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I have not seen the e-book industry studies. I know that the industry has been a dud to date, but that's largely due to the DRM issues and the fact that a decent reader has yet to be invented.
E-books are a trade-off. There are some things about e-books that cannot be matched by any conventional book. Then again, traditional paper books are so much easier to handle and read.
I believe E-books will emerge as a huge market in the next 10 years. IF this technology exists and we own it, it could mean some nice money. Sure, other DRM techniques exist. Multiple means of creating light exist as do multiple personal computer printing systems. But one is going to be best, all other things being equal. Until we know what exists, I'm not ready to close the door on this.
Admittedly, the chances are slim. And the CKYS we know today is never going to make a come back. But a new company, with new management, genuine technology, and some capital could make a go of it. Theoretical? Sure. But not out of the realm of possibilities.
A crucifix with JP on it? BRILLIANT. And I want a complete set of CKYS management bobblehead dolls too. I want the entire collection.
If JP can have a $400,000 Star Wars collection, I can have a $72.34 JP collection.
You know what else would be nioe? A pad of paper about 4"x4" where every sheet looks like another share of CyberKey. Why not feel like you're giving shares away every time someone takes a note or jots down a phone number?
I am sure that this matter will come up in the federal restitution hearing. The Feds have no desire for the patents. They involve risk. But they might be willing to turn them over to the shareholders of the company. We would have to form a new company, but it could be done. If the patents exist, there is the basis for giving it a legit shot.
We would have to file papers with the court representing our desire to own the patents. But it could be done. We just have to stay in touch and keep informed of progress as the trial approaches.
And I want to know where I can get a JP mug shot T-shirt? I don't want one as much as I need one. It's a must have for any Bastille Day festivities.
As far as Sequim is concerned, they will do business with anyone who has money and access to a distribution channel. Why CyberKey ever wanted to sell their product is beyond my understanding, but it is not unreasonable to assume that they would readily resume doing business with a CyberKey under completely new management.
If Sequim had any marketing talent at all, and obviously they don't, they would take back the CyberKey devices and market them as 'limited availability' pink sheet scam logo products. They'd include a copy of the various indictments, maybe a share or two of stock (a soon to be collectors item) and maybe a picture of our hero with bars superimposed on the photo. They'd make a joke of it. They could gain huge notoriety and PR. But, that's takes some balls and some marketing brains. Too bad they appear lacking in that company.
The branding effort might not have been a total waste of money had there been any intelligent thought behind it. Unfortunately, what JP and TI Heaton (The Idiot) know about marketing is surpassed only by their accounting proficiency. Marketing to a large, consumer audience as in a Super Bowl program, a NASCAR program, a fight match or a golf tournament is a complete waste of corporate resources. It's only goal is to sell stock. It means nothing in terms of promoting products or the company's image with the audience it needs to court.
JP is still at the helm of this badly listing ship for a reason. Either he is completely delusional, or this fool thinks that his technology is so good that he can still make a go of this.
IF, and that's a huge if, but if the patents and the technology really exist, Cyberkey has a real product. It can sell tens if not hundreds of milllions a year if properly marketed to the right companies. It is NOT a consumer product. Cyberkey cannot compete with Chinese memory stocks in Walmarts, Office Depots or anywhere else. But it could, potentially. own the entire e-book industry.
The e-book industry is very tiny at the moment. But it's time is coming. IF Cyberkey technology exists, this solves one of two giant hurdles that have prevented the e-book business from becoming huge. When the other piece is solved, the market for e-books will explode.
So, clearly, our hero and The Idiot have to go. Dan has proven himself equally useless to date in differentiating himself from the pack of thieves at the top. So, he has to go too. Bring in new management, change the name, and restart the business using brains instead of arrogance this time. I think it has a chance, if the patents exist.
Far be it from me to have any optimism concerning this scam, but I am not 100% convinced that no patents exist. If part of the inevitable plea deal with JP includes turning 100% of the patent information and authority over to a survivor company established for the benefit of defrauded shareholders, then we have something tangible.
