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Penny stocks are that trade under $5 and normally have a much smaller market cap. Penny stocks give every trader a way to make higher percent gainers.
http://www.stockprofessors.com/
Another Skinner Winner:
AMISH NATURALS, INC. (AMNT)
From the 10-Q filed February 19, 2009.
On August 5, 2008 David C. Skinner, Sr., CEO of the company stepped down and assumed the duties of Director of Manufacturing of the Pasta and Bakery divisions and Martin Silver, then Chairman of the Board assumed the duties of interim CEO. On September 2, 2008 the company closed its production facilities' attempting to have the products co-packed by third party manufacturers so the company could focus primarily on marketing. Soon thereafter, the company was advised that the investment bank was no longer going to fund the company operations and on September 9, 2008 Mr. Silver, interim CEO resigned as Chief Executive Officer, Board Chairman and Director of the company. Alexander Ngan and Carlo Varesco also resigned as Directors. The remaining Board, David Skinner and Kenneth Troyer reappointed Mr. Skinner in the Chief Executive Officer position and appointed Kenneth Troyer as the Board Chairman.
Well What'ya know?
Remember David Skinner's old man, who served as a "consultant" to WINR and who, I believe, was one of the early owners of a whole lotta winr stock....and who eventually married Kim Stein, another name that will ring a bell with those who remember this old dog.......well guess what.
Turns out they really love AMISH pasta.
U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18879 / September 10, 2004
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL B. JOHNSON, MICHAEL JOHNSON & CO., LLC, DAVID C. SKINNER, JR. AND AMERICAN TELEVISION AND FILM COMPANY f/k/a WINNERS INTERNET NETWORK, INC., No. 04-RB-0626 (USDC D. Colorado).
The United States Securities and Exchange Commission (Commission) announced that on April 2, 2004, the United States District Court for the District of Colorado entered an injunction by consent against American Television and Film Company (American Television). The court's order permanently enjoins American Television from violating Sections 10(b), 13(a) and 13(b)(2) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.
The Commission's complaint alleged that between December 1999 and December 1999 and December 2000, American Television, then known as Winners Internet Network, Inc. (Winners), carried out a scheme to defraud investors by filing reports and a registration statement with the Commission containing false financial statements that fraudulently overstated Winners' revenues, income, assets and cash inflows and understated expenses. Further, between January and October 2000, Winners reviewed or disseminated three promotional analyst reports containing baseless financial projections. American Television consented to the court's order without admitting or denying the Commission's allegations.
http://www.sec.gov/litigation/litreleases/lr18879.htm
Received this e-mail alert today:
This filing has been Corrected by the SEC:
Glennaire Finanical Services Inc [ formerly Glennaire Financial Services Inc ]
Winners Internet Network Inc
corrected on Monday, 5/3/4, a 1-document, 3-page 'NT 10-Q'
Notice of a Late Filing of Form 10-Q or 10-QSB -- Form 12b-25
for the period ended Friday, 3/31/0
filed as of Friday, 5/12/0
What am I missing?
________________________________________________________________
Here's an old one I missed:
Friday, June 29, 2001
Story last updated at 8:04 p.m. on Thursday, June 28, 2001
SEC looking into Winners Internet PR dealings
By Mark Basch
Times-Union business writer
Winners Internet Network Inc., an Internet transaction processing company formerly based in St. Augustine, said yesterday that the company is in "a very weak but salvageable position" and that the Securities and Exchange Commission is investigating the company's relationship with a public relations firm.
According to a letter to shareholders posted on the company's Web site yesterday, the SEC is investigating the relationship between Winners Internet and a European firm called Stockreporter that issued favorable research reports about Winners Internet after being retained by the company.
Winners Internet said efforts to settle the investigation last year were unsuccessful and that the investigation is ongoing.
Winners Internet was formed in the 1990s to provide clearinghouse services for Internet casinos. The company was headquartered in St. Augustine, but when founder David C. Skinner Jr. resigned as president and chief executive officer in March, the company apparently moved its headquarters operations to Liechtenstein, where its computers were located. Liechtenstein resident Stefan Vogt was appointed president and CEO when Skinner resigned.
The company has not reported any financial data since recording revenue of $822,673 and a profit of $5,067 in 1999. Its stock, which trades in the over-the-counter market, has been priced below 10 cents a share in recent days.
Winners Internet and Stockreporter issued a joint press release in January 2000 announcing that Stockreporter was beginning coverage of Winners Internet with a "strong buy" recommendation and a "conservative target price" of $12. The stock was trading at $2.50 at the time and rose to a high of $7.88 in March 2000.
Stockreporter is a Germany-based company that publishes research on small companies through its Web site at www.stockreporter.de.
The press release with Winners Internet did disclose that Stockreporter usually receives consideration in cash or stock when it evaluates a company and that investors should view that as a potential conflict of interest. It did not say anything specific about the relationship between Winners Internet and Stockreporter.
Vogt and Stockreporter did not respond to e-mail inquiries yesterday.
The Winners Internet shareholder letter said the company has a "serious liquidity problem" and "it is possible that the company will not be able to pay its bills in June" without additional funds. The company is looking for new investors.
While Winners Internet was started to provide processing services for Internet casinos, it has expanded to provide transaction processing for other types of e-commerce businesses. In the shareholder letter, the company said it plans to change its focus away from gambling and toward more traditional e-commerce.
The complete text of the letter can be seen at the company's Web site at www.winr.net
http://jacksonville.com/tu-online/stories/062901/bus_6561968.html
It is primarly due to Ihub's excellent search engine that I decided to post every fact about WINR here that I could dig up. Many of these old links have been dead for a long time and would now be lost if not for SI and IHub. The old PR's from 1997 and 98, the first paid tout reports, even emails from
Skinner.
I just figured that eventually if every bit of info was archived and easily searchable, then somebody would figure out exactly what happened and who was responsible.
In my opinion, each of these scam penny operations could be viewed as a RICO enterprise and prosecuted accordingly. There just isn't enough call for the U.S. Attorneys (usually political up and comers looking for high publicity cases and biding their time before moving on to higher office) to cause their white collar crime units to look into it. It is just left to the SEC, who seem content to enter into settlements for chump change fines and voluntary injunctions.
It is these injunctions that really take the cake. These crooks agree to be enjoined from further violating the law. No shit, you don't need an injunction for that. Most people understand that breaking the law is already prohibited. It is like the old Chris Rock bit where he describes a guy bragging that he "takes care of his kids," or "ain't in jail." WELL YOU'RE SUPPOSED TO TAKE CARE OF YOUR KIDS AND STAY OUT OF JAIL! You don't get bragging rights for doing what you should be doing, and along those lines I don't see how the SEC thinks it is a big deal for a crook to agree to stop breaking the law going forward.
Okay, enough ranting for the day. Back to Spring cleaning.
ROFL! Vanilla Fudge? Excellent - altho I always liked the Supreme's version of "You Keep Me Hangin' On" better. <g>
I agree. I do enjoy watching them change their business direction every few months - from oil/gas to high tech to pizza shops.
BTW, you've done an excellent job with the history of this company. As I recall, you pegged it early on. Good job.
I have lotsa candles, an abacus & Vanilla Fudge playing very loudly. The visor's a given.
Lol! Somehow I never pictured you with a visor at a dimly lit desk.
for the record...
I am not that guy.
But what you say has occured to me many times before...right after I buy that same #######'S shares & become a stuckholder.
You know,
after a while you get the feeling that every penny stock that ever existed was the brainchild of the same dozen or so guys. Same dirty lawyers, same scamming incorporators, same shell operators/sellers, same crooked accountants, same IR/PR touting firms, and one guy sitting at home on his computer with 300 screen names pumping the crap out of it here and on RB.
I guess good Accountants are hard to find and word spreads....lol
Just stay away from "auditing" any penny stocks and you should be A-Okay.
I mean, how is it that so many of these pennies from all over the country find and use little ol' Michael Johnson & Co., based in Littleton, Colorado?
He must be REALLY, REALLY good!
2 posts in a row about suing Accountants; time to change professions.
Hey Gary!
I am guessing that it was just an outcrop of the stockreporter investigation. The bigger fish here, unfortunately for us, is probably Johnson. I am guessing that they got his employee, Ms. Gardner, to agree to testify against Johnson in exchange for this lenient settlement. It also appears that Skinner has already cut a deal to disgorge some of his ill-gotten gain, and possibly pay a civil penalty, probably in return for his testimony against Johnson too.
As for the entire Q family, it has been drastically reduced. Fortunately, there is still me and my son, and that is a lot.
I hope your NCAA brackets did better than mine this year. See ya round.
Quahog
Mercy. That, my friend, is a mouthful. Nice to see the SEC finally acting on this one. Any idea who initiated it?
BTW, how ya been? Hope all is well with the entire Q family.
Gary
SEC SUES LITTLETON ACCOUNTANT:
DenverPost.com
April 1, 2004. Business Briefs.
The Securities and Exchange Commission on Wednesday sued a Littleton accountant, an online transaction-processing firm in Houston, and its chief executive on charges of securities fraud. The SEC alleges that American Television and Film Co., formerly known as Winners Internet Network, and CEO David Skinner Jr. published misleading financial reports for investors and failed to file the proper reports with the SEC. The lawsuit claims that Michael B. Johnson, president of Littleton-based Johnson & Co., handled accounting work for the company and destroyed some audit papers before his interview with the SEC. With the lawsuit, the SEC filed consent decrees in which Skinner, without admitting or denying guilt, agreed to a ban from serving as an officer of any publicly traded U.S. company. Johnson's attorney did not immediately return a phone message seeking comment late Wednesday.
http://www.denverpost.com/Stories/0,1413,36~33~2054469,00.html
CEASE-AND-DESIST ORDER ENTERED AGAINST ACCOUNTANT MARGARET GARDNER
On March 31, the Commission issued a cease-and-desist order against
Margaret M. Gardner, an accountant employed by Michael Johnson & Co.,
LLC (Johnson & Co.), a Denver, Colorado accounting firm. In the Order
the Commission found that, in late 1999 and 2000, Johnson & Co.
purported to be the independent auditor for Winners Internet Network,
Inc. (Winners), a publicly traded company. Gardner made entries to
certain of Winners' accounts, and participated in the preparation,
compilation, audits and/or reviews of certain of Winners' financial
statements included in a Securities Exchange Act of 1934 (Exchange Act)
registration statement, a current report on Form 8-K and quarterly
reports on Forms 10-QSB and 10-QSB/A filed with the Commission by
Winners between Dec. 23, 1999 and Dec. 6, 2000.
The Commission further found that Winners' financial statements
prepared, compiled, audited and reviewed by Gardner materially
overstated Winners' assets by up to 2,550% and revenues by up to 83%,
and understated expenses by up to 16%, by improperly: capitalizing
certain expenses, recognizing assets from a transaction that lacked
economic substance, recording license fees and receivables, recognizing
receivables from licensing fees that Winners had little or no chance of
collecting, and recognizing revenue and receivables that had not been
realized or earned by Winners. Moreover, the Commission found that, for
the year ended Dec. 31, 1999, the overstatements of revenue and
understatements of expenses enabled Winners to report net income of
$5,067 instead of a net loss of over $501,000.
Finally, the Commission found that Gardner caused Johnson & Co. to issue
audit reports that falsely stated that the firm's audits of Winners'
1997, 1998 and 1999 financial statements were presented in conformity
with Generally Accepted Accounting Principles (GAAP) and that the audit
of the 1999 financial statements was conducted in accordance with
Generally Accepted Auditing Standards (GAAS). According to the Order,
these statements were false because, among other things, by
participating in both the preparation and audit of the 1999 financial
statements, Gardner failed to maintain her independence from Winners.
Without admitting or denying the findings in the Commission's order,
Gardner consented to the issuance of an order requiring that she cease
and desist from committing or causing any violations and any future
violations of Sections 10(b) and 13(b)(5) of the Exchange Act and
Exchange Act Rules 10b-5 and 13b2-1; and from causing any violations and
any future violations of Sections 13(a) and 13(b)(2) of the Exchange Act
and Exchange Act Rules 12b-20, 13a-11 and 13a-13. (Rel. 34-49510; AAE
Rel. 1982; File No. 3-11452)
http://www.sec.gov/news/digest/dig040104.txt
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 49510 / March 31, 2004
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1982 / March 31, 2004
ADMINISTRATIVE PROCEEDING
File No. 3-11452
--------------------------------------------------------------------------------
In the Matter of
MARGARET M. GARDNER,
Respondent.
--------------------------------------------------------------------------------
:
:
:
:
:
:
:
:
:
: ORDER INSTITUTING CEASE-
AND-DESIST PROCEEDINGS, MAKING
FINDINGS, AND IMPOSING A
CEASE-AND-DESIST ORDER PURSUANT
TO SECTION 21C OF THE
SECURITIES EXCHANGE ACT OF 1934
I.
The Securities and Exchange Commission ("Commission") deems it appropriate that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"), against Margaret M. Gardner ("Respondent" or "Gardner").
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over her and the subject matter of these proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist Order Pursuant to Section 21C of the Securities Exchange Act of 1934 ("Order"), as set forth below.
III.
On the basis of this Order and Respondent's Offer, the Commission finds1 that:
1. Gardner, age 65, is a resident of Denver, Colorado. Gardner, who has never been a certified public accountant, has worked as an accountant for Michael Johnson & Co., LLC ("Johnson & Co.") since February 1998.
2. As an employee of Johnson & Co., Gardner participated in the audit of the financial statements for Winners Internet Network, Inc. ("Winners"), now known as American Television and Film Company ("American"), for the years ended December 31, 1997 and 1998, and participated in the compilation of financial statements for the ten months ended October 31, 1998 and October 31, 1999, which were included in a Form 10-SB registration of securities of a small business issuer filed by Winners with the Commission on December 23, 1999.
3. Gardner also participated in the preparation and audit of Winners' December 31, 1999 financial statements, which were included in a current report on Form 8-K filed by Winners with the Commission on May 15, 2000; and participated in the preparation and review of certain of Winners' financial statements for the quarters ended March 31, June 30 and September 30, 2000, versions of which were included in Forms 10-QSB and 10-QSB/A filed by Winners with the Commission on November 21 and 22, 2000 and December 6, 2000, respectively, under the name of Winners' wholly owned subsidiary, Glennaire Financial Services, Inc.
4. Winners, a former Nevada corporation with offices in St. Augustine, Florida and the country of Liechtenstein, offered online processing of Internet gaming and other financial transactions using its proprietary processing software between 1999 and June 2002. Thereafter, Winners had no operations.
5. In December 1999, Winners filed a general form of registration of securities of a small business issuer with the Commission on Form 10-SB, which Winners withdrew before it became effective. In May 2000, Winners' common stock became registered with the Commission pursuant to Section 12(g) of the Exchange Act, when Winners acquired Glennaire Financial Services, Inc., a corporation whose common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act, effective September 1999. On February 26, 2004, Winners terminated the registration of its common stock by filing a Form 15 with the Commission. Therefore, from May 2000 to at least February 26, 2004, Winners, now American, was required to file periodic reports with the Commission. American's stock is listed in the electronic quotation service operated by The Pink Sheets LLC.
6. Once its operations began in 1999, Winners maintained incomplete and inaccurate books and records for its European operations that encompassed accounts including its software asset, receivables, revenues, and the majority of its expenses and liabilities. In connection with the preparation of the financial statements identified in Paragraph 3, Gardner knowingly made false entries to certain of Winners' accounts.
7. The financial statements of Winners referred to in paragraphs 2 and 3 above materially overstated Winners' software asset by between $75,000 and $300,000, resulting in an overstatement of total assets by between 3% and 191%, by improperly capitalizing purported demonstration software costs in Winners' software asset account.
8. Winners' December 31, 1999 financial statements, which Gardner participated in preparing and purporting to audit and that were filed with the Commission in Winners' Form 8-K current report, materially overstated Winners' software asset by approximately $421,000 by improperly capitalizing operating expenses in the software asset account. This resulted in an overstatement of total assets by 416%.
9. Winners' December 31, 1999 financial statements also materially overstated Winners' licensing and processing revenues by approximately $372,000, resulting in an overstatement of total revenues by 83%, and accounts receivable by approximately $533,000, resulting in an overstatement of total assets by 528%, and understated expenses by $161,000, resulting in a 16% understatement of total expenses, by improperly: (a) recording licensing fees; (b) recognizing receivables from licensing fees Winners had little or no chance of collecting; and (c) recognizing revenue and receivables that had not been realized or earned by Winners. These overstatements enabled Winners to report net income of $5,067 instead of a net loss of over $501,000.
10. Financial statements for the initial three quarters of calendar year 2000 were included in Forms 10-QSB and 10-QSB/A filed by Winners with the Commission in November and December 2000. These financial statements improperly recognized a $1 million software asset from a transaction that lacked economic substance, resulting in an overstatement of total assets by between 73% and 2,550%.
11. Johnson & Co. issued audit reports accompanying Winners' year-end financial statements for 1997 and 1998 that contained a going concern qualification and an unqualified audit report for 1999. These reports falsely stated that the financial statements were presented fairly in all material respects in conformity with Generally Accepted Accounting Principles ("GAAP") and that the audits of these financial statements were conducted in accordance with Generally Accepted Auditing Standards ("GAAS"). These statements were false, since portions of the underlying financial statements were not presented in conformity with GAAP, which, in turn, rendered false the statements that the audits were conducted in accordance with GAAS, since the failure to address a deviation from GAAP in an audit report is a violation of GAAS. In addition, Johnson & Co.'s audit of Winners' 1999 financial statements was not in accordance with GAAS because, among other things, by participating in both the preparation and audit of these financial statements, Gardner failed to maintain her independence from Winners.
12. Gardner acted recklessly by participating in preparing, compiling, reviewing and auditing Winners' financial statements, which contained the false statements described in Paragraphs 6 through 11.
13. As a result of the conduct described above, Gardner: (a) violated and, with respect to Johnson & Co.'s audit reports, caused violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in connection with the purchase or sale of securities; (b) violated Section 13(b)(5) of the Exchange Act, which, among other things, prohibits any person from knowingly falsifying any book, record or account subject to Section 13(b)(2) of the Exchange Act; (c) violated Rule 13b2-1, which prohibits any person from directly or indirectly falsifying or causing to be falsified, any book record or account subject to Section 13(b)(2)(A) of the Exchange Act; (d) caused Winners' violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11 and 13a-13 thereunder, which require every issuer of a security registered pursuant to Section 12 of the Exchange Act to file with the Commission, in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate for the proper protection of investors and to insure fair dealing in the security, such quarterly and current reports as the Commission may prescribe; and (e) caused Winners' violations of Section 13(b)(2)(A) of the Exchange Act, which requires public companies to make and keep books and records which accurately and fairly reflect its transactions and dispositions of assets.
