CARDIFF, Wales, Feb. 2, 2009 (GLOBE NEWSWIRE) -- Flex Fuels Energy, Inc. ("Flex Fuels" or the "Company") (OTCBB:FXFL), today announced the progress of an inquiry ("Inquiry") into its prior management and the status of the review of its planned oil seed crush business at Cardiff, Wales ("the Cardiff Project").
Inquiry
The Company is conducting the Inquiry into actions of prior management as controlled by Brian Barrows ("Barrows"), former Chief Executive Officer ("CEO") and Chairman prior to December 12, 2008.
Barrows is currently suspended from his duties at the Company's operating subsidiary, Flex Fuels Energy Ltd. ("FFEL"), pending the outcome of an investigation into his role at FFEL and the Company.
Preliminary findings
-- The cost to the Company of the proxy contest (in which the Company
nominees gained less than 3% of the votes cast) and the associated
litigation, apparently designed to disrupt a fair contest, is
estimated to exceed $1,500,000.
-- Barrows paid a law firm engaged by him personally $434,841 from a
Company bank account in breach of the Flex Fuels Group Purchasing
Policy shortly before he was removed as director by shareholders
and as CEO by the Company. The Company intends to take further
legal advice on this matter.
-- James Laird ("Laird") resigned as a director on May 16, 2008 and
could not revoke his resignation.
-- Tom Barr ("Barr", the Company's current CEO) was authorized to
file a Current Report on Form 8-K announcing Laird's resignation
on July 16, 2008.
-- Robert Galvin was improperly removed as Chief Financial Officer
("CFO") on October 10, 2008.
-- Paul Gothard ("Gothard") was improperly appointed as CFO on
October 13, 2008.
-- Barr was prevented by prior management from exercising any
effective influence as director of the Company from the early
part of 2008 until the stockholders meeting on December 12,
2008.
-- Allegations made against Barr by the Company and Barrows of breach
of fiduciary duty, theft, computer fraud and violations of the
Securities Exchange Act in the Nevada courts appear to be
factually inaccurate and without merit. Accordingly, the Company
expects to withdraw as Plaintiff from the action instituted
against Barr in the United States District Court of Nevada.
-- In late November 2008 Barrows, purportedly on behalf of the
Company, executed Indemnity Agreements ("Indemnity") with certain
directors and staff of FFEL, as well as Paul Gothard (a consultant
to the Company) and Laird, who was at the time of execution a
former director of the Company. Paul Gothard, in the stated
capacity of CFO, executed an Indemnity with Barrows. Recipients
of the Indemnity are collectively referred to herein as
"Indemnitees".
-- The Indemnitees, excluding Barrows and Gothard, have advised the
Company that they did not seek or require the Indemnity.
-- The Indemnity provides for rights to indemnification that are
substantially superior to those that were in effect for the
Indemnitees immediately prior to the execution of the Indemnity.
Given the deadlocked board at the time of execution, the
Indemnity was not properly authorized by board action.
Accordingly the Company believes the Indemnity is ineffective
and has informed the Indemnitees of such.
The Inquiry is ongoing.
Operational Review of FFEL
The Company is diligently reviewing the Cardiff Project with the intention of establishing what value it might have to the Company by development or divestment. The review is ongoing.
Cash lent down to FFEL by the Company has been maintained in pounds Sterling ("GBP") by prior management with no hedging facility in place. The expectation of prior management was that expenditure would be in GBP. New management by default has maintained un-hedged cash balances in GBP as the outcome of the review is unknown. Once available, it will trigger a reassessment of currency holdings.
Further announcements will be made in due course.
Tom Barr, CEO, commented; "It is very clear, even at this early stage that a considerable amount of Company funds was expended in the attempt by prior management to maintain control over the Company and its subsidiary by delaying the holding of a shareholder meeting. Furthermore, these actions have mired the Company for nearly a year, which comes at a further cost."
About Flex Fuels Energy, Inc.
Flex Fuels is a diversified company developing its wholly owned planned oilseed crush business, Flex Fuels Energy Ltd, in Cardiff, Wales, and mining exploration activities in British Columbia, Canada.
The Flex Fuels Energy, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4085
To find out more about Flex Fuels Energy (OTCBB:FXFL), visit our website at www.flexfuelsenergy.com.
Forward-Looking Statements
The statements in the press release that relate to the company's expectations with regard to the future impact on the company's results from acquisitions or actions in development are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements in this document may also contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, such statements should not be regarded as a representation by the Company, or any other person, that such forward-looking statements will be achieved. Since the information may contain statements that involve risk and uncertainties and are subject to change at any time, the company's actual results may differ materially from expected results. Flex Fuels Energy, Inc. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of the foregoing, readers are cautioned not to place undue reliance on such forward-looking statements.