MSP on Demand, a hardware as a service (HaaS) specialist, may have had a majority ownership change, according to a recent SEC filing reviewed by MSPmentor. The potential ownership change comes as MSP on Demand continues to face a lawsuit filed by N-able Technologies, the RMM (remote monitoring and management) software specialist. Here's the update.
The story so far includes these milestones:
Early 2010: XnE Inc. in early 2010 acquired majority ownership in MSP on Demand. At the time, MSPmentor raised questions about the deal, particularly since XnE is a penny stock with a history of belated SEC filings and no real track record in the managed services market.
May 2010: N-able Technologies files suit against MSP on Demand and CEO Ramsey Dellinger somewhere around this time. The lawsuit alleges MSP on Demand committed financial fraud in the HaaS market. At the time, Dellinger told MSPmentor he intended to defend himself and the company from the lawsuit.
Late May 2010: N-able seeks financial records from MSP on Demand in order to prove its case.
November 4, 2010: In an SEC filing, XnE Inc. seems to indicate that its majority ownership in MSP on Demand is null and void, effective September 8, 2010. The filing states:
Effective September 8, 2010, the Board of Directors of XNE, Inc., a Nevada corporation (the “Company”) entered into that certain rescinding Stock Purchase Agreement dated effective as of September 8, 2010 (the “Rescinding Stock Purchase Agreement”) by and among MSP on Demand LLC, a North Carolina limited liability company (“MSP”), all the members of MSP on Demand (the “MSP Members”) and the Company; in accordance with the terms and provisions of the Rescinding Stock Purchase Agreement: (i) since none of the terms to the purchase agreement was fulfilled then the agreement is null and void...I've re-read the SEC filing a few dozen times. To me, it seems to indicate XnE no longer has a majority ownership relationship with MSP on Demand. I reached out to XnE CEO Michael Cummings for comment yesterday but have not heard back. As of December 23, 2010, XnE's web site continues to list MSP on Demand as a portfolio company.
Separately, in an email exchange, Dellinger didn't confirm or deny the potential majority ownership status change between XnE and MSP on Demand. An apology to Dellinger: He sent me a follow-up email that I overlooked. In it he stated: "XNE never followed through with their funds nor stock purchase.... pretty long story. Unfortunately I was way too eager and was willing to jump at the opportunity. I know I have the right HaaS Business model in place."
Also, Dellinger added:
"We are working on several things to put us into better position as a company in order to market our services better, provide better customer service, etc. I believe in first quarter we will have a number of positive announcements that will give us back our edge. I do not quit or give up on something I believe in. I truly see resellers benefiting from what we do on a daily basis. "Meanwhile, an N-able spokesperson says the company continues to pursue legal action against MSP on Demand and hopes for resolution in 2011.
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