The Outdoor Wire has learned that U.S. Bankruptcy Judge Robert J. Kressel granted several early motions in the Dakota Arms Chapter 11 bankruptcy case at a preliminary hearing held yesterday in Minneapolis, Minnesota.

Dakota Arms requested permission to honor obligations to its employees for their salaries and benefits and the treatment of deposits paid to Dakota for ordered firearms as being held "in trust" rather than being regular proceeds of business.

Judge Kressel has granted both motions.

Examining the filings also gives a basic explanation for the Dakota Arms decision to ask for Chapter 11 protections. According to documents filed in the proceeding, Dakota Arms was apparently forced to the courts after First Western Bank of Sturgis, South Dakota, accelerated a demand for payment of a temporary advance following Dakota Arms' failure to meet the repayment deadline. According to court documents, say the failure to make the payment of principal and interest was due not receiving an anticipated "large receivable" in time to make the deadline.

After that failure, First Western placed all Dakota Arm's credit lines in default and demanded payment in full of all credit facilities.

Dakota Arms says the repayment of those credit facilities would have, in effect, caused the company to fail. On July 5, 2006, the bank came to Dakota Arms facilities and demanded immediate turn-over of all its collateral.

Dakota Arms refused to comply; the legal rhetoric escalated, and Dakota filed the Chapter 11 case.

With the granting of these several motions, it would seem Judge Kressel believes Dakota Arms to still be a viable company, consequently granting the "debtor in possession" status, in effect, allowing the company to continue normal operations, although under Bankruptcy Court supervision.

Dakota Arms currently continues its operations for its Sturgis, South Dakota manufacturing plant, employing 46 people. Founded in 1972 by the late Don Allen, a controlling interest was acquired by three venture capital funds in 2003.

I hope Dakota can continue. With all the hype about Sturgis being a "gunmaker friendly" environment, one would expect the bank to want to help out, not make things worse. As a matter of fact, it is in the bank's interest to see Dakota make it, also.....

Andy Jackson: "The banking industry - 'A den of vipers'".......

Banks "are in it" to make money period, accountants mathimatical decisions rule.

It appears to me that the bank lived up to its end of the agreement. Any borrower who borrows more than he can repay will end up in the same situation.

What is more puzzling to me is that Kokesh and the investment funds (run by Kokesh) that bought Dakota are supposedly very deep pocketed; why didn't they put in a little more money or put up additional collateral to satisfy the lender? Well run, well capitalized companies don't go into bankruptcy the first time a receivable is delayed. It would appear there is much more to the story than has been told thus far.

quote:

What is more puzzling to me is that Kokesh and the investment funds (run by Kokesh) that bought Dakota are supposedly very deep pocketed; why didn't they put in a little more money or put up additional collateral to satisfy the lender? Well run, well capitalized companies don't go into bankruptcy the first time a receivable is delayed. It would appear there is much more to the story than has been told thus far.

I was wondering the same thing.

quote:

Originally posted by BigFiveJack:
Banks "are in it" to make money period, accountants mathimatical decisions rule.

Oh, I know! And most of these people are so short-sighted that they can't even see the end of their own noses!

I, however, believe you make more money in the long run from a company that not only remains in business, but one that also LIKES doing business with you........

dare we dream that the companies they bought out and doubled the retail on will come out well by being sold to a company that wants to build that product, ie Miller Arms Miller-DeHaas and "F" Model actions to a gunmaker who actually wants to build them? None of the principals at Dakota, starting with the uppermost level of management or their bank have any specific interest in building firearms, just in making money. Non illegitimus carborundum!
Let somebody else take a whack at running that company I say!!!

Rich

As a banker, how do I go to the loan committee and suggest lending more money to the same group of business owners who made the operational and investment decisions that resulted in their inability to service their current debt? Why isn't this simply throwing good money after bad? Where's the cash flow that will repay the new debt?

Cash flow is king baby...its the rule of the jungle and small business.

quote:

Banks "are in it" to make money period, accountants mathimatical decisions rule.