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions agreed to in Respondent Gardner's Offer.
Accordingly, it is hereby ORDERED that Respondent Gardner cease and desist from committing or causing any violations and any future violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 promulgated thereunder, and from causing any violations and any future violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-11 and 13a-13 promulgated thereunder.
By the Commission.
Jonathan G. Katz
Secretary
Endnotes
--------------------------------------------------------------------------------
1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
http://www.sec.gov/litigation/admin/34-49510.htm
U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18652 / April 1, 2004
Accounting and Auditing Enforcement Release No. 1983 / April 1, 2004
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL B. JOHNSON, MICHAEL JOHNSON & CO., LLC, DAVID C. SKINNER, JR. AND AMERICAN TELEVISION AND FILM COMPANY f/k/a WINNERS INTERNET NETWORK, INC., No. 04-RB-0626 (USDC D. Colorado).
The Securities and Exchange Commission ("Commission") announced that it filed an injunctive action on March 31, 2004 against Colorado resident Michael B. Johnson, his Colorado-based accounting firm, Michael Johnson & Co., LLC ("Johnson & Co."), American Television and Film Company f/k/a Winners Internet Network, Inc. ("Winners"), a Nevada corporation, and Florida resident David C. Skinner, Jr., Winners' former president and chairman of the board of directors. The Commission's complaint alleges that between December 1999 and December 2000, Winners and Skinner carried out a scheme to defraud investors by filing reports and a registration statement with the Commission containing false financial statements that fraudulently overstated Winners' revenues, income, assets and cash inflows and understated expenses. According to the complaint, Johnson and Johnson & Co. assisted in the scheme by performing a range of accounting functions for Winners, including purporting to audit financial statements they had previously prepared for Winners. Further, between January and October 2000, Skinner and Winners reviewed or disseminated three promotional "analyst reports" containing baseless financial projections.
The Commission's complaint alleges that: (1) Johnson, Johnson & Co. and Skinner violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder, and aided and abetted violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-11 and 13a-13 thereunder; and (2) Winners violated Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. The complaint seeks injunctions and third-tier civil penalties against all of the defendants; disgorgement and prejudgment interest from Johnson, Johnson & Co., and Skinner; and officer and director and penny stock bars against Skinner only. Without admitting or denying the Commission's allegations, Skinner has consented to the entry of an order that would enjoin him from future violations of the foregoing provisions and direct him to pay disgorgement and prejudgment interest in an amount to be determined after the completion of the Commission's discovery in this action; and in which he would agree to the Court's continuing jurisdiction over the action for the purpose of determining whether to assess civil penalties against him.
http://www.sec.gov/litigation/litreleases/lr18652.htm
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Civil Action No. 04-RB-0626
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
MICHAEL B. JOHNSON,
MICHAEL JOHNSON &CO., LLC,
DAVID C. SKINNER, JR. and
AMERICAN TELEVISION AND FILM COMPANY,
formerly known as WINNERS INTERNET NETWORK, INC.,
Defendants.
--------------------------------------------------------------------------------
COMPLAINT
--------------------------------------------------------------------------------
Plaintiff the Securities and Exchange Commission ("Commission"), for its complaint, alleges as follows:
A. Summary
1. Between December 23, 1999 and December 6, 2000, Winners Internet Network, Inc., now known as American Television and Film Company (hereinafter referred to as "Winners"), and its then-president, David C. Skinner, Jr. ("Skinner"), carried out a scheme to defraud investors by filing eight reports and a registration statement with the Commission containing numerous false statements, including material overstatements of Winners' revenues, income, assets and cash inflows through the improper capitalization of certain expenses to Winners' software asset, recognition of assets from a sham transaction, recording fictitious licensing fees as revenue, recognition as valid income receivables from licensing fees Winners had little or no chance of collecting, recognition of revenue and receivables that had not been realized or earned by Winners, and false reports of stock issued for services or assets as stock issued for cash proceeds.
2. Winners' outside accounting firm, Michael Johnson &Co., LLC ("Johnson &Co.") and its sole officer and shareholder, Michael B. Johnson ("Johnson"), assisted in the scheme by performing a range of accounting functions for Winners.
3. Furthermore, between January and October 2000, Skinner and Winners reviewed or disseminated three promotional "analyst reports" containing baseless financial projections and false statements about the independence of the analysts.
4. Skinner profited from the fraud by selling Winners stock into the resulting inflated market, thereby realizing proceeds of at least $170,701.
5. In addition, Winners, assisted by Skinner, Johnson and Johnson &Co., failed to create and maintain required books, records and accounts that accurately and fairly reflected transactions and dispositions of its assets, and Winners, assisted by Skinner, failed to devise and maintain a required system of internal accounting controls.
6. Finally, Winners also failed to file mandatory periodic reports with the Commission between March 31, 2001 and February 26, 2004.
7. The Commission brings this action pursuant to the authority conferred upon it by Section 21 of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78u] for an order permanently restraining and enjoining Defendants Johnson, Johnson &Co., Skinner and Winners and granting other relief.
8. In addition to permanent injunctive relief, the Commission also seeks other relief including, without limitation, orders:
a. requiring Johnson, Johnson &Co. and Skinner to disgorge all ill-gotten gains received or benefits derived from the illegal conduct alleged in this complaint, plus pre-judgment and post-judgment interest;
b. requiring Johnson, Johnson &Co. and Skinner to pay third tier civil money penalties pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].
c. prohibiting Skinner from serving as an officer and director of a public company pursuant to Section 21(d)(2) [15 U.S.C. § 78u(d)(2)] of the Exchange Act and the general equitable powers of the Court; and
d. prohibiting Skinner from participating in any offering of penny stock pursuant to Section 21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)] and the general equitable powers of the Court.
B. Jurisdiction and Venue
9. This Court has jurisdiction over this action pursuant to Sections 21(d) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d) and 78aa].
10. In connection with the transactions, acts, practices, and courses of business described in this Complaint, Defendants Johnson, Johnson &Co., Skinner and Winners directly or indirectly, have made use of the means or instrumentalities of interstate commerce, of the mails, of the facilities of a national securities exchange, and/or of the means and instruments of transportation or communication in interstate commerce.
11. Venue lies in this Court pursuant to Section 27 of the Exchange Act because certain of the transactions, acts, practices and courses of business constituting the violations of law alleged herein occurred within this judicial district. In addition, Johnson resides, and Johnson &Co. is domiciled, in this judicial district.
C. The Defendants
12. Defendant Johnson, a resident of Littleton, Colorado, has been the president and sole shareholder of Johnson &Co. and a licensed certified public accountant in Colorado since 1975. He also is a licensed certified public accountant in Florida and Mississippi.
13. Defendant Johnson &Co. is an accounting firm located in Denver, Colorado. Johnson is the only shareholder of, and the only certified public accountant affiliated with, the firm. Johnson &Co., through Johnson and an employee under Johnson's supervision, made entries to Winners' books, records and/or accounts and prepared, compiled, audited and/or reviewed certain financial statements of Winners filed with the Commission by Skinner and Winners between December 23, 1999 and December 6, 2000.
14. Defendant Skinner, a resident of Jacksonville, Florida, was the president, chief executive officer and chairman of the board of directors of Winners from July 1997 to March 2001.
15. Defendant American Television and Film Company, formerly known as Winners, is a Nevada corporation, which, at all times relevant to this Complaint, maintained offices in St. Augustine, Florida and/or in the country of Liechtenstein. Between 1999 and June 2002, Winners offered online processing of Internet gaming and other financial transactions using its proprietary processing software and thereafter had no operations. Winners' name was changed to American Television and Film Company in February 2004. Winners' offices are currently located in Houston, Texas.
16. In December 1999, Winners filed a general form of registration of securities of a small business issuer with the Commission on Form 10-SB, which Winners withdrew on February 17, 2000, before it became effective.
17. On May 15, 2000, Winners' common stock became registered with the Commission pursuant to Section 12(g) of the Exchange Act, when Winners acquired Glennaire Financial Services, Inc., a corporation whose common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act, effective September 1999.
18. On February 26, 2004, Winners terminated the registration of its common stock by filing a Form 15 with the Commission. Therefore, from May 15, 2000 to at least February 26, 2004, Winners, now American, was required to file periodic reports with the Commission. Winners' common stock is quoted on the National Quotation Bureau's Pink Sheets.
19. At all times relevant to this Complaint, Winners' stock has been a "penny stock" as defined by Section 3(a)(51) of the Exchange Act and Exchange Act Rule 3a51-1 because it did not qualify for any of the exemptions from the definition of a penny stock.
D. Factual Allegations
Winners' Commission Filings
20. On December 23, 1999, Winners and Skinner and filed with the Commission an Exchange Act registration statement on Form 10-SB, which included financial statements for the years ended December 31, 1997 and December 31, 1998 and for the ten months ended October 31, 1998 and October 31, 1999. Skinner reviewed and signed the Form 10-SB before filing it with the Commission.
21. Johnson &Co., Johnson and an employee supervised by Johnson audited Winners' financial statements for the years ended December 31, 1997 and December 31, 1998 and compiled the financial statements for the ten months ended October 31, 1998 and October 31, 1999, all of which were included in Winners' Form 10-SB referenced in Paragraph 20.
22. On May 15, 2000, Winners and Skinner filed with the Commission a current report on Form 8-K, which included financial statements for the years ended December 31, 1998 and December 31, 1999. Skinner reviewed and signed the Form 8-K before filing it with the Commission.
23. Johnson &Co., Johnson and an employee supervised by Johnson audited Winners' financial statements for the year ended December 31, 1998 and prepared and audited Winners' financial statements for the year ended December 31, 1999, both of which were included in Winners' Form 8-K referenced in Paragraph 22. In preparing Winners' financial statements for December 31, 1999, Johnson and a Johnson &Co. employee supervised by Johnson decided the values that would be assigned to certain of Winners' accounts and made false entries to Winners' books, records and accounts.
24. On May 19, 2000 Winners and Skinner filed with the Commission a quarterly report for the quarter ended March 31, 2000 on Form 10-QSB, which included financial statements for the quarter ended March 31, 2000 ("original March 31, 2000 financial statements"). Skinner reviewed and signed this Form 10-QSB before filing it with the Commission.
25. Johnson and Johnson &Co. did not participate in the preparation, compilation or review of Winners' original March 31, 2000 financial statements included in the Form 10-QSB referenced in Paragraph 24.
26. On June 21, 2000, Winners and Skinner filed with the Commission an amended quarterly report for the quarter ended March 31, 2000 on Form 10-QSB/A, which included amended financial statements for the quarter ended March 31, 2000 ("first amended March 31, 2000 financial statements"). Skinner reviewed and signed this Form 10-QSB/A before filing it with the Commission.
27. Johnson and Johnson &Co. did not participate in the preparation, compilation or review of Winners' first amended March 31, 2000 financial statements included in the Form 10-QSB referenced in Paragraph 26.
28. On November 22, 2000, Winners and Skinner filed with the Commission a second amended quarterly report for the quarter ended March 31, 2000 on Form 10-QSB/A, which included amended financial statements for the quarter ended March 31, 2000 ("second amended March 31, 2000 financial statements"). Skinner reviewed and signed this Form 10-QSB/A before filing it with the Commission.
29. Johnson &Co., Johnson and an employee supervised by Johnson prepared and reviewed a version of the financial statements for the quarter ended March 31, 2000 that were included in the Form 10-QSB/A filed on November 22, 2000 and referenced in Paragraph 28. In preparing Winners' these financial statements, a Johnson &Co. employee supervised by Johnson decided the values that would be assigned to certain accounts and made false entries to Winners' books, records and accounts.
30. On August 17, 2000, Winners and Skinner filed with the Commission a quarterly report for the quarter ended June 30, 2000 on Form 10-QSB, which included financial statements for the quarter ended June 30, 2000 ("original June 30, 2000 financial statements"). Skinner reviewed and signed this Form 10-QSB before filing it with the Commission.
31. Johnson and Johnson &Co. did not participate in the preparation, compilation or review of Winners' original June 30, 2000 financial statements included in the Form 10-QSB referenced in Paragraph 30.
32. On November 22, 2000, Winners and Skinner filed with the Commission an amended quarterly report for the quarter ended June 30, 2000 on Form 10-QSB/A, which included amended financial statements for the quarter ended June 30, 2000 ("amended June 30, 2000 financial statements"). Skinner reviewed and signed this Form 10-QSB/A before filing it with the Commission.
33. Johnson &Co., Johnson and an employee supervised by Johnson, prepared and reviewed a version of the financial statements for the quarter ended June 30, 2000 that were included in the Form 10-QSB/A filed on November 22, 2000 and referenced in Paragraph
32. In preparing these financial statements, an employee supervised by Johnson made decisions concerning the values that would be assigned to certain accounts and made false entries to Winners' books, records and accounts.
34. On November 21, 2000, Winners and Skinner filed a quarterly report for the quarter ended September 30, 2000 on Form 10-QSB, which included financial statements for the quarter ended September 30, 2000 ("original September 30, 2000 financial statements"). Skinner reviewed and signed this Form 10-QSB before filing it with the Commission.
35. Johnson &Co., Johnson and an employee supervised by Johnson prepared and reviewed a version of the financial statements for the quarter ended September 30, 2000 that were included in the Form 10-QSB/A filed on November 21, 2000 and referenced in Paragraph 34. In preparing these financial statements, a Johnson &Co. employee supervised by Johnson decided the values that would be assigned to certain accounts and made false entries to Winners' books, records and accounts.
36. On December 6, 2000, Winners and Skinner filed with the Commission an amended quarterly report for the quarter ended September 30, 2000 on Form 10-QSB/A, which included amended financial statement for the quarter ended September 30, 2000 ("amended September 30, 2000 financial statements"). Skinner reviewed and signed this Form 10-QSB/A before filing it with the Commission.
37. Johnson &Co., Johnson and an employee supervised by Johnson prepared and reviewed a version of the financial statements for the quarter ended September 30, 2000 that were included in the Form 10-QSB/A filed on December 6, 2000 and referenced in Paragraph 36. In preparing these financial statements, a Johnson &Co. employee supervised by Johnson decided the values that would be assigned to certain accounts and made false entries to Winners' books, records and accounts.
False Financial and Other Statements in Commission Filings
Overstatements of Assets Due to Improper Capitalization of Demonstration Software Costs
38. Winners' financial statements for the year ended December 31, 1997, the ten months ended October 31, 1998 and each of the original and amended financial statements for the quarters ended March 31, June 30 and September 30, 2000 reported as part of Winners' software assets demonstration software valued at $300,000.
39. Winners' financial statements for the years ended December 31, 1998 and December 31, 1999 and the ten months ended October 31, 1999 reported as part of Winners' software assets demonstration software asset valued at $75,000.
40. Winners' Forms 10-SB and 8-K, referenced in Paragraphs 20 and 22, respectively, falsely claimed that the demonstration software had been used in the development of Winners' proprietary processing software, referenced in Paragraph 15.
41. The inclusion of the $75,000 and $300,000 demonstration software values in Winners' assets was improper, because the demonstration software, which was actually purchased for approximately $50,000, was never was used in the development of Winners' proprietary processing software.
42. In addition, $250,000 worth of stock issued by Winners that was included in the $300,000 demonstration software value was not, in fact, issued for the purchase of the demonstration software.
43. The improper capitalization of purported demonstration software costs to Winners' software assets resulted in materially false statements in each of Winners' financial statements filed with the Commission concerning the value of Winners' total assets, by overstating total assets by between $75,000 and $300,000, or between 3% and 191%.
44. During the audit of Winners' December 31, 1997 financial statements, a Winners employee supervised by Skinner notified Johnson and Johnson &Co. that Winners did not use the demonstration software in developing its proprietary processing software and that the $250,000 Winners had previously claimed was used to purchase the demonstration software was not, in fact, used to purchase the software.
45. Despite knowing that none of the purported costs of Winners' demonstration software could be capitalized to Winners' assets, Johnson and Johnson &Co. allowed Winners to include a demonstration software value of $300,000 in Winners' financial statements for the year ended December 31, 1997, the ten months ended October 31, 1998, and in the second amended March 31, 2000 financial statements, the amended June 30, 2000 financial statements, and the original and amended September 30, 2000 financial statements, and a demonstration software value of $75,000 in the financial statements for the years ended December 31, 1998 and December 31, 1999 and the ten months ended October 31, 1999.
46. Furthermore, a Johnson &Co. employee under Johnson's supervision made the decision to increase the value of Winners' demonstration software from $75,000 at December 31, 1999 back to $300,000 in quarters in 2000 and made the false entries to Winners' books, records and accounts increasing this value.
47. Skinner, who reviewed, signed and filed every Winners filing that included the materially overstated demonstration software asset, knew that Winners did not use the demonstration software in the development of Winners' processing software, particularly since he supervised the employee who developed Winners' processing software without using the demonstration software. Furthermore, as a member of Winners' board, which authorized all issuances of Winners' stock, Skinner knew that Winners did not issue $250,000 for the purchase of demonstration software.
Overstatements of Assets Due to Improper Capitalization of Certain Expenses
48. Winners' December 31, 1999 financial statements filed with Winners' Form 8-K identified in Paragraph 22, included in Winners' proprietary processing software asset $421,000 of improperly capitalized expenses, including wages, payroll taxes, rent, travel, marketing and consulting expenses for the entire 1999 fiscal year primarily related to Skinner, who played no role in developing Winners' processing software.
49. The capitalization of the expenses identified in Paragraph 48 was improper, because, in addition to the fact that many expenses unrelated to developing Winners' proprietary processing software were capitalized, generally accepted accounting principles dictated that Winners could capitalize relevant expenses only between the date its software reached technological feasibility, approximately October 1, 1998, until the date that Winners' software was available for general release to customers, approximately January 31, 1999.
50. The improper capitalization of 1999 expenses to Winners' software asset resulted in materially false statements in Winners' December 31, 1999 financial statements concerning the value of Winners' total assets, which were overstated by over $421,000, or 416%.