Believe it or not, if the CyberKey did what it was supposed to do, there is a market for this product. And it's a fairly sizeable market. It has nothing to do with IDKeys, FanKeys or any of the rest of that crap that JP and BA have been working on for the last 12 months. Where do you all think that crap came from? That was BA selling JP services he didn't need and was too ignorant to understand had nothing to do with the markets he needed to cultivate. JP was convinced he needed top line growth to move the stock and he didn't know or care if he lost money on every product he sold as long as the revenues grew. That was my impression.
There is a market for what CyberKey claims it has. Interestingly, it is not a consumer market. Selling Keys in Circuit City or Walmart stores is not the answer. Selling CyberKeys to the publishing, software and media companies is the answer. It's a slow process. There will be no overnight successes. But if the product actually does what it's supposed to do, the market really will exist in the near future.
I'd love a shot at running this. I have some experience in this area. It's a no lose situation. If it fails, it was a massive long shot from the start. If it succeeds, well the sky's the limit.
I have no doubt he'll try. But I've spoken with Heaton before. If he can't plead stupid, then no one can. He can use the UAF's in his defense. They look like the work of a third grade project. Besides, JP's already decided to throw the book keeper under the bus. He can't toss Heaton under there also. I'll bet Heaton knows where some of the assets are that JP might prefer not be known.
He may be stupid, but he's not an idiot. He'll find a way to save his scrawny neck.
I know fraud isn't protected by bankruptcy. But as I said, I don't think they'll try Heaton criminally. He can always use stupidity as a defense. I'll even testify to that in court.
You may be a lot closer than you think. JP never had a long term strategy. Just like the Chimp in Iraq, there was no exit strategy. It had to end some day. It's clear from the game plan that it had to end in the next few months. JP promised audited financials. He couldn't possible keep this game going much beyond late spring.
So unless Jimbo is plain stupid (he's not), there has to be an ending that's not obvious. Time to think out of the bun. What if JP planned all along to swallow lead and go out the martyr (in his own eyes at least).
There has to be an alternative ending. This story just doesn't add up. JP's time horizon was very short. He was playing this game for the short term gain wihout regard to the long term. What if no long term was expected?
Heaton will, IMO, not be tried criminally. They will have a hard time proving a criminal act against anyone at the company beyond JP. JP in an autocrat. He is a one man show. Everyone else is a ball boy. They have no authority, no responsibility, no say.
Heaton will, hoewever, suffer big time in civil court. He's looking at bankruptcy as a solution. That's how I see it.
Has anyone heard from Liquid? I've sent him two e-mails and still no response. I understand that he is planning to file and I'd like to join in. I may have something for him.
JeffGator - Just a couple of comments. First, concerning SCE. Yeah, they were paid pumpers. That was obvious. That was their job. They were paid to do it, they advertised that is was what they were doing, and for that, they have nothing to be ashamed of. What they need to be ashamed of is the fact that they still hold many CKYS shares because they bought the story also.
So, they may be pumpers, but they were paid to be pumpers. They didn't hide it. And they bought the story even with a close up view of the merchandise.
Now BA is a different story. I have to assume that they receive daily or weekly DTC sheets. Thy may not see the company checking account, but they should know the company share counts. They had to know that certain statements were lies, yet they took no action. They could have threatened to resign the account. That would obviously cause major concerns as to why. Maybe the concern wouldn't be nearly as big as when an auditor resigns an account, but it would hurt a pink company trying to act legit.
They had to know some degree of public misrepresentation was going on and yet they did not nothing. They may claim that they are under no restriction that they attempt to right a known wrong. But I think that's up to a judge to decide. I see it as aiding and abetting securities law violations.
If someone in St. George had bothered to find someone who knew something about accounting, they could have passed off bogus numbers as reasonable unuadited financials. But they presented numbers is such an amateurish way that it was immediately clear that the same morons who wrote the June financials were still in charge at year end.
If I was trying to con someone with bogus numbers, I'd be very careful about making the presentation as attractive and normal looking as possible. When the numbers are lies, why get creative with the format? Why draw attention to the fact that BYU finance majors not only don't know what makes up a balance sheet, but are too dumb to look in a book or ask a real accountant how to format the numbers to look presentable.
Far to many mistakes were made here. It's almost as if JP wanted to get caught.