Uhhhhh, yes. That is about as stupid a statement as I have seen on these boards. So because they are a "gun manufacturer" they don't have to make good on their obligations?

First Western looks to be a community bank that serves thirteen communities in the Dakotas. Hardly a big, mean spirited bank. Community banks like these are usually pillars of the townships they serve... places folks go when the Little League field needs a new scoreboard or someone needs to sponsor the community theater's latest production. They also provide capital through commercial loans like the one to Dakota Firearms that keeps the economic engine humming.

I agree with Forrest and KY Nimrod that a bank rarely pushes default and foreclosure over one late receivable... a company is much more valuable when the principals have it and it is a viable entity. In receivership it is worth pennies on the dollar. There is more than meets the eye here and I am sure the story will surface...

Until then, to try and place blame on the bank for Dakota's woes is rather ridiculous. Try their failed business plan...

quote:

Originally posted by ForrestB:
It would appear there is much more to the story than has been told thus far.

Sounds about right to me....

Interesting, the note about a large receivable being delayed is the excuse. The problem(s) must be significant enough for the equity holders to sit on the sideline or possibly looking to "cram down" part of the problem....just all a guess for now.

Yes, Banks are in it to make money, we all are.....missing one payment would not necessarily cause a Loan to be called...there is much more to this story. Banks can and do put more cash into "problem" credits, if given reasonable assurances that the problems can be fixed.....and collateral and/or assets are protected but there ususally are many requirements....

quote:

Originally posted by bwanamrm:

quote:

Banks "are in it" to make money period, accountants mathimatical decisions rule.

Uhhhhh, yes. That is about as stupid a statement as I have seen on these boards.

I figured you'd eventually chime in and tackle that one.

The lead investment vehicle for the Dakota Arms investment was Charlie Kokesh's TECHNOLOGY FUNDING PARTNERS III, L.P. The Fund initially raised $40 million to invest in various high tech companies...it has been a disaster for the investors. The value of their investments had fallen to less than $5 million by 2005. TFP Funding III is only of of several investment funds managed by Kokesh, all of them are coming unraveled. The Independent General Partners (IGPs - akin to outside directors) have resigned and the fund is being forced into liquidation. The IGPs are alleging mismanagement and improper valuation procedures. It's a real mess.

Kokesh has screwed his investors and perhaps commited securities fraud. He'll be tossed out on his fat ass in short order. This entire story should be picked up by the press in due time - if not, I wouldn't mind telling them where to look. The folks at Dakota deserve better than this.

quote:

Originally posted by ForrestB:
The lead investment vehicle for the Dakota Arms investment was Charlie Kokesh's TECHNOLOGY FUNDING PARTNERS III, L.P. The Fund initially raised $40 million to invest in various high tech companies...it has been a disaster for the investors. The value of their investments had fallen to less than $5 million by 2005. TFP Funding III is only of of several investment funds managed by Kokesh, all of them are coming unraveled. The Independent General Partners (IGPs - akin to outside directors) have resigned and the fund is being forced into liquidation. The IGPs are alleging mismanagement and improper valuation procedures. It's a real mess.

Kokesh has screwed his investors and perhaps commited securities fraud. He'll be tossed out on his fat ass in short order. This entire story should be picked up by the press in due time - if not I wouldn't mind telling them where to look. The folks at Dakota deserve better than this.

quote:

Originally posted by ForrestB:
The lead investment vehicle for the Dakota Arms investment was Charlie Kokesh's TECHNOLOGY FUNDING PARTNERS III, L.P. The Fund initially raised $40 million to invest in various high tech companies...it has been a disaster for the investors. The value of their investments had fallen to less than $5 million by 2005. TFP Funding III is only of of several investment funds managed by Kokesh, all of them are coming unraveled. The Independent General Partners (IGPs - akin to outside directors) have resigned and the fund is being forced into liquidation. The IGPs are alleging mismanagement and improper valuation procedures. It's a real mess.