51. Johnson and Johnson &Co. knew that the 1999 expenses identified in Paragraph 48 could not be capitalized to Winners' software asset. They knew that Winners had sold its processing software to customers beginning in early 1999, yet they allowed Winners to capitalize expenses incurred throughout the entire year.
52. Furthermore, Johnson and a Johnson &Co. employee supervised by Johnson jointly decided which of Winners' 1999 expenses would be capitalized to the software asset, including Skinner's 1999 salary and other expenses, and the Johnson &Co. employee supervised by Johnson made the journal entry that improperly increased the software asset by over $421,000.
53. Skinner, who reviewed, signed and filed the Form 8-K incorporating the December 31, 1999 financial statements, which included the improperly capitalized 1999 expenses, was at least reckless in not knowing, at a minimum, that his 1999 salary could not be capitalized to Winners' software asset, since he played no role in its creation. Overstated Licensing Revenues and Accounts Receivable and Understated Expenses Due to Recording of Fictitious License Fees and Uncollectible License Fee Receivables
54. Winners' December 31, 1999 financial statements also contained materially false statements concerning the value of Winners' licensing revenues and licensing receivables by overstating such revenues and receivables by $140,000 and $301,000, respectively.
55. Winners' licensing revenues and receivables were materially overstated due to the recording of fictitious license fees and the recognition of receivables from licensing fees that Winners had little or no chance of collecting. In addition, by failing to write off receivables that Winners had little or no chance of collecting, Winners' December 31, 1999 financial statements contained materially false statements concerning its expenses, which were understated by $161,000 or 17%.
56. Winners reported fictitious licensing fees by valuing licensing revenues of one client at $130,000 and license fee receivables at $107,500, when the client's contract with Winners, a portion of which appeared in Johnson &Co.'s audit workpapers, showed that the client's license fee totaled only $50,000.
57. In addition, while another client's licensing fee was just $10,000 and its corresponding receivables were only $9,000, Winners included $70,000 in revenues and $69,000 in receivables from that client in its December 31, 1999 financial statements. 58. Winners failed to write off $133,500 in receivables from licensing fees it had little or no chance of collecting. For example, the licensing receivables from three of Winners' clients had been outstanding for periods of over 330 days, with at least one client having terminated its relationship with Winners by the end of 1999, and there was no evidence of payment or confirmation of validity of the receivables by the clients. 59. Furthermore, Winners agreed on March 1, 2000 to refund license fees paid by a fourth client in response to a claim by that client that Winners had breached its contract, and therefore Winners would not receive the $27,500 in licensing fees still owed by the client. Winners' improper accounting for these receivables resulted in a material understatement of expenses of $161,000, or 17%, for the year ended December 31, 1999.
60. Johnson and Johnson &Co. knew that Winners' December 31, 1999 financial statements materially misstated licensing revenues, receivables and related expenses. Johnson and a Johnson &Co. employee supervised by Johnson determined the amount of licensing revenues and receivables that would be recorded for the year ended December 31, 1999 while knowing that Winners' documents and their own audit workpapers did not support the reported revenues and receivables, and that the auditors did not perform adequate audit test work.
61. For example, Johnson &Co.'s audit workpapers included only partial license fee contracts for only some of Winners' clients, and only some of these partial contracts showed the amount of license fees owed to Winners by the respective clients.
62. With respect to at least one client, Johnson and Johnson &Co. never saw the license fee contract or other documentation showing the client's license fees.
63. In addition, there was no documentation in Johnson &Co.'s workpapers showing the amount of license fees paid and owed by Winners' clients.
64. In many instances in which there was no documentation supporting certain licensing revenue or receivable values, Johnson and Johnson &Co. relied merely on unverified representations by Winners' management concerning the values and failed to perform adequate audit test work to confirm those values.
65. Johnson and Johnson &Co. ignored the documentation and information that did exist concerning the true amounts of Winners' licensing revenues and receivables and instead recorded significantly higher values for these accounts for the year ended December 31, 1999.
66. As stated in Paragraph 61, Johnson &Co.'s own audit workpapers included partial contracts that set forth the amount of license fees owed by some clients, yet Johnson and Johnson &Co. allowed Winners to record significantly higher licensing revenue amounts for these clients.
67. In addition, a Johnson &Co. employee supervised by Johnson knew, and documents in Johnson &Co.'s workpapers state, that certain of Winners' clients had accused the company of breaching its contracts with them and that Winners had agreed to refund one client's licensing fee, thereby making it unlikely that Winners would receive or retain those fees.
68. Winners continued to report $200,000 of uncollectible licensing receivables in all of its quarterly financial statements for the year 2000, and therefore these financial statements contained materially false statements concerning its licensing receivables and expenses.
69. Skinner reviewed, signed and filed the Form 8-K and the Forms 10-QSB and Forms 10-QSB/A in which the overstated licensing revenues and receivables and understated licensing-related expenses appeared, while knowing that Winners' documents did not support the reported licensing revenues and receivables and that certain clients likely would never pay Winners their licensing fees
.
Overstated Processing Revenues and Accounts Receivable
70. Winners' December 31, 1999 financial statements materially overstated Winners' processing revenues by inappropriately including in revenues and receivables amounts that had not been realized or earned by Winners.
71. Winners historically collected all gaming proceeds due to its casino clients, extracted fees of between 1% and 5%, and paid the remaining 95% to 99% to its clients. For the month of December 1999, however, Winners reported as revenue all of the gaming proceeds it received instead of its much smaller retained processing fees, which were its true revenues. Winners did not record a corresponding expense.
72. Furthermore, Winners' December 31, 1999 financial statements also included as processing income over $115,900 of licensing and processing fees that Winners had not earned but that it anticipated receiving upon the signing of certain license fee contracts in 2000. These amounts had been neither realized nor earned by Winners, since the anticipated contracts had not been executed and Winners had not rendered any services or delivered products to the potential clients. In fact, the contracts were never signed.
73. As a result of the improper recognition of revenue that was neither earned nor realized by Winners, Winners' financial statements for December 31, 1999 contained materially false statements concerning its processing fee revenues and receivables, each of which were overstated by $232,766, resulting in overstated total revenues of 52% and total assets of 230%.
74. Johnson and a Johnson &Co. employee under Johnson's supervision decided to report as revenue 100% of Winners' gaming proceeds for the month of December 1999, without recording a corresponding expense, while knowing that Winners' true revenues were only 1% to 5% of that amount.
75. Furthermore, a Johnson &Co. employee under Johnson's supervision knew that over $115,900 of anticipated licensing and processing fees had not been earned in 1999, and Johnson &Co.'s audit workpapers were devoid of any documentation concerning these anticipated fees, yet Johnson and Johnson &Co. allowed Winners to record them in its December 31, 1999 financial statements.
76. As a result of the overstatements of licensing and processing revenues and the understatement of licensing- and processing-related expenses, Winners' December 31, 1999 financial statements contained materially false statements concerning its revenues, assets, expenses and net income, and its net loss of over $501,000 was reported as net income of over $5,000.
Overstated Assets and Revenues Based on Sham Asset Exchange
77. Beginning with Winners' October 31, 1999 financial statements filed with Winners' registration statement on December 23, 1999, Winners engaged in a pattern of improperly recognizing assets and revenues from a sham asset exchange between Winners and CyberLink Monetary Systems AG ("Cyberlink"), a Liechtenstein trust which existed for the sole purpose of allowing Winners to conduct business in Liechtenstein. In a series of purported transactions, Winners purported to sell its processing software to Cyberlink for $3 million, and Cyberlink purported to sell certain domain names to Winners for $4 million.
78. The purported transactions with Cyberlink lacked economic substance because, among other things, Cyberlink and Winners functioned as the same entity, and Winners already owned the asset it purportedly agreed to purchase for $4 million. Therefore, Winners should not have reported assets or revenues from the transactions, or, in the alternative, the transactions should have been eliminated in the consolidation of Winners' and Cyberlink's financial transactions.
79. The improper recognition of assets and revenues from the sham transactions identified in Paragraph 77 resulted in the following materially false statements in Winners' financial statements: (a) overstatement of Winners' accounts receivables by $1,200,000, resulting in overstatements of total assets by 3% and total revenues by 218% in Winners' October 31, 1999 financial statements; (b) overstatement of the value of Winners' software asset by $1 million, resulting in an overstatement of total assets of 205%, and overstatement of revenues of $1,500,000, resulting in an overstatement of total revenues of 1,125%, in Winners' original March 31, 2000 financial statements; (c) overstatement of the value of Winners' software asset by $4 million, resulting in an overstatement of total assets of 923%, and overstatement of revenues by $3 million, resulting in an overstatement of total revenues of 22,497%, in Winners' first amended March 31, 2000 financial statements; (d) overstatement of the value of Winners' software asset by $1 million, resulting in an overstatement of total assets of 231%, in Winners' second amended March 31, 2000 financial statements; (e) overstatement of the value of Winners' software asset by $4 million, resulting in an overstatement of total assets of 2,550%, and overstatement of revenues by $3 million, resulting in an overstatement of total revenues of 1,749%, in Winners' original June 30, 2000 financial statements; (f) overstatement of the value of Winners' software asset by $1 million, resulting in an overstatement of total assets of 638%, in Winners' amended June 30, 2000 financial statements; (g) overstatement of the value of Winners' software asset by $1 million, resulting in an overstatement of total assets of over 100%, in Winners' original September 30, 2000 financial statements; and (h) overstatement of the value of Winners' software asset by $1 million, resulting in an overstatement of total assets of over 100%, in Winners' amended September 30, 2000 financial statements.
80. Compounding the falsity of the asset and revenue values in Paragraph 79, the Management's Discussion and Analysis section of Winners' registration statement identified in Paragraph 20 stated that Winners' October 31, 1999 revenues of $1,744,878 "were generated from [Winners'] European processing operations," when, in fact, $1,200,000 of Winners' October 31, 1999 revenues were the result of the improper recognition of revenues from the sham transactions identified in Paragraph 77.
81. In addition, the notes to Winners' original March 31, 2000 financial statements contained in the Form 10-QSB identified in Paragraph 24 stated that the increase in revenues of $1,516,419 from March 31, 1999 to March 31, 2000 "was primarily due to an overall increase in [Winners'] operations," when, in fact, $1,500,000 of the increase in revenues from March 31, 1999 to March 31, 2000 was the result of the improper recognition of revenues from the sham transactions identified in Paragraph 77.
82. Johnson and Johnson &Co. knew that Cyberlink and Winners were essentially the same company and, therefore, Winners had no valid basis for recognizing such assets. Johnson and a Johnson &Co. employee supervised by Johnson were sufficiently concerned about the purported asset exchange between Winners and Cyberlink that they did not allow Winners to record any assets or revenues from the transactions in the December 31, 1999 financial statements they prepared and audited.
83. In addition, in February 2000, during their audit of those financial statements, Johnson and a Johnson &Co. employee supervised by Johnson advised Skinner that no revenues from the exchange should be recognized.
84. Nevertheless, Johnson and a Johnson &Co. employee supervised by Johnson prepared and conducted reviews of the second amended March 31, 2000 financial statements, the amended June 30, 2000 financial statements and the original and amended September 30, 2000 financial statements, which recognized assets based on the asset exchange.
85. Furthermore, none of Johnson &Co.'s workpapers indicate that Johnson or Johnson &Co. took any steps to determine whether assets were actually bought or sold pursuant to the purported asset exchange.
86. Skinner, who signed, reviewed and filed with the Commission every report containing the overstated assets and revenues based on the sham asset exchange and the false statements in two of the reports that increased revenues were due to reasons other than the sham asset exchange, knew that Cyberlink and Winners were essentially the same company and, therefore, Winners had no valid basis for recognizing such assets.
87. Moreover, even after Johnson and a Johnson &Co. employee supervised by Johnson advised Skinner that no revenues could be recognized from the exchange in 2000, Skinner continued to file with the Commission quarterly reports that included Cyberlink-related revenues of between $1.5 million and $3 million and Cyberlink-related assets of between $1 million and $4 million.
Overstated Cash Inflows
88. Six of seven of Winners' quarterly financial statements contained in quarterly reports filed with the Commission in 2000 contained materially false statements concerning Winners' cash inflows from financing activities, which were overstated by between $423,172 and $2,476,432, or between 135% and 790%, due to the improper reporting of stock issued for services or assets as stock issued for cash proceeds.
89. Skinner, who reviewed, signed and filed every quarterly report containing the financial statements that overstated Winners' cash inflows, knew or was reckless in not knowing that Winners' cash inflows were materially overstated, given the magnitude of the overstatements and Skinner's position as president and chairman of Winners' board of directors, which authorized all issuances of Winners' stock.
False Statements in Audit Reports
90. Johnson and Johnson &Co. issued audit reports accompanying Winners' year-end financial statements for 1997, 1998 and 1999. As to 1997 and 1998, the audit opinions each contained a going concern qualification. As to 1999, the audit opinion was unqualified. The 1997, 1998 and 1999 audit reports falsely stated that the financial statements were presented fairly in all material respects in conformity with Generally Accepted Accounting Principles ("GAAP") and that the audits of these financial statements were conducted in accordance with Generally Accepted Auditing Standards ("GAAS").
91. The statements in Johnson &Co.'s audit reports referenced in Paragraph 90, that Winners' financial statements for 1997, 1998 and 1999 were presented in conformity with GAAP, were false, because, as discussed above, these financial statements included numerous financial misstatements.
92. The statements in Johnson &Co.'s audit reports referenced in Paragraph 90, that its audits of Winners' 1997, 1998 and 1999 financial statements were conducted in accordance with GAAS, were false, because portions of the underlying financial statements were not presented in conformity with GAAP, which, in turn, rendered false the statements that the audits were conducted in accordance with GAAS, since the failure to address a deviation from GAAP in an audit report is a violation of GAAS.
93. In addition, Johnson &Co.'s audit of Winners' December 31, 1999 financial statements was not conducted in accordance with GAAS because, among other things, by participating in both the preparation and audit of these financial statements, Johnson and Johnson &Co. failed to maintain their independence from Winners.
94. Johnson and Johnson &Co. also failed to conduct their audit of Winners' December 31, 1999 financial statements in accordance with GAAS, because they failed to adequately plan their audit, failed to obtain competent evidential matter, failed to use due professional care, failed to properly evaluate Winners' ability to continue as a going concern, and failed to adopt reasonable procedures to retain audit documentation. Improper Document Creation and Destruction by Johnson and Johnson &Co.
95. Certain original Johnson &Co. workpapers relating to the audit of Winners' December 31, 1999 financial statements were missing within approximately fifteen months after completion of the audit. These documents were inappropriately recreated by Johnson the night before his investigative testimony before the Commission and inserted into the original audit workpapers.
96. After receiving the Commission's subpoena to Johnson &Co., a Johnson &Co. employee under Johnson's supervision destroyed the original trial balance relating to the audit of Winners' December 31, 1999 financial statements. According to Johnson, this trial balance contained numerous handwritten notes. The Johnson &Co. employee then recreated or printed a new trial balance, produced it to the Commission in testimony, and falsely testified under oath that she did not know what had happened to the original trial balance.
False and Misleading Analyst Reports
97. On January 13 and February 24, 2000, World of Internet.com AG ("World of Internet"), a German company that touted the stock of microcap companies using the name "Stockreporter," issued analyst reports recommending that investors buy Winners stock ("the Stockreporter reports"). Skinner reviewed and edited the Stockreporter reports prior to their public dissemination. World of Internet posted these reports on its Internet website, where they remained until at least June 26, 2000, and issued press releases linking to the reports. Winners employees supervised by Skinner posted these releases on Winners' website, where they remained until October 14, 2000. The Stockreporter reports stated that Winners would achieve revenues of between $18 million and $35 million and stock prices of between $12 and $23.60 between the years 2000 and 2002.
98. The revenue projections in the Stockreporter reports lacked a reasonable basis because the projections were not supported by Winners' historical operations, and the reports failed to disclose material adverse facts, specifically that the revenue projections were dependent upon Winners obtaining funding from a third party and that Winners had not received any commitments for such funding. The stock price projections were similarly baseless because, among other things, they were based on the false revenue projections.
99. On February 29, 2000, Christina Skousen ("Skousen"), a California resident who wrote analyst reports both for World of Internet and under her business name CSK Securities Research ("CSK"), issued a CSK analyst report recommending that investors buy Winners stock ("the CSK report"). Skousen disseminated this report through a press release, and Skinner reviewed the report prior to its public dissemination. On March 3, 2000, Winners issued its own press release regarding the CSK report. Winners employees under Skinner's supervision posted this press release and the CSK report on Winners' Internet website, where they remained until October 14, 2000. The CSK report stated that Winners would achieve revenues of between $20 million and $50 million and stock prices of between $15 and $38.50 between 2000 and 2002.
100. The revenue projections in the CSK report lacked a reasonable basis because the projections were not supported by Winners' historical operations, and the reports failed to disclose Winners' need for funding. The stock price projections were similarly baseless because, among other things, they were based on the false revenue projections.
101. Stockreporter's press release announcing its report about Winners and Winners' press release announcing the CSK report falsely stated that Stockreporter and CSK were "independent" from Winners. These statements were false, since Winners paid 200,000 shares of its stock to Stockreporter for, among other services, writing and publicizing the Stockreporter report, and Stockreporter, in turn, paid for, and Stockreporter's principals and Skinner reviewed, the CSK report.
Winners' Inaccurate Books, Records and Accounts and Deficient Internal Controls
102. Although, beginning with the registration of its common stock with the Commission on May 15, 2000, Winners was required to maintain books, records and accounts which accurately and fairly reflected its transactions and the disposition of its assets, Winners maintained incomplete and inaccurate books, records and accounts for its European operations, which encompassed its software asset, receivables, revenues, and the majority of its expenses and liabilities.
103. In connection with the preparation of Winners' second amended March 31, 2000 financial statements, amended June 30, 2000 financial statements, and original and amended September 30, 2000 financial statements, a Johnson &Co. employee under Johnson's supervision knowingly made false entries to certain of Winners' books, records and/or accounts.
104. Once its common stock was registered with the Commission, Winners also was required to, but did not, devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances concerning the execution, recording, access to and accountability for Winners' assets.
105. Between May 15, 2000 and December 6, 2000, Skinner knowingly falsified Winners' books, records and/or accounts and, between May 15, 2000 and March 2001, knowingly failed to implement a system of internal accounting controls for Winners.