Of course, there is another theory. What if JP ran the place with such an autocratic manner that he consulted with no one, did as he damn well pleased and didn't tolerate hearing from anyone that anything was wrong. What if the UAF's we saw were solely JP's own doing? Even a book keeper would know what a balance sheet looks like. She would not have made those mistakes. What if this truly was a one man show with 20 people 'hired' or just paid to hang around and make it look good.
Upbeat - If you don't have thick skin, then the penny market is not where one should be. Frankly, except for the mods penchant for deleting anything that personally offends them or the company, this is a very well behaved board. Almost boring I might say. It was so much livelier when JP's true colors were still unknown.
I'm not young anymore. Not old, yet, but I'm no spring chicken. I've invested heavily in a scam or two before. One cost me a bankruptcy. There's a smell to them. The JP's of this world appear to act strange when you talk to them, but they are cold and calculating. One cannot be charmed, despite the fact that any con artist of any note can fake sincerity with the best of them. You have to go into these things expecting the worst. Most con artists slip up here and there. Timelines don't make sense. Deadlines come and go without results. It's always next week,next month, trust me. Once you've seen it a few times, it gets easier.
There are certain things I still cannot publicly disclose. I will admit to having a bit of an unfair advantage over some other posters. I never doubted that the company would eventually fail. All the ingredients for failure were present. I just never expected fraud on the level displayed here. It still amazes me how even the employees of the company knew so little. It's almost like the Enron employees. Then again, Jim was always good at weeding out anyone who had any independent thought.
Seabisquit - Your letter is all the apology one needs. You were not alone in believing in JP. I thought all along he was basically FOS, but even I was shocked to find out that the DHS contract was a pure fabrication. I knew the profit margin on a gov't contract could not be 51%. That was easy. Finding out it was all bogus. Now that takes balls.
Be well. Take care of yourself. This game isn't over by any means. We still have a good three innings to go. Trust me on this. We've been hammered for the first 6 innings, but their best players are now out of the game (game misconduct - penalty box to mix sports). Now it's our turn and the government's turn. It gets nothing if not ugly from here on. Can you say 'personal devistation'? Does sheriff's auction mean anything?
I was planning to file myself, but I'm now thinking of throwing in with Liquidcool. He's lost the most and he's got the cash to make life for JP, T. I. Heaton (The Idiot) a few others a legal nightmare. It even sounds great.
Missed a zero there, Rooter my boy.
Jim can plausibly claim ignorance abaout the cash not being received if and only if he can prove that he had nothing to do with the increase in shares over the last six months. And that isn't going to happen. I'm quite sure the TA will testify that he communicated with JP about the share structure. I'm quite sure that BA will also testify about the same thing.
Why would a company have to resort to selling shares if it is supposed to have cash in the bank? And how were the tranches financed? Someone must have made arrangement to get the parts made for the 'government' contract. Are we to believe that the book keeper had signing authority to sign an IOU for millions of dollars to begin the purchasing? Are we to believe that JP never saw a bank statement?
And what was in this for the book keeper? Was she supposedly paid off by this third party company to maintain the illusion for almost a year? Let's cut to the bank video tape. Anyone see Ruth depositing $70,000 in small, inconsecutively numbered unmarked bills in her passbook account? Anyone wonder why a CEO would post UAF's 6 to 8 weeks after finding out that there's no money in the bank?
There is no freakin' possible way any prosecutor is going to buy this story. Ruth may get hit for being a facilitator of this fiasco, but she is clearly not the mastermind of anything. This is coming back to our hero like a ton of bricks.
I still say there's another surprise ending on the horizon. This one is too neat and clean. The fiasco had to end. The charade could not go on forever. There didn't seem to be a huge payoff at the end where our hero flies off to Switzerland with $10 million in his pocket. JP's not the brightest bulb, but he's no dope either. Though this be madness, there be method to it.
There's another piece of the story yet untold. JP had to know it would end badly and he just didn't seem to care. Why?
Officer or director. It shouldn't matter for civil liability purposes, as far as I know. They are both liable.
Should be an interesting week coming up. Now that we know the contract never existed, we have to assume that the company has been living for the last year on selling shares for all its financing. I can't see how they made payroll if they were paying people in cash. There's just too many other expenses that have to be paid in cash. It just doesn't add up. Too much cash required versus too little cash generated via stock sales.
