009 sale.

Kyle Yoder, who owned Berlin, Ohio-based Digital Network Solutions, said Omnicity paid him $700,000, but not $50,000 in cash and $150,000 of company stock he is owed.

In a third suit, filed in Rush Circuit Court, the former owner of Peru-based North Central Communications alleges Omnicity owes him $159,903, plus interest. Kevin Sexton alleges Omnicity defaulted on a payment in August.

Jarman told IBJ in October that disagreements are par for the course when a company makes acquisitions and that the Rushville company would strongly defend its position in court.

 

 

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  • Yet another! WOW!
    Trail Bottom, LLC, P.O. Box 208, Berlin, against Omnicity Corp., c/o Greg Jarman, president/CEO, 807 SR 3, Rushville, Ind., $4,095.21
  • After Image Files Suit
    Defendant
    Omnicity, Inc.
    C/o Gregory Jarman, Reg. Agent
    243 E. Us Hwy 52
    Rushville, IN 46173


    Plaintiff
    Afterimage GIS, LLC
    Burt, Blee, Dixon, Sutton & Bloom
    200 E Main Street Suite 1000
    Fort Wayne, IN 46802

    Case No. 70D01-1102-CC-000067
  • At least in Rush County
    At least it will bring up the ones in their home county of Rush
  • Check omnicity Lawsuits
    How to check Lawsuits against this company.
    https://mycase.in.gov/default.aspx
    select rush county
    do civil
    search by party
    change to business
    type Omnicity and do "use soundex" at top right
    that will bring up them all
    • USPP Wins 67,500
      02/08/2011
      Default Judgment entered (Judicial Officer: Hill, Brian D)
      Comment ()
      Status: Active; Signed Date: 02/08/2011
      Awarded to: USppp Inc.
      Awarded against: USppp Inc.
      Court Costs plus Judgment: $67,500.00

      02/08/2011 Judgment Docket Book
      Vol./Book 18, Page 58
    • loss of service
      We lost our service over the weekend and found out the owner of the grain elevator where the serving antenna was located had cancelled his contract with Omnicity. I wonder why....

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    1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

    2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

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