Winners' Delinquent Filings
106. As a public company registered with the Commission pursuant to the provisions of the Exchange Act, Winners was required to file periodic reports with the Commission from May 15, 2000 until February 26, 2004.
107. From March 31, 2001 to February 26, 2004, Winners failed to file three annual reports and nine quarterly reports.
Trading in Winners Stock
108. Between January 31 and March 3, 2000, when the materially false public statements in the Stockreporter and CSK reports were first disseminated, the price of Winners stock increased from $2.38 to $4.69 per share.
109. Between January and December 2000, when materially false statements concerning Winners were disseminated both in analyst reports and false filings with the Commission, Skinner sold a total of 103,000 shares of Winners stock through open market transactions for proceeds of at least $170,701.
FIRST CLAIM
Violations by Skinner, Winners, Johnson and Johnson &Co.
of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5 [15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5]
110. Plaintiff repeats and realleges paragraphs 1 through 109 above.
111. Skinner, Winners, Johnson and Johnson &Co., directly or indirectly, with scienter, in connection with the purchase or sale of securities, by the use of means or instrumentalities of interstate commerce, the mails, or any facility of a national securities exchange, employed devices, schemes, or artifices to defraud; made untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or engaged in acts, practices, or courses of business which operated or would operate as a fraud or deceit upon any person; in violation of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
112. By reason of the foregoing, Skinner, Winners, Johnson and Johnson &Co.
violated Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5.
SECOND CLAIM
Winners' Violations of Section 13(a) of the Exchange Act
and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13
[15 U.S.C. § 78m(a), 17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11 and 240.13a-13]
113. Plaintiff repeats and realleges paragraphs 1 through 109 above.
114. From May 15, 2000 until February 26, 2004, Winners was an issuer of a security registered with the Commission pursuant to Section 12 of the Exchange Act, and was subject to the periodic reporting requirements imposed on such issuers by the Exchange Act.
115. As described elsewhere in this Complaint, between May 15, 2000 and December 6, 2000, Winners filed materially inaccurate and misleading current and quarterly reports with the Commission.
116. Winners also failed to add such further material information to its current and quarterly reports as was necessary to make the required statements or reports, in light of the circumstances under which they were made, not misleading.
117. Furthermore, between March 31, 2001 and February 26, 2004, Winners failed to file annual and quarterly reports with the Commission.
118. By reason of the foregoing, Winners violated Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13 [15 U.S.C. § 78m(a), 17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11 and 240.13a-13].
THIRD CLAIM
Aiding and Abetting by Skinner, Johnson and Johnson &Co.
of Certain of Winners' Violations of Section 13(a) of the Exchange Act
and Exchange Act Rules 12b-20, 13a-11, and 13a-13
[15 U.S.C. § 78m(a), 17 C.F.R. §§ 240.12b-20, 240.13a-11, and 240.13a-13]
119. Plaintiff repeats and realleges paragraphs 1 through 109 above.
120. Skinner, Johnson and Johnson &Co. knew or were reckless in not knowing that Winners filed materially inaccurate and misleading current and quarterly reports with the Commission and failed to add such further material information as was necessary to make the required statements or reports, in light of the circumstances under which they were made, not misleading, in violation of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-11, and 13a-13, and substantially assisted Winners in committing these violations.
121. By reason of the foregoing, Skinner, Johnson and Johnson &Co. aided and abetted Winners' violations of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-11, and 13a-13 [15 U.S.C. § 78m(a), 17 C.F.R. §§ 240.12b-20, 240.13a-11, and 240.13a-13].
FOURTH CLAIM
Winners' violations of Section 13(b)(2)(A) of the Exchange Act
[15 U.S.C. § 78m(b)(2)(A)]
122. Plaintiff repeats and realleges paragraphs 1 through 109 above.
123. Between May 15, 2000 and February 26, 2004, the period in which Winners' common stock was registered pursuant to Section 12 of the Exchange Act, Winners failed to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflected the company's transactions and disposition of its assets.
124. By reason of the foregoing, Winners violated Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)].
FIFTH CLAIM
Aiding and Abetting by Skinner, Johnson and Johnson &Co.
of Winners' Violations of Section 13(b)(2)(A) of the Exchange Act
[15 U.S.C. § 78m(b)(2)(A)]
125. Plaintiff repeats and realleges paragraphs 1 through 109 above.
126. Until his resignation from Winners in March 2001, Skinner knew or was reckless in not knowing of Winners' violations of Section 13(b)(2)(A) of the Exchange Act and substantially assisted Winners in committing these violations.
127. Until at least December 6, 2000, Johnson and Johnson &Co. knew or were reckless in not knowing of Winners' violations of Section 13(b)(2)(A) of the Exchange Act and substantially assisted Winners in committing these violations.
128. By reason of the foregoing, Skinner, Johnson and Johnson &Co. aided and abetted Winners' violations of Section 13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)] of the Exchange Act.
SIXTH CLAIM
Winners' Violations of Section 13(b)(2)(B) of the Exchange Act
[15 U.S.C. § 78m(b)(2)(B)]
129. Plaintiff repeats and realleges paragraphs 1 through 109 above.
130. During the period in which Winners' common stock was registered pursuant to Section 12 of the Exchange Act, Winners failed to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions were recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements.
131. By reason of the foregoing, Winners violated Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)].
SEVENTH CLAIM
Aiding and Abetting by Skinner of Winners' Violations
of Section 13(b)(2)(B) of the Exchange Act
[15 U.S.C. § 78m(b)(2)(B)]
132. Plaintiff repeats and realleges paragraphs 1 through 109 above.
133. Until his resignation from Winners in March 2001, Skinner knew or was reckless in not knowing of Winners' violations of Section 13(b)(2)(B) of the Exchange Act and substantially assisted Winners in committing these violations.
134. By reason of the foregoing, Skinner aided and abetted Winners' violations of Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)].
EIGHTH CLAIM
Violations by Skinner, Johnson and Johnson &Co.
of Rule 13b2-1 Under the Exchange Act
[17 C.F.R. § 240.13b2-1]
135. Plaintiff repeats and realleges paragraphs 1 through 109 above.
136. Between May 15, 2000 and February 26, 2004, Winners' books, records and accounts were subject to Section 13(b)(2)(A) of the Exchange Act.
137. Between May 15, 2000 and March 2001, Skinner directly or indirectly falsified or caused to be falsified Winners' books, records and/or accounts. 138. Between May 15, 2000 and at least December 6, 2000, Johnson and Johnson &Co. directly or indirectly falsified or caused to be falsified Winners' books, records and/or accounts.
139. By reason of the foregoing, Skinner, Johnson and Johnson &Co. violated Rule 13b2-1 under the Exchange Act [17 C.F.R. § 240.13b2-1].
NINTH CLAIM
Violations by Skinner, Johnson and Johnson &Co.
of Section 13(b)(5) of the Exchange Act
[15 U.S.C. § 78m(b)(5)]
140. Plaintiff repeats and realleges paragraphs 1 through 109 above.
141. Between May 15, 2000 and at least December 6, 2000, Skinner, Johnson and Johnson &Co. knowingly falsified books, records and/or accounts described in Section 13(b)(2) of the Exchange Act
.
142. Between May 15, 2000 and March 2001, Skinner knowingly circumvented or knowingly failed to implement a system of internal accounting controls.
143. By reason of the foregoing, Skinner, Johnson and Johnson &Co. violated Section
13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court:
1. Find that the defendants, and each of them, committed the violations alleged;
2. Enter an injunction permanently restraining and enjoining Defendants Johnson, Johnson &Co., Skinner and Winners, his or its agents, servants, employees and attorneys, and those persons in active concert or participation with them who receive actual notice of a judgment by personal service or otherwise, and each of them, from violating, directly or indirectly, the provisions of law and rules alleged in this Complaint;
3. Order Defendants Johnson, Johnson &Co. and Skinner to disgorge all ill-gotten gains received or benefits in any form derived from the illegal conduct alleged in this Complaint, together with prejudgment and post-judgment interest as provided by law;
4. Order Defendants Johnson, Johnson &Co. and Skinner to pay third-tier civil money penalties pursuant to Section 21(d)(3) [15 U.S.C.§ 78u(d)(3)] of the Exchange Act;
5. Order that Defendant Skinner be barred from serving as an officer or director of any publicly held company pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and the general equitable powers of the Court;
6. Order that Defendant Skinner be barred from participating in any offering of penny stock pursuant to Section 21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)] and the general equitable powers of the Court; and
7. Grant such other and further relief as this Court may deem just or appropriate.
Dated: _______________, 2004
Respectfully submitted,
___________________________________
Julie K. Lutz
Kelli Farrand Chan
Attorneys for Plaintiff
Securities and Exchange Commission
1801 California Street, Suite 1500
Denver, CO 80202
Phone: (303) 844-1000
Fax: (303) 844-1068
http://www.sec.gov/litigation/complaints/comp18652.htm
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 15
CERTIFICATION AND NOTICE OF TERMINATION OF REGISTRATION UNDER SECTION 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934 OR SUSPENSION OF DUTY TO FILE REPORTS UNDER
SECTIONS 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission File Number 000-28641
AMERICAN TELEVISION AND FILM COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
PO BOX 570611, Houston, Texas 77257
----------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COMMON
--------------------------------------------------------
(Title of each class of securities covered by this Form)
N/A
--------------------------------------------------------------
(Titles of all other classes of securities for which a duty to file reports
under section 13(a) or 15(d) remains)
Please place an X in the box(es) to designate the appropriate rule
provisions(s) relied upon to terminate or suspend the duty to file reports:
Rule 12g-4(a)(1)(i) X Rule 12h-3(b)(1)(i)
--
Rule 12g-4(a)(1)(ii) X Rule 12h-3(b)(1)(ii)
--
Rule 12g-4(a)(2)(i) Rule 12h-3(b)(2)(i)
Rule 12g-4(a)(2)(ii) Rule 12h-3(b)(2)(ii)
Rule 15d-6
Approximate number of holders of record as of the certification or notice
date: 138 as of February 25, 2004.
Pursuant to the requirements of the Securities Exchange Act of 1934 (Name
of registrant as specified in charter) has caused this certification/notice to
be signed on its behalf by the undersigned duly authorized person.
Date: February 26, 2004 BY:/s/ Edward R. Skaggs
-------------------
Edward R. Skaggs
15-12G Last Page of 2 TOC 1st Previous Next Bottom Just 2nd
Instruction: This form is required by Rules 12g-4, 12h-3 and 15d-6 of the
General Rules and Regulations under the Securities Exchange Act of 1934. The
registrant shall file with the Commission three copies of Form 15, one of which
shall be manually signed. It may be signed by an officer of the registrant, by
counsel or by any other duly authorized person. The name and title of the person
signing the form shall be typed or printed under the signature.
http://www.secinfo.com/d1529h.12r.htm
Does this stock have enough weight to wait? I'm hearing "same old people", "crap", etc. My last stock was like this one and went up _ _ _ _ %. Who knows?
Interesting....
I'd forgotten that I even owned this crap until I checked my positions at Schwab yesterday. I found something called ATVF that I knew I hadn't bought. I was about to call Schwab and report the mistake when I noticed that WINR was gone. If Mr. Oehri says that WINR somehow lost its ownership, I guess he neglected to tell Mr. Schwab. Whatever happened to Mr. Swedelo?
AngelCiti Enters Into $2.43 Million Credit Facility Agreement
PEMBROKE PINES, Fla., Feb. 12, 2004 -- AngelCiti Entertainment entered into a Loan and Security Agreement for a Credit Facility of up to $2.43 million with Finanzinvest, Ltd., a Bermuda investment company.
The Company intends on using the funds for further development of its online casino and poker software and expansion into the European and Asian markets. The agreement provides for a Credit Facility of up to $2.43 million, to be provided in increments, on a best efforts basis, with initial funding anticipated within 30 days.
'This credit facility is another strong step in the maturation of our Company,' remarked AngelCiti president George Gutierrez. 'We've moved from development stage to expansion and this Credit Facility will provide us with the additional tools necessary to become a leader in the online gaming industry.'
The Industry
A Bear Stearns report for the industry pegged annual revenue at $4.2 billion for 2003, while Christiansen Capital Advisors predicts a slightly more rosy picture pointing to an estimated $4.5 billion in revenue for calendar year 2002, saying 2005 revenue could exceed $10 billion. PokerPulse.com estimates that more than $16 billion will be wagered at online poker sites in 2004.
The Company
AngelCiti's wholly owned subsidiary Worldwide Management provides gaming software to numerous online casinos including SharkCasino.com, SharkPoker.com and TheHouseWins.com, and currently services casinos in English, Spanish, German, Chinese and Japanese.
This news release contains forward-looking statements regarding AngelCiti's business strategies and future plans of operations. Forward-looking statements involve known and unknown risk and uncertainties. The company's risks and uncertainties include: intense price competition, economic, political and regulatory uncertainties, the need to raise additional capital for growth and expansion and its reliance on the internet as a means for promoting the software it sublicenses. The forward-looking statements contained in this news release speak only as of the date hereof and AngelCiti disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in AngelCiti's expectations or future events.
CONTACT: AngelCiti Entertainment, Inc.
Evelyn Fallas
(800) 908-9574
Evelyn@angelciti.com
Almost Confirmed: Winner is Amer TV & F. A 100 to 1 reverse split has taken place (100,000 shares is now 1,000 shares). The stock is bid .55 and ask 1.35. Who knows what they will do to look after the shareholders next. I'm so glad I'm into Gold.
I guess "good" is relative.
I have a hard time believing anything is good about this company, but to each their own.
I had never heard of ATVF before, but the best I can tell, and it's all just guesswork, is that ATVF is American Television & Film Co. Whoever controls ATVF probably now has a whole lotta WINR common stock, and vice versa. They need to sell it to make this transaction profitable. WINR has come full circle, and is now in a position similar to where it was in 1997-98. New players, same game.
All just a guess, and just my uninformed opinion.
Playing the 6 degrees of separation game:
Winners Internet Network, Inc.
American Television & Film Co.
Edward R. Skaggs
Skaggs Associates, Inc. (Houston, TX)
Pangea Petroleum
CBS MarketWatch's Calandra Quits Over Informal SEC Probe
Thursday, January 22, 2004 04:36 PM ET
The Wall Street Journal Online
Financial-news publisher MarketWatch.com Inc. (MKTW, news) said Thom Calandra, the writer of a stock-picking subscription newsletter, has resigned in the face of internal and Securities and Exchange Commission inquiries into his trading activities.
Larry Kramer, MarketWatch's chairman and chief executive, said in an interview that Mr. Calandra submitted his resignation Thursday rather than submit documents about his trading. Mr. Kramer said the company had set a deadline of Thursday for receiving the documents, which it requested last month in response to the SEC's informal inquiry.
The SEC has asked MarketWatch, based in San Francisco, for information about the company's policies for its editorial staff's equity trading, as well as any internal communications specifically about Mr. Calandra's trading, Mr. Kramer said. He added that the company is fully cooperating with the SEC inquiry, which the company said in a statement began in October 2002.........
Full Story at: http://www.quicken.com/investments/news_center/story/?story=NewsStory/dowJones/20040122/ON2004012216....
*********************************************************
'Like a drug addiction' It's still the small investor's game.
Mar 13, 2000. SAN FRANCISCO (CBS.MW) FTMarketWatch.com.
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=13917393
Thom Calandra's StockWatch
'Like a drug addiction'
It's still the small investor's game
By Thom Calandra, CBS MarketWatch
Last Update: 4:22 PM ET Mar 13, 2000 FTMarketWatch.com
Thom's biography
SAN FRANCISCO (CBS.MW) -- It's still a small investor's game, for good or bad. Even with the world's stock markets taking it on the chin Monday, it's still happy-hunting grounds for investors in the tiniest of companies.
As one Wall Street analyst was brave enough to point out the other day: "Over-the-counter Bulletin Board volume has grown exponentially in recent months. We attribute the gains to the persistent influx of online traders and the widening of speculative fever." That was Internet brokerage analyst Greg Smith at Chase Hambrecht & Quist. Daily volumes for the high-flying bulletin-board stocks, which some folks call the penny-stock market, are running 1.1 billion shares a day vs. 323 million shares a day in 1999, Smith said in his report.
Folks, that's why small is big these days. Most Wall Street investment banks -- and many of the traditional financial publications -- are loath to tell you about the micro-cap stocks. That's because the big brokers and market makers don't make any money off companies whose shares trade for 50 cents apiece.
Smith, in his report, said total over-the-counter bulletin-board share volume is up 366 percent from a year ago. That's a robust market.
* * * [text deleted]
Another tiny stock, Winners Internet Network (WINR: news, msgs), was up 16 percent Monday afternoon. The Florida company, which owns stakes in European Internet service providers and is developing on-line transaction processing systems, will list its bulletin-board stock on Germany's Hamburg Stock Exchange. The Hamburg exchange will start spotlighting bulletin-board stocks. Winners Internet Network shares are up about 11-fold since early December.
Small is big, even in a rocky market.
* * *
Thom Calandra is CBS MarketWatch's editor-in-chief. Thom appears regularly on "CBS MarketWatch Weekend," which airs weekly on CBS television.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Take a look at WINR's chart for this period:
http://bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=winr&close_date=3%2F...
The day before the article, WINR had a high of 4.375
the day of the article, WINR had a high of 5.00
The day after the article, WINR had a high of 7.875
One month after the article, WINR had a high of 2.75
Is Winner a good buy or a goodbye? I just found this board. I recently emailed the company and was told they couldn't tell me anything because it would violate SEC regulations. Seemed kind of strange. What is happening with the company? Thanks and I look forward to hearing from someone.
To:Mr. Miller who started this subject
From: CYBERKEN Tuesday, Jan 16, 2001 11:26 AM
Respond to of 6545
Posted by Joe on RB:
<<Email from Skinner, in regards to a question I sent him last Tuesday;
David,
One quick question this morning and then I'll leave you alone. In your Email yesterday you alluded to the fact that a mm has been chosen to file a 211 for re-listing:
The company has been working with a MM in order to have WINR placed back on the OTC:BB. This was an extensive search due to the many 'requests' made by MM's in order to file the application. I agree this is the number 1 priority
with the company and it is being treated in the same fashion.
Has this been accomplished and filing underway? If so, what kind of timeframe do you think we are looking at regarding being re-listed? Our price seems to be responding well since it bottomed out, and this re-listing action could go a
long way towards regaining market share we had lost.