Kokesh has screwed his investors and perhaps commited securities fraud. He'll be tossed out on his fat ass in short order. This entire story should be picked up by the press in due time - if not I wouldn't mind telling them where to look. The folks at Dakota deserve better than this.

I've been waiting for Kokeshs' role in Dakota's difficulties to be made known. When Kokesh took over Dakota started spending money like it was candy. They bought Nesika commmited themselves to paying a propriety cartridge premium to Todd Kindler, dangled enough money in front of Lapua to get custom Lapua .20 cal. wildcat brass manufactured. They bought Miller and mailed out a glossy advertising mag every month. I mean, they were just flush with cash. And where was it all coming from? Too early to judge with certainty, but one can't help harboring a strong suspicion that Kokesh has raided and completely mismanaged Dakota.


Jordan

quote:

Originally posted by Jordan:
...one can't help harboring a strong suspicion that Kokesh has raided and completely mismanaged Dakota.
Jordan

There wasn't much at Dakota to raid; instead it looks like Kokesh raided and mismanaged investor's money to personally benefit himself. (in very fine print I'll add, he's considered innocent until proven guilty).

Let's post this picture of Charlie for posterity, before it gets pulled from the Dakota website:



He'll soon be the bagged game.

quote:

Originally posted by ForrestB:

quote:

Originally posted by Jordan:
...one can't help harboring a strong suspicion that Kokesh has raided and completely mismanaged Dakota.
Jordan

There wasn't much at Dakota to raid; instead it looks like Kokesh raided and mismanaged investor's money to personally benefit himself. (in very fine print I'll add, he's considered innocent until proven guilty).

Let's post this picture of Charlie for posterity, before it gets pulled from the Dakota website:



He'll soon be the bagged game.

Aaahhh...boought Dakota, Miller, Nesika, etc. with investory money and now they are floundering. I checked him out on the web. Great credentials [Harvard, Harvard and Boalt Hall]. This will be interesting to watch.


Jordan

Here is Charlie's 2004 report to limited partners. Read the weasel words. It didn't look good way back then.


Jordan


Technology Funding Partners III, L.P.

2004 Annual Report

Dear Limited Partners:

The 2004 Annual Report for Technology Funding Partners III, L.P., includes an overview of 2004 Partnership activity, a brief profile on the companies in the portfolio, financial highlights for the year, and the Partnership's December 31, 2004, audited financial statements.

Venture capital funds typically begin with a life expectancy of 10 years or more. As you know, venture capital investments depend on liquidity events - either initial public offerings or acquisitions by larger companies - for the return of capital to investors. Since the market collapse in 2000 and 2001, which virtually shut down the IPO and M&A markets, limited liquidity opportunities have made it difficult to predict exit opportunities for most of our remaining portfolio companies.

The risks that new start-up companies may fail and money may be lost, the necessity to reserve capital for follow-on investments, the requirement that investors be patient over an extended period of time, and the importance of ongoing, active professional management are all part of venture capital investing. (And, of course, spelled out in the initial prospectus for such a high-risk investment.)

Our experience with several partnerships, including this one, over the past two decades has convinced us that it is generally in the best interests of the partnership and the partners to try to maximize the value of our remaining investments by waiting for the appropriate exit opportunities. The good news is that in 2004, according to the annual MoneyTree(TM) Survey by Pricewaterhouse-Coopers, Thomson Venture Economics and the National Venture Capital Association, there were 93 venture-backed IPOs - more than triple the IPO activity in 2003.

Unfortunately, no one can predict what the markets will do, but be assured that we are working diligently to liquidate all of the remaining companies in the portfolio as quickly as possible consistent with maximizing the value for all of the partners. The Partnership is scheduled to terminate on December 31, 2006.

As of December 31, 2004, the unaudited fair value of the Partnership was $70 per $250 Limited Partner unit, exclusive of prior distributions of $78 per unit. At year-end, the investment portfolio included four public companies, 10 private companies and four venture capital limited partnerships with a total fair value of approximately $4.8 million.

