DTS America, a medical transcription company, came to Carlsbad earlier this year lured by an available work force and promise of up to $2 million in local incentives. Now, having moved far faster than anyone expected, and having burned through $1 million in initial cash incentives, DTS officials have admitted the company is strapped for cash. They apparently burned through the funds by experiencing very rapid growth in the number of employees in training, accompanied by growing payroll expenses. Their employee headcount recently crested at more than 101. At the beginning of August, the milestone allowed the company to approach the city to request $500,000 as a second round of cash incentives, prescribed by the contract it has with the city.

When DTS hit this second "money mark" so quickly, councilors openly questioned the rapid pace of the company. "Slow down," Councilor Louise Tracy told DTS execs Aug. 8 during a discussion where council and company officials agreed reaching the 101 level in staffing was "months" ahead of schedule.

The city and DOD approved dispensing the next $500,000, but DTS apparently couldn't wait for the govern-ment to issue the funds. So, the DOD board went out on a limb and loaned DTS $200,000 out of the DOD's operating funds. They took DOD operating capital and lent it to a newcomer, betting that the DOE would approve release of the funds - and they'd get paid back. But it turns out that two hundred grand was not enough.

DTS execs in Tennessee wrote a stern letter to the DOD, demanding the rest of the money right away - by citing the contractual obligation the city and DOD are under. In an unprecedented and stunning move, the DOD voted by phone and e-mail to borrow $300,000 from a local bank. All the more astonishing, Mayor Bob Forrest personally secured the loan!

Meanwhile, some DTS employees stepped forward this week and publicly voiced several concerns. Speaking out about the details of how the promised high-paying jobs within DTS actually work, they described that the transcription work comes to Carlsbad in the form of overflow from DTS workers in India - only when they can't get it done. Employees also stated that fully trained employees often wait all day for work to come in - and don't make those big bucks if they are not transcribing.

DTS grew faster than anyone anticipated, and apparently reached the next contractual payout level, largely because they changed their own rules of compensation - recruiting new trainees by offering an hourly wage immediately. (The first class signed on by agreeing to train for three months for free.) This explosive growth in payroll expenses almost certainly resulted in DTS' immediate desperation for the whole $500,000.

The old saying, "Lack of planning on your part does not constitute an emergency on my part" comes to mind. Between this unseemly desperation for cash, and bearing witness to a number of employees who are risking their jobs to express multiple concerns, there is ample reason for the city council, the DOD board, and the U.S. DOE to ask some serious questions of the company. Thankfully, the DOE has already begun that process. Serious questions remain about their business model, cash flow, customer base, and long-term viability.