Joe
Dear Joe,
WINR has made the re-listing the number 1 priority, followed closely by adding new companies to utilize the WINR e-swipe technology.
In regards to a 'time frame' all I can state is what has been presented to the company. The form is submitted to the NASD and they will either respond with comments or a clearance. If there are comments they must be responded to within 180 days. I can assure you that if WINR received comments they would be answered immediately. The NASD will also check with the SBO of the SEC to verify that WINR has cleared comments from the acquisition of Glennaire. Once this is completed by the NASD the company will be cleared to trade on the OTC:BB
I hope this answers your questions. As always please feel free to email me with any questions or comments and I will respond as time permits.
Regards,
David C. Skinner, JR
CEO Winners Internet Network, Inc.
www.winr.net>>
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=15188702
Email from Skinner
To:Mr. Miller who started this subject
From: CYBERKEN Monday, Jan 8, 2001 11:09 AM
Respond to of 6545
Posted on RB this AM:
<<Email from Skinner this morning:
Dear Joe,
I would like to tell you to please feel free to email me any questions or
comments you may have and I will answer them as time permits.
WINR and SupraNet had been negotiating with a new company whose business
plan projected $100,000 per month or more in processing. We have talked to
dozens of companies who had plans of processing anywhere from $100,000 per
month to $5-$10 million per month in their operations. In the past WINR
would look to project what type of revenue we would derive from these
contracts. The facts are that some of these companies, with their models and
business plans, never were able to open and begin operation and the ones
that were in operation didn't match their revenue projections. We decided to
not include any type of projections or information until the sites were
operational and or had a track record of revenues we could report accurately
on.
The company has been working with a MM in order to have WINR placed back on
the OTC:BB. This was an extensive search due to the many 'requests' made by
MM's in order to file the application. I agree this is the number 1 priority
with the company and it is being treated in the same fashion.
Regards,
David C. Skinner, JR
CEO Winners Internet Network, Inc.
www.winr.net
-----Original Message-----
From: Joe D Mitchell [mailto:joe_d_mitchell@email.mobil.com]
Sent: Thursday, January 04, 2001 8:53 AM
To: David Skinner
Subject: RE: Premiere Pay
David,
Good morning. Hope your day is going well. First, I would like to tell you that I am not trying to be a nuisance, but I would like to email you every
week or two and try to stay abreast of what is going on. Secondly, anything you state to me that you don't want posted on a message thread, just say so and it won't be done. There is an extensive grapevine linking winr investors all over the world, I think you would be very surprised how far reaching it is. A couple of quick questions;
Through the grapevine, I have been informed of a recently signed(last couple of months) contract that will generate in the neighborhood of $100,000 per month for Winr. Why hasn't this been announced?
You stated in your response the other day that we had cleared comments from the SEC:
WINR is also working on its relisting to the OTC:BB. The comments WINR received from the SEC regarding the 10Qs had to be cleared and its financials up to date prior to filing. This has been accomplished and when the NASD notifies WINR on the relisting status we will also make an
immediate announcement.
Has a market maker been set up to file a 211? I think this situation deserves the highest priority, as re-listing is paramount, as quickly as possible.
Most of your core long term investors are still here, we are waiting for some positive moves to regain the market share we have lost over the last year.
Please try to keep us better informed, as that is very important. What does a pr cost on Business Wire, $500.00? A state of the company announcement
about where we are at this time and what you see in our immediate future would quell many fears.
Thanks for your time, and have a great day.
Hoping you and all of yours are blessed,
Joe D. Mitchell>>
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=15141992
Date: 12/6/2002
Document Filings
Corporation Names
--------------------------------------------------------------------------------
Name Name Type
CREATIVE GAMING CONSULTANTS, INC. Legal
Business Corporation Information
--------------------------------------------------------------------------------
SOSID: 0464256
Status: Current-Active
Date Formed: 7/13/1998
Citizenship: Domestic
State of Inc.: NC
Duration: Perpetual
Registered Agent
--------------------------------------------------------------------------------
Agent Name: Starczewski, Daniel D
Registered Office Address: 932 Burke St
Winston Salem NC 27101
Registered Mailing Address: 932 Burke St
Winston Salem NC 27101
Principal Office Address: No Address
Principal Mailing Address: 932 Burke St
Winston Salem NC 27101
Bar-Coded Forms
**********************
From Articles of Incorporation, filed July 13, 1998
Name and Address of Incorporator:
Lamont W. Jones
1013 Centre Road
Wilmington, DE 19805
JVO & Fox
From SEVU board:
FOX CONSULTING, 20 BLAZING STAR, IRVINE, CA. 91124 490,000 SHARES SERVICES PROVIDED INCLUDE SOURCING PRODUCT COMPONENTS FOR MANUFACTURING OF PRODUCTS BY REGISTRANT, TOGETHER WITH DISTRIBUTION FOR PRODUCTS.
(II) J.V.O. CONSULTING, INC., 1020 BROOKSTOWN AVE., #14, 490,000 SHARES WINSTON SALEM, N.C. 2VITIES.
----------------------------------------
http://216.239.33.100/search?q=cache:s_AWjJ1lkqEC:www.triadipages.com/s/securitybrokersdealers/inves...
Investor Resource Svc 336-723-0908 1020 Brookstown Ave # 14 Winston Salem NC 27101
To:Francois Goelo who started this subject
From: TheTruthseeker Monday, Mar 5, 2001 1:23 PM
Respond to of 1957
Searched the web for HATTIER SANFORD fraud. http://www.google.com/search?q=HATTIER+SANFORD+fraud
--------------------------------------------------
By: DD_Captain $$$
Reply To: 26510 by tomohawk $$$ Saturday, 3 Mar 2001 at 2:35 PM EST
Post # of 26548
Broker John Doria & his clients are filing 144's by the boatload.
In fact, they vastly outnumber all other filers of 144's.
Doria, located in Florida, is a broker with the New Orleans brokerage HATTIER SANFORD.
Here are the filings
CREATIVE GAMING CONS... UK 1/8/2001 25,000 HATTIER SANFORD & RE...
DORIA JOHN CUST FOR ... N 10/16/2000 8,333 HATTIER SANFORD & RE...
DORIA JOHN J CUST FO... N 2/26/2001 8,333 HATTIER SANFORD & RE...
DORIA JOHN J CUST FO... N 1/29/2001 8,333 HATTIER SANFORD & RE...
DORIA JOHN J CUST FO... N 12/19/2000 8,333 HATTIER SANFORD & RE...
DORIA JOHN J CUST FO... N 11/30/2000 8,333 HATTIER SANFORD & RE...
DORIN JOHN CUST FOR ... N 9/26/2000 8,333 HATTIER SANFORD & RE...
DORIN JOHN CUST FOR ... N 8/28/2000 8,333 HATTIER SANFORD & RE...
DORIN JOHN CUST FOR ... N 7/21/2000 8,333 HATTIER SANFORD & RE...
DORIN JOHN CUST FOR ... N 6/23/2000 8,333 HATTIER SANFORD & RE...
GLICKMAN RONALD N 11/30/2000 416 HATTIER SANFORD & RE...
GLICKMAN RONALD N 10/16/2000 416 HATTIER SANFORD & RE...
GLICKMAN RONALD N 9/26/2000 416 HATTIER SANFORD & RE...
GLICKMAN RONALD N 8/28/2000 416 HATTIER SANFORD & RE...
GLICKMAN RONALD N 7/21/2000 416 HATTIER SANFORD & RE...
GLICKMAN RONALD N 6/23/2000 416 HATTIER SANFORD & RE...
GLICKMAN RONALD N 6/8/2000 416 HATTIER SANFORD & RE...
GLICKMAN RONALD N 5/23/2000 5,000 HATTIER SANFORD & RE...
GLICKMAN RONALD E N 2/26/2001 416 HATTIER SANFORD & RE...
GLICKMAN RONALD E N 1/29/2001 416 HATTIER SANFORD & RE...
GLICKMAN RONALD E N 12/19/2000 416 HATTIER SANFORD & RE...
GLICKMAN RONALD E N 11/30/2000 416 HATTIER SANFORD & RE...
HAMILTON RONALD E & ... UK 1/29/2001 30,000 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 2/26/2001 500 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 1/29/2001 500 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 12/19/2000 500 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 11/30/2000 416 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 10/16/2000 500 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 9/26/2000 500 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 8/28/2000 500 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 7/27/2000 500 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 6/23/2000 500 HATTIER SANFORD & RE...
HORSCHEL JOSEPH SH 4/3/2000 6,000 HATTIER SANFORD & RE...
JOHN J DORIA CUST JE... N 5/30/2000 8,133 HATTIER SANFORD & RE...
JOHN J DORIA CUST JE... N 3/20/2000 100,000 HATTIER SANFORD & RE...
JVO CONSULTING INC N 9/8/2000 16,000 HATTIER SANFORD & RE...
KAIER CATHERINE SH 2/26/2001 416 HATTIER SANFORD & RE...
KAIER CATHERINE SH 1/29/2001 416 HATTIER SANFORD & RE...
KAIER CATHERINE SH 11/30/2000 416 HATTIER SANFORD & RE...
KAIER CATHERINE SH 10/16/2000 416 HATTIER SANFORD & RE...
KAIER CATHERINE SH 9/26/2000 416 HATTIER SANFORD & RE...
KAIER CATHERINE SH 8/28/2000 416 HATTIER SANFORD & RE...
KAIER CATHERINE SH 7/24/2000 416 HATTIER SANFORD & RE...
KAIER CATHERINE SH 6/23/2000 416 HATTIER SANFORD & RE...
KAIER CATHERINE SH 4/3/2000 5,000 HATTIER SANFORD & RE...
KAIER MICHAEL SH 2/26/2001 4,166 HATTIER SANFORD & RE...
KAIER MICHAEL SH 2/26/2001 333 HATTIER SANFORD & RE...
KAIER MICHAEL SH 1/29/2001 333 HATTIER SANFORD & RE...
KAIER MICHAEL SH 1/29/2001 4,166 HATTIER SANFORD & RE...
KAIER MICHAEL SH 12/19/2000 4,166 HATTIER SANFORD & RE...
KAIER MICHAEL SH 12/19/2000 333 HATTIER SANFORD & RE...
KAIER MICHAEL SH 11/30/2000 333 HATTIER SANFORD & RE...
KAIER MICHAEL SH 11/30/2000 4,166 HATTIER SANFORD & RE...
KAIER MICHAEL SH 10/16/2000 4,166 HATTIER SANFORD & RE...
KAIER MICHAEL SH 10/16/2000 333 HATTIER SANFORD & RE...
KAIER MICHAEL SH 9/26/2000 4,166 HATTIER SANFORD & RE...
KAIER MICHAEL SH 9/26/2000 333 HATTIER SANFORD & RE...
KATER MICHAEL SH 8/28/2000 333 HATTIER SANFORD & RE...
KATER MICHAEL SH 8/28/2000 4,166 HATTIER SANFORD & RE...
KATER MICHAEL SH 7/24/2000 4,166 HATTIER SANFORD & RE...
KATER MIKE SH 7/21/2000 333 HATTIER SANFORD & RE...
KATER MIKE SH 6/23/2000 4,166 HATTIER SANFORD & RE...
KATER MIKE SH 6/5/2000 4,166 HATTIER SANFORD & RE...
KATER MIKE SH 4/3/2000 50,000 HATTIER SANFORD & RE...
KATER MIKE SH 4/3/2000 4,000 HATTIER SANFORD & RE...
MITCHELL CALVIN L N 2/26/2001 8,333 HATTIER SANFORD & RE...
MITCHELL CALVIN L N 1/29/2001 8,333 HATTIER SANFORD & RE...
MITCHELL CALVIN L N 11/30/2000 8,333 HATTIER SANFORD & RE...
MITCHELL CALVIN L N 10/16/2000 8,333 HATTIER SANFORD & RE...
MITCHELL CALVIN L N 10/3/2000 8,333 HATTIER SANFORD & RE...
MITCHELL CALVIN L N 8/28/2000 8,333 HATTIER SANFORD & RE...
MITCHELL CALVIN L N 7/17/2000 8,333 HATTIER SANFORD & RE...
MITCHELL CALVIN L N 6/12/2000 8,333 HATTIER SANFORD & RE...
PATTERSON ERNEST N 2/26/2001 416 HATTIER SANFORD & RE...
PATTERSON ERNEST N 1/29/2001 416 HATTIER SANFORD & RE...
PATTERSON ERNEST N 10/16/2000 416 HATTIER SANFORD & RE...
PATTERSON ERNEST N 9/26/2000 416 HATTIER SANFORD & RE...
PATTERSON ERNEST N 9/8/2000 416 HATTIER SANFORD & RE...
PATTERSON ERNEST N 8/3/2000 416 HATTIER SANFORD & RE...
PATTERSON ERNEST N 7/10/2000 416 HATTIER SANFORD & RE...
PATTERSON ERNIE SH 4/17/2000 5,000 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 2/26/2001 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 1/29/2001 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... UK 1/8/2001 50,000 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 11/30/2000 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 10/16/2000 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 9/26/2000 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 8/28/2000 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 7/24/2000 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 6/23/2000 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... UK 5/30/2000 16,250 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 4/3/2000 195,000 HATTIER SANFORD & RE...
TUSCANO INVESTMENTS ... N 3/27/2000 50,000 HATTIER SANFORD & RE...
http://www.nasdaq.com/asp/Holdings.asp?FormType=Form144&Sele...
Doria's clients might be interested in knowing that according to the NASDR, he has a disclosure record. You can order a free copy at www.nasdr.com. Just look for JOHN JOSEPH DORIA CRD #826504
http://www.google.com/search?q=HATTIER+SANFORD+fraud
Posted by: BillBranum
In reply to: None Date:2/6/2001 5:11:06 PM
Post #of 14583
I just spoke with Rich
And would like to share his answer to my concerns about the “missing” stock. He states that when the original 5,000,000 shares were issued, 1,170,000 of these new shares went to the group responsible for bring Seaview and Gopher together. This is the source of the shares referred to in the follow quote from the 10Q filed 8/14/2000:
On April 17, 2000 the Company entered into a pooling lock up agreement with the
following parties holding 921,000 shares of restricted stock held for over one
year from the original reverse merger with Gopher, Inc.
Bon Temps Roule Inc. 230,000 shares
Gregory Fox 120,000 shares
Jason Fox 110,000 shares
Tuscano Investments 195,000 shares
John J. Doria 100,000 shares
Calvin Mitchel 100,000 shares
Catherine Kaier 5,000 shares
Joeseph Horshel 6,000 shares
Ronald Glickman 5,000 shares
The agreement restricts the sale of stock for the period April 2000 through
April 2001 to 1/12th of the total holdings. The stock is held with the Company's
transfer agent and an opinion letter is required each month for release of the
shares.
I accept Rich’s explanation of this transaction. It does seem to me a high price to pay to go public (1,000,000 shares originally outstanding in Gopher; 1,170,000 shares to the group above; and 1,430,000 to the group in the S-8 filed on 4-18-99), but I am not an expert in this area, and besides, at this point they were all Rich’s shares anyway.
In regard to the question of the Springs, I accept the explanation offered on the following link:
http://www.investorshub.com/beta/read_msg.asp?message_id=45870
All of the concerns I had about stock transactions have been answered to my satisfaction.
Bill Branum
Sevu Insiders, many same as WINR
Posted by: bulldop01Toror
In reply to: Duly Diligent who wrote msg# 2854 Date:12/14/2000 9:24:36 AM
Post #of 14583
Duly Diligent, here is the COMPLETE lis of all SEVU insider trades, proposed and actual, since March 22 of this year. A quick read tells me that you can relax, since the # of shares is small, both in comparison to the float and the total # of shares outstanding. The #s indicate to me that these people are probably doing this for tax reasons. There is no sign of an insider panic here that I can see.
JMHO Bulldop01Toror
Date Who Shares
Stock Transaction
31-Dec-00 DORIA, JENNY ELIZABETH
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $65,081.
31-Dec-00 PATTERSON, ERNIE
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,744.
31-Dec-00 HORSCHEL, JOSEPH
Shareholder 500
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,500.
31-Dec-00 TUSCANO INVESTMENTS LTD
Shareholder 16,250
SEVU Proposed Sale (Form 144).
Estimated proceeds of $146,250.
31-Dec-00 MITCHEL, CALVIN L
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $74,997.
31-Dec-00 GLICKMAN, RONALD E
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,744.
31-Dec-00 KAIER, MICHAEL
Shareholder 4,166
SEVU Proposed Sale (Form 144).
Estimated proceeds of $37,494.
31-Dec-00 KAIER, MICHAEL
Shareholder 333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $2,997.
31-Dec-00 KAIER, CATHY
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,744.
30-Nov-00 FOX, GREGORY
Shareholder 20,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $180,000.
30-Nov-00 FOX, JASON
Shareholder 45,835
SEVU Proposed Sale (Form 144).
Estimated proceeds of $360,950.
12-Nov-00 BON TEMPS ROULE INC
Shareholder 30,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $270,000.
12-Nov-00 BON TEMPS ROULE INC
Shareholder 50,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $450,000.
1-Nov-00 JOHN, J DORIA & JENNY DORIA
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $75,000.
1-Nov-00 PATTERSON, ERNIE
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,744.
1-Nov-00 HORSCHEL, JOSEPH
Shareholder 500
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,500.
1-Nov-00 TUSCANO INVESTMENTS LTD
Shareholder 16,250
SEVU Proposed Sale (Form 144).
Estimated proceeds of $146,250.
1-Nov-00 MITCHEL, CALVIN L
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $74,997.
1-Nov-00 GLICKMAN, RONALD E
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,744.
1-Nov-00 KAIER, MICHAEL
Shareholder 333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $2,997.
1-Nov-00 KAIER, MICHAEL
Shareholder 4,166
SEVU Proposed Sale (Form 144).
Estimated proceeds of $37,494.
1-Nov-00 KAIER, CATHY
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,744.
19-Oct-00 VIDEOCOM INC
Shareholder 100,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $893,800.
1-Oct-00 DORIA, JENNY ELIZABETH
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $80,000.
1-Oct-00 PATTERSON, ERNIE
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,056.
1-Oct-00 HORSCHEL, JOSEPH
Shareholder 500
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,875.
1-Oct-00 TUSCANO INVESTMENTS LTD
Shareholder 16,250
SEVU Proposed Sale (Form 144).
Estimated proceeds of $158,438.