Investment Activity
In 2004, the Partnership funded equity investments of approximately $2.3 million, including follow-on investments in CellzDirect, Inc., Dakota Arms, Inc. and Dakota Holdings, LLC, Impres Medical, Inc., KeyEye Communications, Inc., and Sanarus Medical, Inc. The Partnership liquidated its holdings in Acusphere, Inc., Applied NeuroSolutions, Inc., and LifeCell Corporation. Proceeds from the sale of equity investments totaled $7.7 million with a net realized gain of $2.9 million. Cash distributions from venture capital limited partnerships totaled $46,363.

In 2004, the Partnership wrote off its investment in WorldRes.com, Inc., and Delphi Ventures, L.P., realizing a loss of $2.9 million. The Partnership expects no recovery on these investments.

For more information about the Partnership's equity investments at December 31, 2004 and 2003, please refer to the Statements of Investments and Note 4 in the Notes to Financial Statements. Information on significant developments at the portfolio companies can be found in the 2004 Portfolio Review.

Additional information on Technology Funding Partners III and a link to the complete Form 10-K filed with the Securities and Exchange Commission can be found at www.techfunding.com on the Internet. If you have additional questions, please contact our Client Services Department at (800) 821-5323. You may also send e-mail queries to clients2@techfunding.com or address written correspondence to Technology Funding, 460 St. Michael's Drive, Suite 1000, Santa Fe, N.M. 87505.

Thank you,
Technology Funding

Top of Page

Poster Boy for "Vocational Recreation Nondistinction Disorder" or VRND:

quote:

Originally posted by ForrestB:

Charlie:



... bagged game.

Get a "load" of the scope on that bear rifle. Pounds of S&B on a "bear rifle"... speaks of tons of BS from the hunter.

Muzzle brake too. Charlie was so deaf he didn't hear the wolves scratching at the door.

Or his ears were plugged with BS?

As Managing General Partner, Kokesh took in investor money and the TFP III L.P. was making $500K to $2,000K passive investments in tech and biotech companies (and losing money like crazy). After the Fund had shrunk from $40 mil to $10 mil (2004), Kokesh put $1 mil equity, and $3.5 mil debt into Dakota and installed himself as CEO. It didn't take long until the debt was forced to convert to equity and another million was added to make a total $5.5 mil investment in Dakota.

Things quickly went down hill. Within two years the Dakota investment was marked down to a $1.1 mil valuation. The total value of the Fund is less than $4 mil now, Dakota is worth zero and it's turned into "lawsuit city". Investors can't be happy that their few remaining assets were squandered on Kokesh's hobby.

Here's the text from the resignation letter from one of the Independent General Partners of the Fund (Kokesh received a similar letter from each of the IGPs at the Fund):

quote:

June 26, 2006

Mr. Charles Kokesh
Technology Funding Ltd.
Technology Funding Inc.
460 Saint Michaels Drive
Suite 1000
Santa Fe, New Mexico 87505

RE: Resignation of Independent General Partner of Technology Funding Partners III, L.P. (the "Fund")

Dear Mr. Kokesh:

Effective immediately, I hereby resign from my position as Independent General Partner of the above-referenced Fund.

I have lost faith in the Managing General Partners' ability to appropriately manage the Fund as a result of information I have received regarding the inappropriate management of the Fund's portfolio companies and improper and unreasonable procedures that have been used in valuing the assets of the Fund. In addition, I have lost faith in the Managing General Partners' ability to manage the liquidation of the Fund's assets for the benefit of the limited partners of the Fund.

For these reasons, I feel that I may no longer continue as a Independent General Partner of the Fund.

Very truly yours,

/s/ G. Whitney Baines

FAX and Hard Copy to follow.

cc: Fred S. Stovall, Patton Boggs LLP

Maybe little ol' First Western Bank of Sturgis is not the evil villain it's been made out to be.

