The Newark star and Newark advertiser. [volume] (Newark, N.J.) 1909-1909, 1909-10-21
ON STAND,
TELLS OF KORN|T
FIRMS FAILURE

The complete story of the ~organiza-
featuring Company was brought out
today before Referee Edwin G. Adams
In the Essex Bankruptcy Court, when
Charles E.. Ellis. the president of the
defunct concern, was examined In re-
gard to his connection with the COM
pany by David Bilder. Mr.. Ellis vas
ON the stand for al our and a half.
As the reason for the failure of the
Kornit Company, in which thousands
of persons had Invested sums ranging
from SIS to $500. Mr.. Ellis advanced
that, following the fire In February.
1907, in the original plant of the Kornit
Company, difficulty had been expe-
rienced in obtaining proper machinery
to grind the material used to the nee
essary fneness. According to Mr..
Ellis's testimony, the company, which
he claims was always in debt, reached
such a precarious condition last fall
that several meetings OF the creditors
were held. Mr.. Ellis. who says that
he still believes 'Kornit'' a marketa-
Dl6 pTOQuCt, ODttiiCu al iioS tHhO 'ihO
consent of the creditors to allow the
company to operate for several months
longer.
Finally. last August, however, it was
seen that the company was up against
it for good" and that 1t would be nee
.essary to go into bankruptcy. This
state of affairs had been precipitated.
Mr.. Ellis claims, by the failure OF a
contracting supply firm to deliver It's
goods on time for a product, the manu-
facture of which had been started as
the last chance to ~recuperate the fallen
fortunes of the concern, all chances for
were lost. Before the burning
of the mill, so Mr.. Ellis testified, the
process of reducing the hoofs and horns
used in manufacturing "Kornit' had
been perfected.
In regard to the method OF carrying
the business Of h company, Mr..
Ellis testified that advertising had
been used to a great extent to sell the
product, $4,000 a year be-
ing expended In magazines and news
paper advertising. Through this in
Mr.. Ellis claims, 100000
worth of stock. some of which was
treasury stock and some stock issued
to buy the necessary patents, was
sold.
The first inducement offered Mr..
Jones to invest in the company was
presented, according to the testimony
brought out in the examination, ,y a
Mr.. ]. F. Jones. of London, a lawyer,
who owns the English rights to the
manufacture of the product. Mr.. Jones
represented that the goods were being
manufactured and sold In Russia with
great success. and that the opportunity
was open for American manufacture CT
the project. Mr., Ellis finally said that
he would be willing to finance any conn.,
pany which might be started, provided
everything should turn out as repre-
scented.
To ascertain this. Henry Humphrey,
Erwin r. Graves afterwards manager
and vice-president of the Kornit Com
pany), and ], w. Cox, of London, who
acquired the English rights to the nan
ufacture of the product, went to Russia,
staying there about six weeks, to In
vestigate conditions. On their return.
Mr.. Graves made a favorable report to
Ellis, and an agreement was reached
whereby a company was to be incor-
porated by Graves, and others inter-
ested. Ellis to furnish the necessary
funds as soon as the company was In
c~orporated.
This was done, Mr.. Ellis paying into
the treasury of the company $4,000, for
which he received stock of the company
as collateral. This $25, 900 was in the
form of notes, to be paid within
eighteen months. These were all made
good and the transaction settled. Ellis
was elected president of the company,
and from that time on. according to his
sank money in the concern
until he had no more to invest.
Ellis testified that some Of his stock
and also that of st. John Alexander.
the treasurer of the company, was sold
through the demand created by the adj
vertising.