1-Oct-00 MITCHEL, CALVIN L
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $83,330.
1-Oct-00 GLICKMAN, RONALD E
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,056.
1-Oct-00 KAIER, MICHAEL
Shareholder 333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,247.
1-Oct-00 KAIER, MICHAEL
Shareholder 4,166
SEVU Proposed Sale (Form 144).
Estimated proceeds of $40,619.
1-Oct-00 KAIER, CATHY
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,056.
22-Sep-00 PATTERSON, ERNIE
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,744.
22-Sep-00 JVO CONSULTING INC
Shareholder 16,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $144,000.
1-Sep-00 HORSCHEL, JOSEPH
Shareholder 500
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,875.
1-Sep-00 TUSCANO INVESTMENTS LTD
Shareholder 16,250
SEVU Proposed Sale (Form 144).
Estimated proceeds of $158,438.
1-Sep-00 MITCHEL, CALVIN L
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $81,247.
1-Sep-00 GLICKMAN, RONALD E
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,056.
1-Sep-00 KAIER, MICHAEL
Shareholder 333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,247.
1-Sep-00 KAIER, MICHAEL
Shareholder 4,166
SEVU Proposed Sale (Form 144).
Estimated proceeds of $40,619.
1-Sep-00 KAIER, CATHY
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,056.
26-Aug-00 BON TEMPS ROULE INC
Shareholder 50,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $600,000.
19-Aug-00 DORIA, JENNY ELIZABETH
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $83,333.
15-Aug-00 PATTERSON, ERNIE
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $5,200.
1-Aug-00 DORIA, JENNY ELIZABETH
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $100,000.
1-Aug-00 HORSCHEL, JOSEPH
Shareholder 500
SEVU Proposed Sale (Form 144).
Estimated proceeds of $6,000.
1-Aug-00 TUSCANO INVESTMENTS LTD
Shareholder 16,250
SEVU Proposed Sale (Form 144).
Estimated proceeds of $186,875.
1-Aug-00 GLICKMAN, RONALD E
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $5,408.
1-Aug-00 KAIER, MICHAEL
Shareholder 333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $4,000.
1-Aug-00 KAIER, CATHY
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $5,000.
30-Jul-00 FOX, GREGORY
Shareholder 20,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $240,000.
28-Jul-00 MITCHEL, CALVIN L
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $108,327.
21-Jul-00 PATTERSON, ERNIE
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $5,122.
7-Jul-00 MITCHEL, CALVIN L
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $129,000.
3-Jul-00 BON TEMPS ROULE INC
Shareholder 38,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $459,996.
3-Jul-00 FOX, JASON
Shareholder 18,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $219,996.
1-Jul-00 DORIA, JENNY ELIZABETH
Shareholder 8,333
SEVU Proposed Sale (Form 144).
Estimated proceeds of $100,000.
1-Jul-00 HORSCHEL, JOSEPH
Shareholder 500
SEVU Proposed Sale (Form 144).
Estimated proceeds of $6,000.
1-Jul-00 TUSCANO INVESTMENTS LTD
Shareholder 16,250
SEVU Proposed Sale (Form 144).
Estimated proceeds of $227,500.
1-Jul-00 GLICKMAN, RONALD E
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $5,980.
1-Jul-00 KAIER, MICHAEL
Shareholder 4,166
SEVU Proposed Sale (Form 144).
Estimated proceeds of $45,000.
1-Jul-00 KAIER, CATHY
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $5,000.
28-Jun-00 MCCAUGHY, HOLLY A
Shareholder 1,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $14,438.
15-Jun-00 GLICKMAN, RONALD E
Shareholder 416
SEVU Proposed Sale (Form 144).
Estimated proceeds of $3,640.
12-Jun-00 TUSCANO INVESTMENTS LTD
Shareholder 16,250
SEVU Proposed Sale (Form 144).
Estimated proceeds of $134,063.
1-Jun-00 DORIA, JENNY ELIZABETH
Shareholder 8,133
SEVU Proposed Sale (Form 144).
Estimated proceeds of $80,000.
1-Jun-00 KAIER, MICHAEL
Shareholder 4,166
SEVU Proposed Sale (Form 144).
Estimated proceeds of $40,000.
25-May-00 GLICKMAN, RONALD E
Shareholder 5,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $55,000.
28-Apr-00 TUSCANO INVESTMENTS LTD
Shareholder 195,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $2,925,000.
15-Apr-00 TUSCANO INVESTMENTS LTD
Shareholder 50,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $750,000.
1-Apr-00 HORSCHEL, JOSEPH
Shareholder 6,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $60,000.
1-Apr-00 KAIER, MICHAEL
Shareholder 4,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $40,000.
1-Apr-00 KAIER, MICHAEL
Shareholder 50,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $500,000.
1-Apr-00 KAIER, CATHY
Shareholder 5,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $50,000.
22-Mar-00 DORIA, JENNY ELIZABETH
Shareholder 100,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $1,000,000.
22-Mar-00 PATTERSON, ERNIE
Shareholder 5,000
SEVU Proposed Sale (Form 144).
Estimated proceeds of $50,000.
Utah State Bar Membership Tracking System
--------------------------------------------------------------------------------
Daniel W Jackson
Daniel W. Jackson, Attorney at Law
2157 Lincoln Street
Salt Lake City, UT, 84106-
Voice Telephone: (801)596-8338
FAX: (801)364-5645
Email:
Membership Information
Bar ID 01633
Status Active
Date Admitted 9/26/79
Ethics CLE
Utah State Bar Membership Tracking System
--------------------------------------------------------------------------------
R. Michael Otto
Otto & Rees, P.C.
2749 East Parley's Way, Suite 300
Salt Lake City, UT, 84109
Voice Telephone: (801) 467-0099
FAX: (801) 467-5844
Email: ottorees@hotmail.com
Membership Information
Bar ID 07272
Status Active
Date Admitted 10/17/95
Ethics CLE
Utah State Bar Membership Tracking System
--------------------------------------------------------------------------------
Cindy Shy
Cindy Shy, PC
2157 S Lincoln Street, Suite 202
Salt Lake City, UT, 84106-
Voice Telephone: (801) 323-2392
FAX: (801) 364-5645
Email: cshypc@hotmail.com
Membership Information
Bar ID 07624
Status Active
Date Admitted 10/15/96
Ethics CLE
PHI MUtual Ventures
April 01, 2002
WORLDWIDE WIRELESS NETWORKS INC (WWWN.OB)
Annual Report (SEC form 10KSB)
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements, including all notes attached to these statements, which appear at the end of this filing. In addition to historical information, the discussion here and elsewhere in this filing contains some forward-looking statements. These statements by their nature involve risks and uncertainties, and should not be construed to imply any promise, certainty or likelihood that these results or trends will necessarily continue in the future. Our actual results in the future may differ significantly from those anticipated by these forward-looking statements, due to many factors including those set out in the "Risk Factors," "Business" and other sections of this filing.
PLAN OF OPERATION.
-
During fiscal year 2002, we plan to continue our efforts on establishing profitability within Orange County, California. We have modified our previous business plan of that called for a concentration on expansion, and we will instead be emphasizing our efforts in further developing our operations in Orange County, California.
We currently do not generate sufficient cash flows to support our current operations. The revenue generated from our operations can only fund approximately 60% of our current operational related expenses and current debt obligations. In order for us to meet our cash requirements over the next twelve months, cost reduction measures must continue to be implemented, sales must increase, and additional funding must be obtained either from our $20,000,000 equity line and/or other private investments.
We are not currently engaged in any product research and development.
We currently have approximately $10,000 of excess Adaptive Broadband equipment that we are in the process of disposing at a discount. During fiscal year 2001, we disposed of approximately $180,000 of Adaptive Broadband equipment at discounts of up to 50%.
We also do not anticipate a significant change in the number of our employees.
OVERVIEW.
We are a networking solutions company that provides high speed Internet access using our own wireless network, frame relay circuits, data center services and network consulting. Since April 1999 we have had large-scale commercial operations and have developed a commercial customer base, a direct sales force and have expanded our wireless network. Our primary market is currently Orange County, California, where we operate our wireless network. Since inception we have operated at a net loss, due primarily to our investment in expanding our network coverage. Management believes that efforts to continue expansion will result in additional losses from which recovery will be difficult. Therefore, we have temporarily discontinued our expansion efforts beyond our existing Orange County operations. We plan to resume expansion efforts after we have established profitability in Orange County. There can be no assurance that we will be able to access either debt or equity capitalization in sufficient
amounts or on acceptable terms to continue to fund operations and continue growth of our customer base. We have a $20,000,000 equity line with Whitsend Investments Limited, of which approximately $326,000 was utilized in fiscal 2001, that may be utilized on an as-needed basis with certain limitations. If we were unable to access this capital, or any other capital for current operations, then we would be unable to continue our operations.
Revenues. We generate revenues primarily through the sale of annuity-like service contracts with customers, the sale and installation of wireless networks, and network consulting including sales of networking equipment. We recognize revenues when services are completed. We believe that growth in revenue will come from additional penetration in markets currently served by existing networks, expansion of complimentary product lines to existing and new customers, and geographic expansion using currently deployed technologies. We have spent, and intend to continue to spend, significant resources on these activities.
Cost of Sales. Cost of sales consists of third-party network usage and other - outsourced service costs, cost of equipment sold, and the cost of roof rights. Third-party network costs are expensed in the period when services are rendered and are generally proportional to the number of customers. We do not currently anticipate that inflation will have a material impact on our results of operations.
Sales and Marketing. Sales and marketing expenses include salaries, sales - commissions, employee benefits, travel and related expenses for our direct sales force, fees paid to third-party sales agents, marketing and sales support functions. In an effort to increase our revenues, user base and brand awareness, we expect to increase significantly the amount of spending on sales and marketing over the next year. Marketing costs associated with increasing our user base, which to date have been minimal, are expensed in the period incurred.
General and Administrative. General and administrative expenses include salaries, employee benefits and expenses for our executive and finance personal, depreciation of network equipment, technical staff costs, legal, and human resources personnel. Investment in network equipment is related primarily to geographic network expansion and incremental customer installations, which result in increased depreciation expense in future periods. In addition, general and administrative expenses include fees for professional services and occupancy costs. We expect general and administrative expenses to increase in absolute dollars as we continue to expand our administrative infrastructure to support the anticipated growth of our business, including costs associated with being a public company.
REVERSE MERGER TREATMENT.
Effective April 1, 1999, Pacific Link Internet, Inc. (Pacific) (a private company) was acquired by Worldwide Wireless Networks, Inc. (Worldwide) (a public company). Worldwide issued 7,000,000 shares to the shareholders of Pacific in exchange for all shares of Pacific, thus making it a wholly owned subsidiary of Worldwide. The agreement provides for the acquisition to be treated as a reverse acquisition, thus making Pacific the accounting survivor. Because the historical financial information in these financial statements prior to the reverse acquisition (April 1,1999) is that of the accounting acquirer (Pacific), a forward stock split of 14 for 1 has been retroactively applied to show the
effects of the 7,000,000 share issuance as though it happened ratably since inception of Pacific. The management of Worldwide resigned and the management and board of Pacific filled the vacancy.
In January 1999, $1,000,000 was advanced to Worldwide Wireless from investors as an investment. Of the 4,199,988 shares issued, 200,000 post merger shares were issued to the investors in relation to the $1,000,000 investment.
BRIDGE TECHNOLOGY
-
We entered into an agreement with Bridge Technology, Inc. on June 28, 2000. Under this Agreement, we issued 300,000 shares of restricted common stock for 150,000 restricted shares of Bridge Technology common stock. The shares were issued as restricted in accordance with the Securities and Exchange Commission Regulation 144. During the second quarter ended June 30, 2001, we were notified by Bridge Technology that they unilaterally cancelled the 150,000 share stock certificate issued to us without our consent. We view this as an illegal and fraudulent action. At this time we are contemplating our options ranging from further negotiations to possible litigation.
We have taken an other-than-temporary loss of $1,050,000 on our original investment in Bridge Technology of $1,200,000 , of which $550,000 are recorded on our year-end December 31, 2001 financial statements. The original other-than-temporary loss of $500,000 was recorded on our year-end December 31, 2000 financial statements. Our investment in Bridge Technology suffered losses because of weak market conditions. The original price per share of $8.00 in July 2000 suffered from a continuous decline down to $1.14 by the end of December 2001. Based upon market forecasts and the slim probability of a reverse trend, our management recognized a permanent write down from $4.67 to $1.00 per share to arrive at an investment carrying value of $150,000 or $1.00 per share.
RECENT DEVELOPMENTS.
-
On October 27, 1999, we entered into a contract to purchase wireless telecommunications equipment from Adaptive Broadband Corporation. Pursuant to the agreement we committed to purchase 2,624 units, 5,120 units and 7,760 units during the first, second and third years of the agreement, respectively. Units consist of subscriber units or access points. Subscriber units refer to individual customers and access points refer to POPs. The agreement may be terminated by written notice from either party for occurrence of several specific events, notably, if either party is not satisfied with the performance of the other party. On February 15,2001 an agreement was reached with Adaptive Broadband Corporation to terminate the purchase contract and return certain equipment previously acquired which was accomplished in the first quarter of 2001. This resulted in a reduction in both inventory and accounts payable of approximately $1,485,240 in the first quarter of 2001. The termination of this agreement is not expected to have any material impact on our continuing operations, and we incurred a restocking fee of $15,000.
On June 28, 2000, Worldwide Wireless issued 300,000 shares of its common stock valued at $1,200,000 to Bridge Technology, Inc. in exchange for 150,000 shares of Bridge Technology, Inc. stock valued at $1,200,000 based on the quoted stock
prices on the market at the time of exchange. As of December 31, 2001, Worldwide Wireless recorded at total of $1,050,000 of losses on this investment, an investment available for sale. The aggregate fair market value of Bridge Technology, Inc was $150,000. A loss of $550,000 in 2001 and $550,000 in 2000 has been recognized due to management's determination that this decline in value is permanent.
On January 5, 2000 we issued 250,000 restricted common shares to Pacific First National Corp., Inc. in consideration of Five Hundred Thousand Dollars ($500,000.00). The transaction was exempt pursuant to Sections 3 and 4 of the Securities Act of 1933 and applicable state exemptions.
Pursuant to an Acquisition Agreement and Plan of Merger (the "Merger Agreement") dated as of February 10, 2000 between Worldwide Wireless and Tarrab Capital Group ("TCG"), a Nevada corporation, all the outstanding shares of common stock of TCG were exchanged for 5,000 shares of our 144 restricted common stock in a transaction in which we were the successor corporation and TCG will cease to exist. A copy of the Merger Agreement and Certificate of Merger were filed as exhibits to the Form 8-K filed in February, 2000.
On February 10, 2000, we issued 200,000 restricted common shares to Mutual Ventures Corporation in consideration of $400,000 in legal fees paid to Sperry, Young & Stoecklein for services rendered in connection with the Tarrab Capital Group Merger. Mutual Ventures Corporation paid for these legal services on our behalf. The issuance of these shares was exempt from registration under the Securities Act of 1933 by reason of Section 4(2) as a private transaction not involving a public distribution.
On March 13, 2000 we issued 8,000 restricted common shares to Universal Business Insurance, Inc. in consideration of an officer and director liability insurance policy valued at $33,000.00. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On April 17, 2000, Worldwide Wireless awarded 915 shares to Robert P. Kelly, Jr. and Mimi Grant, joint owners of Southern California Technology Executive Network in compensation for its membership in that organization. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On May 15, 2000 we issued 100,000 restricted common shares to The Oxford Group, Inc. in consideration of $250,000 in cash. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On May 25, 2000, we issued 144,887 shares of common stock for cash of $500,000 at $3.45 per share, from a private investor on June 30, 2000. We subsequently recalled the shares and the $500,000 was rolled into an agreement to sell $1,000,000 of convertible debentures and warrants to AMRO International, S.A. and Trinity Capital Advisors, Inc. A condition of the purchase is that we must register the shares of common stock underlying these debentures and warrants with the SEC. These investors are selling stockholders in this filing. (See Item 6: Subsequent Events below) The transaction was exempt from registration
pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On June 1, 2000, we issued 20,157 shares of common stock to Schumann & Associates in consideration of legal and management services rendered between October 1999 and May 31, 2000, which were valued at $46,865. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On June 1, 2000, Worldwide Wireless Networks, Inc. issued 25,000 shares of common stock for services valued at $58,125. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On June 14, 2000, Worldwide Wireless Networks, Inc. issued 5,000 shares of common stock for services valued at $17,250. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
Whitsend Investments Limited, a British Virgin Islands corporation, entered into a Private Equity Line of Credit Agreement with us, dated as of June 19, 2000, for the future issuance and purchase of shares of our common stock. The purpose of this agreement is to provide Worldwide Wireless with the ability to access and draw down funds when we need them for working capital, up to the maximum amount of $20 million, under the conditions specified in the agreement. Under that agreement, Whitsend Investments Limited has committed to purchase up to the $20 million worth of shares of our common stock over a three-year period. Once every 15 trading days we may request a draw of up to $500,000 of that amount.
On June 30, 2000 Worldwide Wireless Networks, Inc. went into default on a secured promissory note. The secured promissory note was entered on May 1, 2000 with PHI Mutual Ventures, LC. PHI Mutual Ventures, LC loaned us $100,000 under a secured promissory note bearing interest at 12% per annum. The promissory note became due on June 30, 2000, and began to accrue a late interest rate of 18% per annum. As of the date of this filing, we are in default on the principal and interest in the amount of $126,608, which indebtedness exceeds 5% of our total assets. We are currently negotiating with PHI Mutual Ventures, LC to obtain an extension on the promissory note, however there can be no assurance that these negotiations will be successful.
On July 10, 2000, Worldwide Wireless Networks, Inc. issued 5,000 shares of common stock for services valued at $15,000. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On July 12, 2000, we agreed to issue warrants to Columbia Financial Group, Inc. in consideration for services rendered on our behalf. The warrants are exercisable for an aggregate of 600,000 common shares. The services which Columbia Financial Group, Inc. performed for us involved the preparation and dissemination to our shareholders, the media and others, information concerning Worldwide Wireless and our activities. Based upon our negotiation of, and entry into some agreements with, other companies providing or offering to provide these services to us for only cash, as well as our understanding of which Columbia Financial Group, Inc. charges to other clients in cash for the same type of services, we value the service provided to us by Columbia Financial
Group, Inc. at approximately $10,000 per year of service. The issuance of these shares was exempt from registration under the Securities Act of 1933 by reason of Section 4(2) as a private transaction not involving a public distribution.