Let's assume 1 billion shares sold at an average of a penny each. That's $10 million over 2 years since the reverse split. If we assume that the UAF numbers are correct (we have to start somewhere), they said they received 1.065 million for all the shares they sold from Jun 30 to the end of the year. I think we can assume that the company had more than 700 million outstanding at year end. That's my theory as to why the UAF's look like they were done by third graders. They were trying to hide the shares outstanding number.
Even if we assume they sold 250 million, that's only 4 tenths of a penny per share - less than half of a full penny per share. Meanwhile the stock price averaged about 2 cents/share during that time. Some discount is reasonable, maybe as much as 50% given that this is a pink sheet company. But half of even that much tells me that many shares were used as cash, probably for salaries.
Whare did you find the Finders on the CLYS BOD? I have never seen this infomation before. Can you provide documentation for this?
This is going to wind up in court, both civil and probably criminal. Criminal is out of our hands. Civil is all in our hands. Anyone on the BOD has liability. If they have assets, and are on the BOD, they have to be concerned. They may have info to trade. We need to know what kind of leverage we have with them.
Can you point me to a current statement showing them on the BOD?
So what happens next?
I'm guessing that one of two things happens, maybe both.
A) CKYS appoints a new executive committee and
B) CKYS files Chapter 11 reorganization
If I were running the place, that's what I would do. I would file early this week to calm things down. That would create a focal point for all things CKYS. It would nullify the contract with BA. It would also create a position outside the company, appointed by the court, where all information would be collected. The trustee would have responsibility for discovery making it easier to get the true story as to what happened and where various assets are. The trustee will deal with major stakeholders to determine the company viability and whether it attempts to come out of bankruptcy or end the show. At least it would take the heat off the new set of officers who might try to pick up the pieces.
Again,that's what I would do. Let's see what JP & Co. do.
Wow, what an amazing theory! I can't say that you are wrong, because I just don't know all the facts. I've heard it said that Heaton has a lien on CKYS's assets. If that's so, it should be recorded in some county or state office.
I've talked to Heaton. I find it hard to believe that he just gets through the day, let alone masterminded anything. Jim's not the kind of guy to let anyone else call the shots - not one, and certainly not many. JP's a one man show. Everyone else is a supporting player.
My guess on the payroll numbers is that everyone else was being paid in stock. And being the professional accountants and bookkeepers that they are at CKYS, they naturally wrote the stock off as sold for no money. That would explain how the UAF's could show what we think is 250,000,000 shares sold for $1 million dollars. They gave away massive amounts of shares instead of paying salaries. Remember, if the company had effectively no income, they had no cash either. They could ill afford to waste precious cash on salaries. So they gave away shares in lieu of salaries. That concept is backed up by the claim that Dan in sales said he has been paid in stock.
Are there two companies in the sane building? I've heard that there are. And possibly, many of the employees 'work' for both companies. JP pays in stock while Heaton pays in cash. That way, employees don't tip anyone off by accidentally saying that they don't work for CKYS. Again, just a theory on my part. And if this is true, then I can see where Heaton would be involved and look to be calling the shots. The sharing of resources can make it look like that. But my guess is that the businesses were separate and only designed to give the appearance of one business to visitors and outsiders. As I said, I just can't see JP taking direction from anyone on anything. In his mind, he knows everything.
First, concerning your assertion that Heaton couldn't possibly be that deaf, dumb and stupid. I have spoken with Mr. Heaton several times. Let me assure you that Mr. Heaton could well be that stupid. I would be willing to testify to that in court. It may be his best defense.
As far as no liability in Nevada is concerned. If this were so, why would anyone incorporate in any of the other 49 states? Nevada could charge $5,000/yr. for every company that incorporated in the state, completely eliminate every tax except for gamblers and incorporation fees and still be able to pave the streets with gold. So my guess on this part is that your information is incorrect.
Finally, as for BA's role in this. They are the company's IR firm, yes? They receive the DTC sheets every day or week. They know exactly what's going on with the share structure. They either allowed, participated in, or managed the issuance of the unaudited financials. Even if they never had access to see the company checking account, they had to know how many shares were being issued. BA had to be complicit in the UAF's or they would have resigned the account in a heartbeat. They have attorneys and possibly accountants on staff. They know what was issued and what the implications were.