Combination of dink, with pissy peashooter
with un-needed brake and thousand dollar scope,
screwing over the business; and truckloads of
RUM brass for guys(like on here) to build
same kind of cartridges, in guns quite
a bit less expensive---failure mode....Ed.

Picture reminds me of "Kartman" from the "South Park" show.

"Past performance is not necessarily indictative of future results."

Especially when the company is being raped daily by its management!

Jesús Cristo! One would hope that the creditors committee will persuade the trustee to get rid of this guy, pronto.

quote:

Originally posted by ForrestB:
As Managing General Partner, Kokesh took in investor money and the TFP III L.P. was making $500K to $2,000K passive investments in tech and biotech companies (and losing money like crazy). After the Fund had shrunk from $40 mil to $10 mil (2004), Kokesh put $1 mil equity, and $3.5 mil debt into Dakota and installed himself as CEO. It didn't take long until the debt was forced to convert to equity and another million was added to make a total $5.5 mil investment in Dakota.

Things quickly went down hill. Within two years the Dakota investment was marked down to a $1.1 mil valuation. The total value of the Fund is less than $4 mil now, Dakota is worth zero and it's turned into "lawsuit city". Investors can't be happy that their few remaining assets were squandered on Kokesh's hobby.

Here's the text from the resignation letter from one of the Independent General Partners of the Fund (Kokesh received a similar letter from each of the IGPs at the Fund):

quote:

June 26, 2006

Mr. Charles Kokesh
Technology Funding Ltd.
Technology Funding Inc.
460 Saint Michaels Drive
Suite 1000
Santa Fe, New Mexico 87505

RE: Resignation of Independent General Partner of Technology Funding Partners III, L.P. (the "Fund")

Dear Mr. Kokesh:

Effective immediately, I hereby resign from my position as Independent General Partner of the above-referenced Fund.

I have lost faith in the Managing General Partners' ability to appropriately manage the Fund as a result of information I have received regarding the inappropriate management of the Fund's portfolio companies and improper and unreasonable procedures that have been used in valuing the assets of the Fund. In addition, I have lost faith in the Managing General Partners' ability to manage the liquidation of the Fund's assets for the benefit of the limited partners of the Fund.

For these reasons, I feel that I may no longer continue as a Independent General Partner of the Fund.

Very truly yours,

/s/ G. Whitney Baines

FAX and Hard Copy to follow.

cc: Fred S. Stovall, Patton Boggs LLP

Maybe little ol' First Western Bank of Sturgis is not the evil villain it's been made out to be.

Well a "cram down" of a different sort. Simply amazing that $500K is paid out of a fund that does not perform.

Where in the heck were these IGPs during all of this...resign at the end of the day after the losses and damages have been done! I see very little redemption in that act.....Any fund set-up to allow payment for "Fund" fees and expenses where losses are incurred is something to be avoided.....No performmance, No Pay!

quote:

As Managing General Partner, Kokesh took in investor money and the TFP III L.P. was making $500K to $2,000K passive investments in tech and biotech companies (and losing money like crazy). After the Fund had shrunk from $40 mil to $10 mil (2004), Kokesh put $1 mil equity, and $3.5 mil debt into Dakota and installed himself as CEO. It didn't take long until the debt was forced to convert to equity and another million was added to make a total $5.5 mil investment in Dakota.

Things quickly went down hill. Within two years the Dakota investment was marked down to a $1.1 mil valuation. The total value of the Fund is less than $4 mil now, Dakota is worth zero and it's turned into "lawsuit city". Investors can't be happy that their few remaining assets were squandered on Kokesh's hobby

As Paul Harvey would say... "and now for the rest of the story!".

Didn't I just read a big article in American Hunter regarding Mr. Kokesh on a 21 day full bag Tanzanian safari trying out his latest wonder cartridge and dragging outdoor writers along to tout Dakota? Did Don Allen ever do that? Sounds like Nero fiddling while Rome was burning...

Any more news on the status of Dakota?