On July 19, 2000, Worldwide Wireless Networks, Inc. issued 125,000 shares of common stock for cash of $250,000 at $2.00 per share. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On January 25,2001, Worldwide Wireless Networks, Inc. went into default on a secured promissory note. The secured promissory note was entered on October 24, 2000 with Mutual Ventures Corporation. The principal value of the secured promissory note is $200,000 bearing interest at 12% per annum. The promissory note became due on January 24, 2001, and began to accrue a late interest rate of 18% per annum. As of the date of this filing, we are in default on the principal and interest in the amount of $234,800, which indebtedness exceeds 5% of our total assets. We are currently negotiating with Mutual Ventures Corporation to obtain an extension on the promissory note, however there can be no assurance that these negotiations will be successful.
On January 31, 2001 , Worldwide Wireless Networks, Inc. issued 262,500 shares of common stock for services valued at $65,625. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On February 12, 2001, the SEC declared effective our Form SB-2/A Registration Statement registering 11,970,060 shares if its common stock. All proceeds from the sale of common stock under this filing will go to the selling stockholders. We will not receive any proceeds from the sale of common stock. Of the 11,970,060 shares offered in the February 12, 2001 filing, 1,225,000 shares are issuable upon the exercise of warrants and 930,525 are issuable upon the conversion of convertible debentures. (See: Item 5: Market for Common Equity and Related Stockholder Matters - Use of Proceeds from SB-2/A, declared effective February 12, 2001.)
On February 16, 2001, Worldwide Wireless issued 277,391 shares of common stock in exchange for conversion of $51,000 notes payable due AMRO International, S.A. and Trinity Capital Advisors, Inc. plus accrued interest of $2,259 for a total consideration of $53,258.
On February 23, 2001, Worldwide Wireless issued 118,686 shares of common stock in exchange for conversion of $20,000 notes payable due Trinity Capital Advisors, Inc. plus accrued interest of $34 for a total consideration of $20,035.
On February 28, 2001, Worldwide Wireless issued 479,217 shares of common stock in exchange for conversion of $50,000 notes payable due Trinity Capital Advisors, Inc. plus accrued interest of $1,755 for a total consideration of $51,755.
On March 8, 2001, Worldwide Wireless issued 543,423 shares of common stock in exchange for conversion of $40,000 notes payable due AMRO International, S.A. plus accrued interest of $1,952 or a total consideration of $41,952.
On March 16, 2001 World Wide Wireless Networks, Inc. went into default on a secured promissory note. PHI Mutual Ventures, LC loaned us $1,000,000 under a secured promissory note bearing interest at 11% per annum on March 15, 2000. The promissory note became due on March 15, 2001, and began to accrue a late interest rate of 18% per annum. As of the date of this filing, we are in default on the principal and interest in the amount of $1,262,524, which indebtedness exceeds 5% of our total assets. We are currently negotiating with PHI Mutual Ventures, LC to obtain an extension on the promissory note, however there can be no assurance that these negotiations will be successful.
On March 16, 2001, we submitted a new filing with the SEC that we subsequently amended on March 30, 2001. We are registering 17,562,500 shares of common stock. (See: Item 5 - Market for Common Equity and Related Stockholder Matters).
On March 29, 2001, Worldwide Wireless issued 200,000 shares of common stock for services valued at $28,000.
On March 31, 2001, Worldwide Wireless issued 553,582 restricted common shares to Universal Business Insurance, Inc. in consideration of an officer and director liability insurance policy valued at $77,502. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On April 1, 2001, Worldwide Wireless issued 1,420,454 shares if common stock for cash of $118,509 to Whitsend Investments Limited under our Private Equity Line of Credit.
On April 3, 2001, Worldwide Wireless issued 631,313 shares if common stock for cash of $46,500 to Whitsend Investments Limited under our Private Equity Line of Credit.
On April 17, 2001, Worldwide Wireless issued warrants to purchase 250,000 shares of common stock to Pacific Industrial Partners as part of the settlement agreement discussed at ITEM 3 - Legal Proceedings.
On May 31, 2001, Worldwide Wireless issued 1,893,940 shares if common stock for cash of $47,985 to Whitsend Investments Limited under our Private Equity Line of Credit.
On June 14, 2001, the SEC declared effective our filing (Number 333-57108) in which we registered 19,804,274 shares of common stock. All proceeds from the sales of common stock under the SB-2/A will go to the selling stockholders. We may, however, receive proceeds from the exercise of warrants described in the SB-2/A, should the holders of the warrants choose to exercise them (which is solely in the holder's discretion). Of the 19,804,274 shares offered in the SB-2/A, 16,000,000 may be issuable upon the conversion of the convertible debentures, 1,000,000 shares are issuable upon the exercise of warrants. (See: Item 5: Market for Common Equity and Related Stockholder Matters - Use of Proceeds from SB-2/A, declared effective June 14, 2001.)
On June 21, 2001, Worldwide Wireless issued 800,477 shares of common stock in exchange for conversion of $18,500 notes payable due Trinity Capital Advisors, Inc. plus accrued interest of $1,352 for a total consideration of $19,851.
On June 28, 2001,Worldwide Wireless issued 1,119,970 shares of common stock in exchange for conversion of $18,000 notes payable due AMRO International, S.A. plus accrued interest of $1,264 for a total consideration of $19,264
On July 9, 2001, Worldwide Wireless issued 1,515,152 shares if common stock for cash of $19,185 to Whitsend Investments Limited under our Private Equity Line of Credit.
On July 9, 2001, Worldwide Wireless issued 1,029,552 shares of common stock in exchange for conversion of $13,000 notes payable due Trinity Capital Advisors, Inc plus accrued interest of $1,002 for a total consideration of $14,002
On July 17, 2001, Worldwide Wireless issued warrants to purchase 250,000 shares of common stock to Pacific Industrial Partners as part of the settlement agreement discussed at ITEM 3 - Legal Proceedings
On July 18, 2001, Worldwide Wireless issued 1,957,008 shares of common stock in exchange for conversion of $22,500 notes payable due Trinity Capital Advisors, Inc. plus accrued interest of $1,767 for a total consideration of $24,267
On July 19, 2001, Worldwide Wireless issued 3,466,666 shares of common stock in exchange for conversion of $40,000 notes payable due AMRO International, S.A. plus accrued interest of $2,987 for a total consideration of $42,987
On July 19, 2001, Worldwide Wireless issued 935,017 shares of common stock in exchange for conversion of $11,400 notes payable due Trinity Capital Advisors, Inc. plus accrued interest of $840 for a total consideration of $12,240
On July 20, 2001, Worldwide Wireless issued 3,467,293 shares of common stock in exchange for conversion of $40,000 notes payable due AMRO International, S.A. plus accrued interest of $2,994 for a total consideration of $42,994
On July 26, 2001, Worldwide Wireless issued 1,242,937 shares of common stock in exchange for conversion of $14,300 notes payable due Trinity Capital Advisors, Incplus accrued interest of $1,112 for a total consideration of $15,412
On August 1, 2001, Worldwide Wireless issued 2,272,728 shares if common stock for cash of $46,500 to Whitsend Investments Limited under our Private Equity Line of Credit.
On August 6, 2001, Worldwide Wireless issued 55,358 restricted common shares to Universal Business Insurance, Inc. in additional consideration of an officer and director liability insurance policy valued issued in March 2001 The additional consideration was valued at $783. The transaction was exempt from registration pursuant to 4(2) of the Securities Act of 1933 as a private offering not involving any public distribution.
On August 6, 2001, Worldwide Wireless issued 2,309,940 shares of common stock in exchange for conversion of $30,000 notes payable due AMRO International, S.A. plus accrued interest of $2,339 for a total consideration of $32,339
On August 9, 2001, Worldwide Wireless issued 2,202,746 shares of common stock in exchange for conversion of $27,770 notes payable due AMRO International, S.A. plus accrued interest of $2,187 for a total consideration of $29,957
On September 17, 2001, Worldwide Wireless issued 1,242,898 shares if common stock for cash of $32,601 to Whitsend Investments Limited under our Private Equity Line of Credit
On October 17, 2001, Worldwide Wireless issued warrants to purchase 250,000 shares of common stock to Pacific Industrial Partners as part of the settlement agreement discussed at ITEM 3 - Legal Proceedings
On October 18, 2001, Worldwide Wireless issued 713,050 shares if common stock for cash of $14,443 to Whitsend Investments Limited under our Private Equity Line of Credit
LIQUIDITY AND CAPITAL RESOURCES.
Since Pacific Link's inception, it has financed its operations primarily through the private placement of equity securities, loans, leasing arrangements, cash-flow from operations and the merger completed with Worldwide Wireless in April 1999. As of December 31, 2001 cash reserves totaled $52,383 with total current assets of $239,341.
We have posted operating losses since inception. Our long-term debt was $603,530 as December 31, 2001. Our current liabilities for that same date were $4,788,852 of which $2,201,456 accounts for the current portion of, our long term liabilities discussed above, and $1,284,857 is attributable to current accounts payable. We anticipate a reduction of approximately $14,960 in March 2002, due to the expiration of certain capital lease obligations. We have paid interest rates ranging from 15.5% to 32.5%, or an average of 21.7%, on such obligations as a new company without a credit history.
As of December 31, 2001, our principal commitments consisted of office, roof-rights payments, and equipment leases. Future minimum principal payments on notes payable were approximately, $2,186,497 in 2002, and $603,530 in 2003. Future minimum capital lease payments were $15,954 through 2002. Future minimum operating lease payments at December 31, 2000 were $874,814. with payments due through the end of fiscal years 2002 and 2003 of $366,210 and $319,801, respectively.
The consolidated cash flows show net cash used for our operating activities for the fiscal year ended December 31, 2001 was $474,260. Net cash used for operating activities consisted primarily of net operating losses and network asset purchases. Net cash provided by our financing activities was $600,991 during the same period. Net cash provided by financing activities was principally attributable to the sale of debt and equity securities.
We expect to continue to incur significant capital expenditures in the future in our current market of Orange County, including additions and enhancements to our server and network infrastructure, software licenses and furniture, fixtures and equipment. The actual amount of capital expenditures will depend on the rate of growth in our user base and available resources, which is difficult to predict
and which could change dramatically over time. Technological advances may also require us to make capital expenditures to develop or acquire new equipment or technology. We anticipate that funding for these activities will come from our equity line of credit, as well as the development of strategic alliances.
Worldwide Wireless' current business plan concentrates on the continued development of our Orange County, California network and expansion of our customer base to achieve a positive operational cash flow, which is a continuation of our business goals as of December 31, 2001. We have curtailed our expansion in Los Angeles County as described above.
Whitsend Investments Limited, a British Virgin Islands corporation, entered into a Private Equity Line of Credit Agreement with us, dated as of June 19, 2000, for the future issuance and purchase of shares of our common stock. The purpose of this agreement is to provide Worldwide Wireless with the ability to access and draw down funds when we need them for working capital, up to the maximum amount of $20 million, under the conditions specified in the agreement. Under that agreement, Whitsend Investments Limited has committed to purchase up to the $20 million worth of shares of our common stock over a three-year period. Once every 15 trading days we may request a draw of up to $500,000 of that amount. If we elect to receive any of these funds, we will fix a specific date on which to calculate the appropriate price to charge Whitsend Investments Limited for our shares. This price will be calculated using a formula based on the average trading price of our common stock for the five-day period starting two days before the calculation date and ending two days after it. Each draw must be for at least $75,000. Once the relevant average trading price for that period is calculated, Whitsend Investments Limited receives a discount on the purchase of our shares equal to twelve percent of this amount During fiscal 2001, we utilized this line for a total capital investment of $326,339 by issuing 9,689,535 shares of capital stock.
We have investigated the availability, source and terms for external debt financing and are exploring options which may be available to us. However, we cannot assure that we will be able to obtain such financing on terms agreeable to us. Also, the acquisition of funding through the issuance of debt could result in a substantial portion of our cash flows from operations being dedicated to the repayment of principal and interest on the indebtedness, and could render us more vulnerable to competitive and economic downturns.
Any future securities offerings will be effected in compliance with applicable exemptions under federal and state laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. After determination of the availability of debt financing we may elect to offer securities and, accordingly, will determine the type of offering or the type or number of securities which we will offer at that time. However, we can not assure that a future securities offering will be successful. We have no plans to make a public offering of our common stock at this time. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock.
During fiscal year 2002, we plan to focus our efforts on establishing profitability within Orange County, California. We have modified our business goal of concentrating on expansion, and will only enhance our Orange County network at this time.
RESULTS OF OPERATIONS.
-
The following table sets forth selected consolidated statements of operating data as a percentage of total revenues:
Year Ended
Dec 31 Dec 31 Dec 31 Dec 31, Dec 31,
1997 1998 1999 2000 2001
--------- --------- ----------- ----------- -----------
Revenues. . . . . . . . . . $271,841 $841,841 $1,980,203 $3,351,878 $1,965,924
AS A PERCENTAGE OF REVENUES
Cost of sales . . . . . . . $189,382 $430,600 $ 972,802 $2,292,996 $1,054,623
69.7% 51.1% 49.1% 68.4% 53.6%
Gross profit. . . . . . . . $ 82,459 $411,241 $1,007,401 $1.058,882 $ 911,200
30.3% 48.9% 50.9% 31.6% 46.4%
Operating expenses: Selling . . . . . . . . . $ 68,827 $158,592 $ 616,022 $ 836,088 $ 304,657
25.3% 18.8% 31.1% 24.9% 15.5%
General and administrative $154,596 $549,987 $2,417,450 $3,990,987 $3,270,704
56.9% 65.3% 122.1% 119.1% 166.4%
Total operating expenses . $223,423 $708,579 $3,033,472 $4,827,075 $3,575,361
82.2% 84.2% 153.2% 144.0% 181.9%
Loss from operations . . . . $140,964 $297,338 $2,026,071 $3,768,193 $2,664,060
51.9% 35.3% 102.3% 112.4% 135.6%
Other income (expense), net $(12,529) $(32,045) $ (25,181) $ (887,179) $ (974,224)
4.6% 3.8% 1.3% 25.6% 49.5%
Net loss . . . . . . . . . . $153,493 $330,183 $2,051,252 $4,655,372 $3,638,284
56.5% 39.2% 103.6% 138.9% 201.9%
TWELVE MONTHS ENDED DECEMBER 31, 2001 AND 2000
Revenues for the period ended December 31, 2001 were $1,965,823, which represented an decrease of $1,386,055 from $3,351,878 for the period ended December 31, 2000. The decrease was primarily attributable to discontinuing our dial-up and DSL services as well as decreased equipment sales. In 2000 dial-up services were $98,502, DSL services were $170.968, and equipment sales $943,302 a decline of $718,515 for 2001. Wireless customers generated approximately $1,275,936 of our total revenues for such period. Frame circuits customers generated approximately $426,325 of our total revenues and equipment sales
generated $224,787 of our total revenues for the period. The balance of $38,775 resulted from other services, including co-location, and consulting services.
Cost of sales for the fiscal year ended December 31, 2001 was $1,054,623 which represents an decrease of $1,382,393 from $2,292,996 recorded for the period ended December 31, 2000. The decrease was primarily attributable to decreased third-party network service expense on a per customer basis and a decrease in cost of equipment purchased for resale.
Selling expenses for the fiscal year ended December 31, 2001 were $304,657, which represented a decrease of $531,431 from $836,088 for the period ended December 31, 2000. The decrease was primarily due to the company restructuring which commenced in late fiscal 2000 and was completed in 2001 which resulted in a reduction in sales personal and a change in compensation arrangements
General and administrative expenses for the 2001 fiscal year were $3,270,704, which represented a decrease of $720,283 from $3,990,987 for fiscal year 2000. The decrease was primarily due to the company reorganization, staff reductions, and a decrease in legal, professional and outside services as expenses related to being a public company stabilized. We expect slight increases in our general and administrative expenses due to increased advertising and staff additions as our cash flow permits.
Interest expense consists primarily of interest expense on notes payable and capital equipment leases. Interest expense for fiscal year 2001 was $399,301 which represented a increase of $212,806 from interest expense of $186,495 for fiscal year 2000. The increase was primarily attributable to the interest expense on the $2,097,725 of additional long-term debt incurred during the twelve months ended December 31, 2000 of which funds were used to continue expansion and increase the customer base in our existing market.
Cindy Shy, P.C.
A professional law corporation
525 South 300 East
Salt Lake City, Utah 84111
Telephone (801) 323-2392
EPAT -Earth Products & Technologies Inc
525 SOUTH 300 EAST
SALT LAKE CITY, UT 84111
Phone: (801) 323-2394
John W Peters CB/PR/CEO
PHI Mutual Ventures, LLC. BO
Mutual Ventures Corporation BO
Ariika Mason SEC/TR/DIR
TTPC -- Trade The Planet Corporation
525 South 300 East
Salt Lake City, UT 84111
Phone: 801-323-2395
GWIV - Global Investments Inc525 South 300 East Suite 201
Salt Lake City, UT 84111
Phone: 801-323-2395
11/17/1998/A//BRTW//Brick Tower Corporation/11/17/1998///(801) 323-2395
11/17/1998/A//HYAM//Hystar Aerospace Marketing Corp of Oregon/11/17/1998///(801) 323-2394
Cindy Shy, P.C.
A professional law corporation
--------------------------------------------------------------------------------
525 South 300 East * Salt Lake City, Utah 84111 * Telephone (801) 323-2392
February 18, 2000
James M. Daly
Assistant Director
United States Securities and Exchange Commission
Washington, D.C. 20549
RE: Winners Internet Network, Inc.
Form 10-SB filed December 23, 1999
File No. 0-28641
Dear Mr. Daly,
Winners Internet received its first comment letter from your office regarding the above identified registration statement on February 17, 2000. Winners Internet acknowledges that the 60 day comment period will pass before it will be able to address such comments. Accordingly, Winners Internet withdraws the registration statement pending resolution of the pending comments and requests your prompt consent to such withdrawal prior to the effective date of February 22, 2000.
It is the intention of Winners Internet to refile the registration statement addressing the pending comments and recent changes in the direction of Winners Internet.
This letter is countersigned by David Skinner, Jr., President of Winners Internet who is authorized to take this action.
