HLNT/NIR/Walters Lawsuits and Arbitration:
To confirm my understanding of the AAA (American Arbitration Association) rules, I called the New York office this morning and asked about public access to the arbitration hearings. I was told that the hearings are private and only open to the parties involved. Furthermore, when the Arbitration is resolved, any settlement will also be private.
When talking about the A/S, maybe it would help to put it into a better perspective.
1. The background: A) Ribotsky knew in 2008 that he was not living up to the hype of NIR when he refused to honor requests for redemptions by Investors in NIR. He was having cash flow problems because many of the companies that he PIPE funded were not able to convert their notes while having a sufficient volume for NIR to sell them off and make a profit, let alone, recover NIR's initial investment. B) Of the many companies that NIR became saddled with (by Ribotskys own choice), Humphries company, Dealers Advance (DLAD) was one of them that couldn't support the note conversions as it couldn't create the volume needed for NIR to sell the shares it got from the Conversion. As Humphries reached the point where he no longer was able to obtain unlimited funding from NIR to maintain his wealthy life style, he became increasingly pressured to find alternatives. C) SSEV, while under Rhoades as a CEO, was not converting notes fast enough to suit Ribotsky, so a change in the CEO was engineered and Walters took Rhoades place and the conversions were continued. D) The plan was hatched by Ribotsky and Humphries to find a company where the notes of DLAD could be transferred to, and by agreement with Walters, transactions were created to transfer the nearly 6 million notes from DLAD to SSEV. However, DLAD really didn't have any assets of value to transfer to SSEV to balance the transfer of the Notes, so the three inflated the value of a software asset to justify the transfer of the notes, including interest. And this was the fraud. E) As part of the deal, Humphries became the new CEO of SSEV, Walters got a sweet deal in terms of shares, subsequent notes (the ones now being tried in the State of Texas), and cash. Ribotsky had the expectation of getting his notes converted and the shares dumped on the market, and Humphries had the expectation of getting continued financing. To convert the notes, Humphries raised the Common Stock A/S to 10 billion shares, without shareholder approval. To him, shareholders were tools and fools to be used for his own purposes. F) Humphries brought in Hydrogen Hybrids and the HOSS company as subsidiaries, to help pump up SSEV and make it possible to convert notes for NIR, lying to Foster and Robinson about the debt structure of the company, as clearly demonstrated in the court documents about those transactions. This also made Foster and Robinson major shareholders in SSEV. G) Humphries, who was no longer be financed by NIR, got caught doing fraudulent notes on the side, which led to his being pushed out of SSEV by Foster and Robinson. As has been posted elsewhere, this was a total surprise to Ribotsky and Walters.
2. Early changes in the A/S by HLNT: A) When Chad and the new management took over at SSEV and renamed the company, they discovered the Fraudulent Note transfers and immediately took steps to stop the conversions, including the refusal of NIR's conversion request, and by reducing the A/S. This involved a two step reduction in which the A/S for Common Stock was lowered to 2 Billion shares. Of course, this led to the initial lawsuit by Ribotsky's company, New Mellinnium. Important thing to note: That decision was made without having the shareholders to vote on it. As the Board of Directors at that time controlled the majority of the stock, this decision was a legitimate one.
3. The Subsequent Issues: HLNT management at that time did not have all the knowledge to make an adjustment to the A/S that would have avoided recent changes in the A/S. The management did know that the company was saddled with a large number of outstanding shares of Common Stock, and that there would be need for capital funding to bring the products (the HOSS and the Hydrogen Booster) to market. But they were not aware of the Whalehaven note, or at least, not enough to know that it was a legitimate note. So the management of HLNT did not allow enough of an A/S to handle all the issues that they did not know that they would be facing. But just for the sake of argument, if they had lowered the A/S to 2.5 Billion, and not 2 Billion, there would not have been any complaining about raising the A/S to the 2.5 Billion.
4. The Right Perspective: HLNT did the best they could with the information they had at hand in making the decisions about the A/S. However, HLNT is trying to avoid, and to do so legally, the massive amount of dilution that would occur with the forced conversion of fraudulently transferred NIR notes. But HLNT is also a publicly traded company, and publicly traded companies do so in order to be able to sell stock for the purposes of raising capital for financing. If investors do not want to face or endure dilution for legitimate reasons, they should invest in loans or bonds or commodities, rather than stocks.