They can attempt to hide behind some contract and attempt to shift liability. But I have them as a prime location for picking up several million dollars in a class action suit to recover money for all shareholders. Unless they can prove that they were deceived on the share counts or that they are the only IR firm on planet Earth that does not receive regular DTC sheets, they are in hot water. That's my read on this.
I don't know much about ETIM and don't want to know. What I know is that there are people associated with this fiasco who have money. I intend to extract as much as humanly possible from them for the benefit of all shareholders. Let the games begin!!
Thanks for the nod. I knew that JP had no clue how to run a company. That much was obvious. The fact that the contracts and other items were pure fabrications came as a bit of a surprise to me too. I knew the shares outstanding could not be 700 million. I recognized many of the products as make work products that would never be profitable. But I chalked it up to incompetence and arrogance. Thievery was beyond my radar scope.
As for CKYS, put a fork in it. It's done. At this point, I give the patents a 10-20% chance of being real. At best. Existing shareholders are unlikely to ever see this POS resurected. There are, however, opportunities to recover funds. I believe that there are people responsible for this fiasco who can be made to pay. I intend to make that happen.
I think you will find that he is just as surprised as I am, as you are, and everyone else. Hank made introductions. He is not an attorney nor an agent. He assumed, as did I, that the contacts were successful and the contract resulted from the introductions. I spoke to him this evening. He's not at all a happy camper tonight.
It's hard to find out everything you thought was true isn't. But that's exactly what's supposed to happen from the perp's point of vue. There were cracks in the veneer on this one. I picked up on many and minimized my exposure. But even I got caught. To have walked through an office and talked to the employees and then find out that it's not true is hard to take. But that's how the game is played. Deceit is a serious business. Good people get fooled too.
JP isn't a stupid man. This may be a scam, but there's more to it than we are seeing. Either he is insane, under the influence of something, or playing an unconventional game that requires one to think out of the box. I refuse to believe this man is stupid.
If this has been a scam from day one, it wasn't all that well done - too many tip-offs, too many pieces that didn't add up. Give him credit, though. He kept it going for several years. But unlike most scams where the leader grabs the cash and runs, this one stayed. Attention junkie? Bought into his own lies? Is there an alternative?
Stay tuned. This isn't over. The real answer comes at the end of the book. This is going to the head of the Amazon non-fiction list in 2008.
There may not be any middle man because there may never have been any contract, nothing purchased, nothing received, nothing shipped, nothing billed. Seems a bit odd that the CEO of a 20 man (?) organization would have no idea on that stuff. Seems odder (?) that the company CFO and COO would have no knowledge of this.
Comedy of errors. But there's more to come. My spidey senses are tingling. There's at least 3 more chapters in this yet unwritten book.
Not Mexico, I'm guessing. It would seem he's off to somewhere a bit more permanent.
At this point you might as well learn to laugh because there isn't much left. For those of us who got caught, this isn't too funny. But if you were on the outside looking in, this is a comedy of errors.
Question -Does Jim claim a chemical dependency and seek rehab in the next 48 hours? Worked for Congressman Foley.
I have been following this stock for about 18 months. I always suspected that things were not as they appeared, but even I am amazed to hear that the entire contract was bogus. And then this PR comes out tonight! I can't stop laughing. This has got to be the most amazing PR I've ever read. It's a classic for the books.
Speaking of books. Keep your notes, people. This story needs to be written down. Even among the world of penny stocks, this one is a piece of work.
Prediction - this isn't over. There's still another surprise or two to come. This story can't end with a wimper. There has to be more. It's too good to end here.
The math is good. The logic, however, needs work.
Are you sure they are all broke?
I think I would start the 'inquiry' off with a softball question. But on the other hand, I wouldn't want to waste an opportunity to learn something. Therefore, I think I'd ask about what products the company has sold recently, and when we might be hearing about the next generation of products rumored to be various stages of development.
Someone mentioned that CKYS was going to come out with a biometric device capable of turning appliances and lights on and off. Ask when we may see that announcement.