Thank you for your cooperation in this matter.
Sincerely,
/s/ Cindy Shy
Cindy Shy
Attorney
WINNERS INTERNET NETWORKS, INC.
/s/ David Skinner, Jr.
By: ________________________________
David Skinner, Jr.
President
Wall Street Reporter
http://ftp.sec.gov/litigation/litreleases/lr15950.txt
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 15950 /October 27, 1998
SECURITIES AND EXCHANGE COMMISSION v. STARWOOD MEDIA GROUP,
INC., and JACK MARKS a/k/a JACOB MESTECHKIN, 98 Civ. 7659
(RO) (S.D.N.Y.)
The Commission sued a New York public-relations firm
and its owner for disseminating information about stocks on
their website, Stock-Line.com, without fully and accurately
disclosing that the featured companies had paid for the
touts. Jack Marks, formerly named Jacob Mestechkin, heads
Starwood Media Group, a small firm in lower Manhattan.
Starwood also publishes a monthly print version of the
internet site, Wall Street Reporter, which is distributed
free of charge. The Commission's complaint alleges that
Starwood's publications do not accurately describes the
compensation arrangements with featured companies, as
follows. At least three of the featured companies have paid
consideration to Starwood Media, in cash, stock, or options,
exceeding $10,000 in value. The three companies are a
start-up motorcycle manufacturer, American Quantum Cycles,
Inc.; a golf-course developer, Golf Ventures, Inc.; and a
technology personnel firm, Infocall Communications Corp.
The stocks of all three companies trade on the Over-the-
Counter bulletin board.
Stock-Line's disclosure, buried in a mislabeled
linkage, understates the amount of compensation received for
the touts, and fails to disclose Starwood's receipt of
potentially valuable options. The disclosure in the Wall
Street Reporter is also misleading in stating the featured
companies either "have purchased or may purchase" investor
relations services, when all companies have paid to appear
in the journal. According to the Commission's complaint,
Marks was on notice of the disclosure requirements, and
persisted in his unlawful conduct even after consulting an
attorney on the legal basis for a competitor's disclosure of
specific amounts of stocks and options from featured
companies. The Commission is seeking permanent injunctive
relief and penalties based on the alleged violations of
Section 17(b) of the Securities Act.
Without admitting or denying the allegations in the
Complaint, defendants Marks and Starwood have consented to
the entry of an order permanently enjoining them from
violations of Section 17(b) and requiring them to pay a
civil penalty of $15,000.
*********************************************************
Winners Internet Network, Inc. 'Wall Street Reporter' Interview on the Internet Available on Stock-Line.com.
ST. AUGUSTINE, Fla./ Nov. 3, 1998 /Business Wire.
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=13855609
Winners Internet Network, Inc. 'Wall Street Reporter' Interview on the Internet Available on Stock-Line.com
ST. AUGUSTINE, Fla./ Nov. 3 /Business Wire / -- Winners Internet Network, Inc. (OTC BB: WINR) today said that David C. Skinner, Jr., the Company's President and CEO, was interviewed this week by Stock-Line, the stock traders' news network.
Upon giving an overview of the services that Winners Internet Network, Inc. (WINR) provides to the on-line gaming industry, Mr. Skinner discussed its current contracts with Interbet Casino http://www.interbetcasino.com TISS http://www.cyberbookis.com and other business opportunities the company is pursuing. Other highlights that were discussed were those of the benefits gaming operators and customers will receive including the use of multi- currencies in Internet processing also encompassing current and future plans and growth for the company. The entire interview highlighting Winners Internet Network, Inc. can be heard on the Internet at Stock-Line's web site @ http://www.stock-line.com
WINR, headquartered in St. Augustine, Fla, is a company which has developed an Internet banking financial structure. The company is engaged in on-line processing for Internet gaming operations as well as other business applications concerning Internet commerce.
Information contained in this news release other than historical information, should be considered forward-looking and is subject to various risk factors and uncertainties. For instance, the strategies and operations of Winners Internet Network, Inc. involve risks of competition, changing market conditions, changes in laws and regulations affecting these industries and numerous other factors discussed in this release. Accordingly, actual results may differ materially from those in any forward-looking statements.
Contact:
Columbia Financial Group, Inc.
Telephone: 888-301-6271
Company website: http://www.cfgstocks.com
Skousen Settlement
http://www.sec.gov/litigation/litreleases/lr17379.htm
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO.17379 / February 25, 2002
SECURITIES AND EXCHANGE COMMISSION v. CHRISTINA SKOUSEN, individually and doing business as CSK SECURITIES RESEARCH, No. C02-894 VRW (USDC N.D. CALIFORNIA).
The Securities and Exchange Commission announced that it filed a settled injunctive action on February 22, 2002 against California resident Christina Skousen, individually and doing business as CSK Securities Research.
The Commission's complaint alleged that between May 1999 and December 2000, Skousen, a self-styled "analyst," wrote fraudulent research reports touting eight microcap companies. Skousen's reports for seven of the companies contained false and misleading revenue, income and earnings. The revenue projections exceeded the companies' most recently reported revenue figures by as much as 260,913%, and exceeded the companies' most recently reported income figures by as much as 30,089%. Skousen's reports additionally failed to disclose that six of the companies required significant additional financing, which was not assured, to implement their business plans or continue in operation. Skousen's reports for the same seven companies also contained arbitrary projected stock prices, which exceeded the companies' current stock prices by as much as 18,650%. In addition, Skousen falsely represented that one company was "well-capitalized" when it had previously disclosed that it required additional working capital in order to continue as a going concern. Moreover, Skousen, who typically was paid in cash for all of the reports, failed to disclose her receipt of compensation in two instances where she personally published the reports.
The Commission's complaint alleges that Skousen violated Section 17(b) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks an injunction against Skousen and disgorgement of $30,000 and prejudgment interest and third-tier civil penalties. Without admitting or denying the Commission's allegations, Skousen has consented to the entry of an order that would enjoin her from future violations of the foregoing provisions and directing her to pay disgorgement and prejudgment interest. Under the proposed order, Skousen would not be required to pay disgorgement or civil penalties based on her demonstrated inability to pay.
Skousen Complaint
http://www.sec.gov/litigation/complaints/complr17379.htm
MICHAEL R. MACPHAIL (Colo. Attorney Reg. No. 26382)
KELLI FARRAND CHAN (Colo. Attorney Reg. No. 19756)
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
1801 California Street, Suite 4800
Denver, Colorado 80202
Telephone: (303) 844-1000
Fax: (303) 844-1010
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
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SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
CHRISTINA SKOUSEN, individually and
doing business as CSK Securities Research,
Defendant.
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CIVIL ACTION NO.
COMPLAINT
Plaintiff Securities and Exchange Commission ("Commission") alleges the following facts in support of its complaint against the defendant, Christina Skousen, also d/b/a CSK Securities Research ("Skousen").
I. SUMMARY
1. Between May 1999 and December 2000, Skousen, a self-styled "analyst" with a high school education and no formal securities training, wrote research reports touting eight microcap companies. Skousen's reports for seven of the companies contained false and misleading financial and stock price projections. The projections lacked a reasonable basis because, among other reasons, all of the companies had poor financial track records, and four of the companies were the subject of going concern audit opinions.
2. Skousen's revenue projections exceeded the companies' most recently reported revenue figures by as much as 260,913%, and exceeded the companies' most recently reported income figures by as much as 30,089%. Skousen's reports additionally failed to disclose that six of the companies required significant additional financing, which was not assured, to implement their business plans or continue in operation. Skousen's reports for the same seven companies also contained arbitrary projected stock prices, which exceeded the companies' current stock prices by as much as 18,650%.
3. In addition, Skousen falsely represented that one company was "well-capitalized" when it had previously disclosed that it required additional working capital in order to continue as a going concern.
4. Moreover, Skousen, who typically was paid in cash for all of the reports, failed to disclose her receipt of compensation in two instances where she personally published the reports.
5. Skousen's reports caused the price and/or volume of the stock of six of the seven companies to increase significantly in the short term.
6. Skousen has, directly and indirectly, engaged in, and unless restrained and enjoined by this Court will engage in transactions, acts, practices and course of business that violate Section 17(b) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77q(b)] and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] promulgated thereunder.
II. JURISDICTION AND VENUE
7. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. §77u(a)] and Sections 21(e) and 27 of the Exchange Act [15 U.S.C. §§78u(e) and 78aa]. Venue lies in this Court pursuant to Section 22(a) of the Securities Act and Section 27 of the Exchange Act.
8. In connection with the transactions, acts, practices, and courses of business described in this Complaint, the defendant, directly and indirectly, has made use of the means or instrumentalities of interstate commerce, of the mails, and/or of the means and instruments of transportation or communication in interstate commerce.
9. Defendant Skousen resides within this judicial district. Additionally, certain of the transactions, acts, practices and courses of business constituting the violations of law alleged herein occurred within this judicial district.
III. DEFENDANT
10. Christina Skousen, age 49, resides in Novato, California. Doing business as CSK Securities Research ("CSK"), she writes analyst research reports regarding microcap companies. Skousen's formal education consists of one year of college and 18 months of secretarial training at a business college. Skousen has had no formal training in analyzing financial statements or stocks.
IV. FACTS
SKOUSEN'S RESEARCH REPORTS
11. Between May 14, 1999 and December 4, 2000, Skousen wrote research reports touting eight companies. Reports touting four companies, Packetport.Com, Inc. ("Packetport"), Nanopierce Technologies, Inc. ("Nanopierce"), Integrated Communication Networks, Inc. ("Integrated") and Searchhound.Com, Inc. ("Searchhound"), were issued under the name of Stockreporter.de and did not mention Skousen's name or otherwise suggest her involvement. The dates of these reports are set forth in Appendix A.
12. Stockreporter.de's principals posted Skousen's reports on their Internet website and issued press releases announcing the reports. The principals of the Stockreporter.de website have been enjoined by a U.S. District Court from future violations of Section 17(b) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. The court's order further required the defendants to pay disgorgement and civil penalties. SEC v. Torsten Prochnow d/b/a Stockreporter.de et al., No. C00-3199-MJJ (N.D. Cal. Sept. 15, 2000).
13. Skousen also wrote reports touting four other companies (Infe.Com, Inc. ("INFE"), Winners Internet Network, Inc. ("Winners"), AXYN Corp. ("AXYN") and MyWeb Inc.Com. ("MyWeb") under the name CSK. Skousen printed copies of these reports and distributed them to the touted companies.
14. Skousen received approximately $5,000 for each report as compensation except for INFE, which agreed to pay her but did not do so.
15. Skousen received compensation for the CSK reports either directly from the companies or indirectly through the Stockreporter.de principals. Two of the four CSK reports (Winners and MyWeb) failed to disclose Skousen's compensation.
16. In preparing her reports, Skousen typically interviewed officers of each company to obtain information regarding the company's business and competitors. Skousen also reviewed documents provided by the company, including business plans and the company's public filings with the Commission.
BASELESS FINANCIAL PROJECTIONS
17. Skousen's reports touting seven companies, INFE, Winners, AXYN, Packetport, Nanopierce, Integrated and Searchhound, contained false and misleading financial projections. The reports predicted that these companies would realize revenues of as much as $1,025,000,000 within one and four fiscal years of the dates of the reports, and that six of the companies would realize income of as much as $425 million within the same periods. See Appendix A for details.
18. The reports stated that Skousen's financial projections were "conservative" or "very realistic and achievable," or that her projections could "easily" be exceeded.
19. The financial projections lacked a reasonable basis because they were not supported by each company's historical financial performance. The revenue projections for four of the seven companies (AXYN, Packetport, Integrated and INFE) lacked a reasonable basis because they represented increases of as much as 260,913% from each company's most recent yearly revenue figures. See Appendix A for details.
20. Skousen projected that a fifth company, Nanopierce, would achieve revenues of as much as $123 million, whereas it had reported zero revenues during the previous fiscal year. See Appendix A for details.
21. Skousen projected that two companies (Winners and Searchhound) would achieve revenues that represented increases of as much as 4,703% from the revenues reported during the first nine months of each company's fiscal years. See Appendix A for details.
22. Skousen's income projections lacked a reasonable basis because they represented increases of as much as 30,089% from the companies' most recent income figures. See Appendix A for details.
23. In addition, four of the companies (AXYN, Nanopierce, Winners and INFE) were the subject of going concern opinions by the companies' auditors. Searchhound's management had expressed doubt in a November 15, 2000 Form 10Q-SB filed with the Commission about its ability to continue as a going concern. None of Skousen's reports disclosed these adverse facts.
24. Skousen's projections for six of the seven companies (AXYN, Nanopierce, Winners, Searchhound, Integrated, and Packetport) were additionally undermined by the fact that the projections were contingent upon the issuers' receipt of substantial funding, which was not assured.
25. The companies' business plans stated that the projections were based on assumptions that the issuers would receive significant additional financing. None of the reports prepared by Skousen disclosed this contingency.
26. Skousen's projections for two of the companies (Winners and INFE) lacked a reasonable basis because, among other things, they were inconsistent with the companies' internal projections and/or Skousen's own previous projections.
27. Skousen's financial projections for Winners were significantly higher than management's internal projections.
28. Skousen's financial projections for INFE were inconsistent with management's internal projections. For the first year following the issuance of the INFE report, Skousen projected revenues of $240 million and net income of $22,538,000; but the company projected revenues of only $85 million and net income of $4.2 million for that year.
29. Just six weeks before she wrote this report, Skousen had written a report touting INFE, which was issued under the name Stockreporter.de, which included the much lower projections of management.
BASELESS STOCK PRICE PROJECTIONS
30. Skousen's reports predicted that the price of seven companies' stocks would reach prices as high as $105 per share between one and three years. See Appendix A for details.
31. These stock price projections lacked a reasonable basis because they were not based on any rational methodology and none of the stock price projections was supported by the companies' historical stock prices.
32. Skousen's stock price projections represented increases of as much as 18,650% from the companies' then-current stock prices. See Appendix A for details.
33. The Winners stock price projections were based on the assumption that the number of the company's issued and outstanding shares of stock would remain constant at 16 million. This was a false assumption because the company was planning significant private placements.
34. None of the companies' stock prices has reached the stock prices predicted by Skousen.
FALSE STATEMENT ABOUT SEARCHHOUND'S FINANCIAL CONDITION
35. Skousen's report for Searchhound stated that the company was "well-capitalized."
36. This statement was false since a Form 10Q-SB filed by Searchhound with the Commission just two weeks before the release of this report stated that the company would require additional working capital to remain a going concern.
FAILURE TO DISCLOSE COMPENSATION
37. Skousen prepared and published a report regarding MyWeb on or about May 14, 1999.
38. MyWeb paid Skousen $5,000 to prepare and publish this report.
39. Skousen's MyWeb report did not disclose her receipt of this compensation.
40. The Stockreporter.de principals paid Skousen $5,000 to prepare a report regarding Winners. The $5,000 came from the sale of Winners stock received by the principals.
41. Skousen's Winners report did not disclose her receipt of this compensation.
MARKET REACTION
42. Following the release of Skousen's reports, the stock price and/or volume of six of the seven touted issuers increased significantly.
SKOUSEN ACTED FRAUDULENTLY
43. Skousen knew that her financial projections were undermined by the companies' historical financial performance and need for financing and therefore lacked a reasonable basis.
44. Skousen was aware of each companies' historical financial performance and the going concern opinions regarding four companies at the time she wrote her reports. She also knew about the six issuers' need for financing, yet she failed to disclose their need for financing in her reports.
45. Skousen was aware of the then-current stock prices of these issuers when she wrote her reports and therefore was reckless in not knowing that these historical prices did not provide a basis for her predicted stock prices.
46. Skousen had reviewed the most recent Form 10Q-SB regarding Searchhound and therefore knew that the company was not "well-capitalized."
47. Skousen continued to issue reports containing baseless financial and stock price projections for several months after May 2000, when she was first made aware of the Commission staff's concerns about her projections.
V. FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5
[15 U.S.C. § 78 j (b) and 17 C.F.R. § 240.10b-5]
48. Paragraphs 1 through 47 are hereby realleged and incorporated by reference.
49. Defendant Skousen directly and indirectly, with scienter, in connection with the purchase or sale of securities, by use of the means or instrumentalities of interstate commerce or by use of the mails, has employed devices, schemes, or artifices to defraud; has made untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or has engaged in acts, practices, or courses of business which have been and are operating as a fraud or deceit upon the purchasers or sellers of such securities.
50. By reason of the conduct described above, Skousen violated, is violating, and unless restrained and enjoined will violate Section 10(b) of the Exchange Act and Rule 10b-5 thereunder [15 U.S.C. § 78 j (b) and 17 C.F.R. § 240.10b-5].
VI. SECOND CLAIM FOR RELIEF
Violations of Section 17(b) of the Securities Act
[15 U.S.C. § 77q(b)]
51. Paragraphs 1 through 47 are hereby realleged and incorporated by reference.
52. Defendant Skousen, by use of the means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly, published, gave publicity to, or circulated communications, which, though not purporting to offer a security for sale, described such securities for a consideration received or to be received, directly or indirectly from an issuer without fully disclosing such consideration and the amount thereof.
53. By reason of the conduct described above, Defendant Skousen has violated, is violating and, unless restrained and enjoined, will continue to violate Section 17(b) of the Securities Act [15 U.S.C. §§ 77q(b)].
VII. PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court:
A.
Find that Skousen committed the violations alleged.
B.
Enter an injunction, in a form consistent with Rule 65(d) of the Federal Rules of Civil Procedure, permanently restraining and enjoining the defendant and persons in active concert or participation with her, from violating, directly or indirectly, Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)], Rule 10b-5 thereunder [17 C.F.R. §240.10b-5], and Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)].
C.
Order Defendant and her agents, servants, employees and attorneys to disgorge all ill-gotten gains received or benefits, totaling $30,000, received from her alleged illegal conduct with respect to Packetport, Nanopierce, Integrated, Searchhound, Winners, and AXYN, together with pre-judgment and post-judgment interest as provided by law.
D.
Order Defendant to pay civil penalties pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)] and Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] in an amount to be determined by the Court.
E.
Grant such other relief, as this Court may deem just or appropriate.
Dated: February 27, 2002.
Respectfully submitted,
________________________
Kelli Farrand Chan
Michael R. MacPhail
Attorneys for Plaintiff
Securities and Exchange Commission
http://www.sec.gov/litigation/complaints/complr17379.htm
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