The plot gets thicker yet. For
it was a credibility grabber: A press release touting a clinical review completed by a joint project with the
University of Iowa
that found that its heavily hyped Electronic Housecall patient monitoring system "reduced health care costs significantly" over traditional methods. The press release, on Feb. 24, quoted Dr. Michael Kienzle, director of Telemedicine for the University of Iowa Health Care, as saying, "We are seeing significant benefits both in terms of costs and clinical outcomes." Cyber-Care then went on to describe its Electronic Housecall System as an "Internet-based technology system that provides remote monitoring of individuals for health care purposes."
The key word here, folks, is "Internet." That "Internet" connection has been the sizzle to Cyber-Care's story -- the sizzle that caused its stock to rocket to a high of 40 in February from pennies last August. It also helped separate Cyber-Care from other companies, like
, whose monitoring systems rely on old-fashioned telephone lines.
Just one problem: Kienzle's comments on the cost effectiveness of Cyber-Care's product had nothing to do with the company's Internet product. Instead, his comments referred to a study using
Cyber-Care product that, like Kodak's, uses telephone lines --
a product for which Cyber-Care has not yet even applied for FDA approval
. "We have never used their Internet-based product," Kienzle told my associate,
. "Our experience is with the POTS
plain old telephone service ... I do not want to misrepresent our experience and say this is an Internet program. This is a POTS program."
POTS? Pans! Will somebody please tell me what's going on here? Turns out, as Kienzle told Mark, the press release that was issued wasn't the one Kienzle had authorized. The one he authorized included the model number of the POTS product: EHC 200; the press release that was issued didn't include
model number, leaving the impression that the good doc might have been talking about the Internet product -- the EHC 500.
Why the switcheroo? "One of the reasons that it occurred is because we did not want to confuse anyone," says Linda Roman, senior vice president at Cyber-Care. "We thought it would be confusing if we put in a model number."
Confusing, indeed. How would they have explained that he was talking about a product that hasn't yet been pitched to the FDA, that relies on old-fashioned technology and, worst of all, doesn't have Internet sex appeal?
Last week's item on
mentioned that CEO Leonhard Dreimann picked a fight with short-sellers on his company's conference call when he said, "This month ... leads us to the 10-month anniversary since the company's shares have experienced significant short activity, and after 10 months there are only two months for shorts to qualify for capital gains losses."
He spoke for a few minutes more and then turned the mike over to President William Rue. As Rue began to speak there were a few muffled comments in the background. Turns out those muffled comments were Dreimann saying, "Like that short statement ... 10 months into the year ... garble ... about the capital gains." (There were then sounds of chuckles.) Rue, sounding somewhat red-faced, then said, "We can hear you." Ah, but the joke is on Dreimann. According to numerous short-sellers, short sales
qualify for long-term capital gains. (Badda-bing, badda-ba-ba-ba-ba-boom!)
Meanwhile, back in February -- about two weeks before Salton filed a shelf-registration statement with the
Securities and Exchange Commission
to sell as much as $100 million in securities -- Chairman David Sabin sold 54,000 shares at prices ranging from $50.62 to $58.60. Then, four days after the registration statement was filed, he sold another 9,000 shares at prices ranging from $50.27 to $50.90. Salton closed Friday at 42 3/8. Why did he sell
of his own company? A Salton spokeswoman said Sabin was traveling Friday and could not be reached. (Whenever I get that response, I always wonder, "Don't these guys ever check in with their office?!")
PS: Hold the hostile emails because I won't read them.
Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
email@example.com. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.