And most importantly, ask not just what's been sold. Ask how the company is making the sales. Are they all coming through the Internet? Do we have any dealers? Are there any brick and mortar distributors of any size? Do we have a dedicated sales force marketing to local governments, not for profits, and other retailers?
This will get him talking about the future where there are no problems and the slate is clean. It also might impress him that you, as a shareholder, are looking past the current mess and forward to a more optimistic future. If this discussion fails to warm him up to you, then end it there and prepare for the worst.
Seabiscuit, despite your protestations to the contrary, JP has already been found guilty in at least the SEC's eyes. Perhaps it was nothing more than gross negligence, incompetence, and poor managerial skills. None of the above are crimes, though they make excellent evidence in a class action lawsuit.
So unless you assume that the SEC is out to get JP and the company, he's already been found guilty of being in over his head. Now I know you harbor this notion that JP's DRM technolgy is so explosively good that the major media companies have conspired to request the Bush Administration to force the SEC to make life difficult for our heros. If the exact same scenario had not just been disclosed in the US Justice Department, I'd say you are nuts.
But this time you're going to have to trust common sense. JP has had no publicly known progress to date in selling his DRM technology to a media company, large, small or indifferent. Not an American company, not a Japanese company and not a Chinese company. I find it hard to fathom that every media company is a member of this cabal when the Chinese companies are the prime copywrite offenders. No one has made a purchase that the company has chosen to acknowledge publicly. The company's DRM technology, assuming it exists, is probably one in hundreds of DRM options. Some will be better suited for certain things than others. It's doubtful that any one is best for all markets.
There is no conspiracy. The SEC nailed our boys because they are in over their heads in trying to run a business. Of that, they have aready been found guilty.
Well said. A CEO's basic job is to deal with customers, employees, shareholders, and the Board of Directors. He also has secondary responsibilities that he needs to make time for, but let's keep this simple for now.
Shareholders are part of the mix, especially for a company that might require external financing today or in the near future. In fact, if this is the case, what segment of the mix is more important for a near start-up former pink sheet company? A dead stock price means no more outside capital. The company has to live and die on its available funds and those it can generate internally. Show me a company with plans to grow from $25 million in sales annually to $100 million annually in 3-5 years without external capital and you've found a one in a thousand company. As a rule, they don't exist. Start-ups require externally generated capital to grow. No capital, slow or no growth.
So quite contrary to Bears's statement, CKYS is going no where without the ability to raise more capital by selling stock. It can't acquire anyone either with a dismal stock price. Its equity is dead money. Clearly, getting to the AF's is step one in getting this company back on track. But depending upon what those AF's say, JP may have a huge task ahead in re-establishing personal credibility. If the AF's essentially match the previously reported numbers, then maybe the credibility task is not a big deal.
I'm guessing that LiquidCool will be back on his horse again Monday AM to find out what's going on with the audit. And if he confirms what he believes to be true, then all bets are off. Bear's statement becomes true by default because there is no hope of any external financing for the next several quarters. So shareholders don't matter because stock price doesn't matter. In that case, we move along in the dark until the legal process forces some light into the room. Someone holding many million shares is not likely to accept another indeterminate audit wait quietly.
Congrats on the new Kittys. But do them a favor and avoid buying pinks or worse grays for their college fund. Watch Cramer. Then do what he says about a week after he says it. You may not hit a lot of 4 or 10 baggers, but you won't see too many of your CEO's giving depositions trying to salvage their company's reputations.
PS By the time they reach college age, this country should be well on its way to also ran status among the world's eceonomic powers due to our massive debt position. Gold will be a huge winner in the coming two decades as US Gov't attempts to inflate its way out of its debt crises. Gold will soar.
It helps when the CEO surrounds himself/herself with intelligent, competent, questioning people capable of independent thought. That may not be the case here.
It's not that I don't think the company can be successful. It can be. But it requires major changes at the top and a complete reevaluation of what it's doing and where it's going.
They also need to drop Big Apple yesterday.
If you got the cash, I got the shares. What are you offering?
No hard feelings pal. It just kills me how little the people who own stock in this company really know about the product (if it exists) and what it's good for. I'm sure that JP and his band of third graders don't fully understand it either. Just because a man invents something does not mean he understands how to position it and sell it.