SiliconBeat

Hands up if you’ve ever heard of TVIA? Neither had we, until today when the company filed an amended 8-K that is just plain ugly. It mostly contains a note from former director Celso Azevedo who resigned Sept. 12.

At the time, the company was forced to disclose in another 8-K a truly harsh memo that Azevedo had written in frustration. The company denied the various allegations and said that Azevedo’s logic had been faulty.

By way of background, TVIA (ticker: TVIA.PK) is a fabless seminconductor company based in Santa Clara that trades on the pink sheets. It’s stock generally bounces around under $1 per share. And like everyone and their dog, the company has been grappling with an options backdating mess. Azevedo joined the board in May, and more recently had been pushing for the ouster of CEO Eli Porat due to a number of issues.

The latest filing delivers Azevedo’s rebuttle:

“To make it very clear, the main reason behind my resignation was the impossibility to have the board of directors agree to replace the CEO. Any CEO with this track record should have been replaced by the previous board of directors, or at the latest by the current board. In the absence of support for this decision, given a blocked 3:3 position amongst the directors, I had concluded that the company could not be taken to a successful path with its incumbent CEO and its situation should not be perpetuated. Such blocking persisted, even though a four person majority of the board had decided to strip the CEO of his authority, which was given back to him under the advice given to the board by an attorney brought in by the CEO, which advice I believe to be unfounded and incorrect, that control by an executive committee could or would jeopardize the Company’s D&O insurance.
The Form 8-K filing continues a pattern of presenting misleading, and outright false, statements about the Company which is a second main reason why I felt my resignation was necessary to protect me from the implication that I concurred in such behaviour.”

So what does Azevedo think Porat has done?

To name just a few highlights, quoting from the filing:

“In the most recent months, the company had to deal with the following issues, all generated during the tenure of the CEO:

• An audit investigation that cost the company (an undisclosed sum)

• A stock option plan which was out of control, including with allegations of backdating of options — it took Jay Parkhill, external counsel, over two months to fix it;

• A sales team that for over two years was committing seemingly criminal acts against the company, without being detected;

• The company had (an unnamed sum) in vacation liabilities;

• The company was sued by a group of PIPE investors and had to convert millions in equity to debt obligations in order to settle the suit; a huge payment on that debt is due in September 2007.

• The company had a trade secret litigation which was just resolved.

Throw in the inability to file its financial statements, and the resignations of the company’s auditors earlier this year, and he’d had enough.

The company, of course, begs to differ. In a response, it notes the company decided that it did not have the money to restate its financial statements, and so opted to be de-listed and focus on “strategic alternatives.” It also hints that Azevedo was upset that the board voted against a plan to spin off some assets and create a new company where he would be CEO. Azevedo says that wasn’t true, that he’d turned them down when other directors suggested such a plan…

And so on, and so on….

We’ll keep you posted.