The role of genius is not to complicate the simple, but to simplify the complicated.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
huck ... so why doesn't this ongoing litigation show up in ADSX's 10k?
LEGAL PROCEEDINGS
We, and certain of our subsidiaries, are parties to various legal
actions as either plaintiff or defendant and accordingly, have recorded
certain reserves in our financial statements as of September 30, 2002. In
our opinion, these proceedings are not likely to have a material adverse
affect on our financial position, our cash flows or our overall trends in
results. The estimate of the potential impact on our financial position, our
overall results of operations or our cash flows for these proceedings could
change in the future.
On January 31, 2002, Treeline, Inc. filed a complaint in the Common
Pleas Court of Cuyahoga County, Ohio against us, and one of our
subsidiaries, STR, Inc., now known as ARJANG, Inc. ("STR") and another
defendant who was formerly an executive of STR, alleging that STR breached
its lease agreement with Treeline, Inc. in connection with a facility no
longer being used by us. The complaint alleges that we, and the former
executive of STR, are liable as Guarantors of the lease for damages
sustained by Treeline as a result of the alleged breach. The plaintiff
demanded monetary relief of an unspecified amount.
During the quarter ended March 31, 2002, 510 Ryerson Road Inc.
filed a lawsuit against us and one of our subsidiaries in connection with a
lease for a facility that we vacated prior to the expiration of the lease
and which is no longer in use. The trial date, originally set for December
2002, has been rescheduled for February 2003.
In May 2002, a purported securities fraud class action was filed
against us and one of our directors. In the following weeks, fourteen
virtually identical complaints were filed and they have now been
consolidated into a single action, In re Applied Digital Solutions
Litigation, which was filed in the United States District Court for the
Southern District of Florida. The primary allegations in the recently filed
Amended Consolidated Complaint include claims that:
o we recklessly engaged in a strategy of acquiring
subsidiaries without regard to any strategic worth;
o we lacked the necessary accounting controls over our
subsidiaries;
o we manipulated our stock price through the issuance of
press releases; and
o our statements about our subsidiaries Intellesale, Inc.
and VeriChip Corporation were false and misleading.
We believe these claims, and the action in general, are without
merit and we intend to vigorously defend the action. We filed a motion to
dismiss the Amended Consolidated Complaint on December 27, 2002.
In July 2002, SRZ Trading LLC filed a derivative complaint in the
Circuit Court of Cole County, Missouri against us, and several of our
officers and directors. The complaint alleges that we misrepresented our
financial condition and disseminated false and misleading statements about
VeriChip. The plaintiff demanded monetary relief in an unspecified amount.
The action was dismissed. The plaintiff subsequently filed a substantially
similar claim in the U.S. District Court for the Southern District of Florida.
We believe the action is without merit and intend to vigorously defend
against it.
On September 25, 2002, The Bank of Scotland filed a complaint in
the Court of Session in Edinburgh, Scotland against us alleging that we owe
them money under the terms of an agreement dated December 18, 2000,
governing the Senior Term Loan and Overdraft Facilities ("Loan Agreement").
Under the terms of the Loan Agreement, Caledonian Venture Holding Limited
(also referred to as Transatlantic Software Corporation) was purchased by us
through the issuance of our common stock. The complaint alleges that we are
liable for a shortfall of approximately $565,000 created under the price
protection provision of the loan.
On May 29, 2001, Janet Silva, individually and as Guardian ad Litem
for Jonathan Silva, a minor, and the Estate of Clarence William Silva, Jr.
(collectively, "Plaintiffs") filed suit against Customized Services
Administrators, Incorporated ("CSA"), Pricesmart, Inc. ("Pricesmart"),
Commercial Union Insurance Company ("Commercial Union"), CGU Insurance
Group, and the Digital Angel Corporation (collectively the "Defendants") in
the Superior Court of the State of California in and for the County of Santa
Clara. The allegations of the complaint arise from a vacation guarantee
insurance policy (the "Insurance Contract") allegedly purchased by
Plaintiffs from Defendants on March 6, 2000. The complaint alleges, among
other things, that Defendants breached the Insurance Contract, defrauded
Plaintiffs, acted in bad faith, engaged in deceptive and unlawful business
practices, resulting in the wrongful death of Clarence William Silva, Jr.
(the "Deceased") and the intentional infliction of emotional distress on
Plaintiffs. The complaint seeks the cost of funeral and burial expenses of
the Deceased and amounts constituting the loss of financial support of the
Deceased, general damages, attorney's fees and costs, and exemplary damages.
CSA has filed a cross-claim against the Digital Angel Corporation alleging
that it should be held liable for any liability that CSA may have to
Plaintiffs. Digital Angel Corporation has denied the allegations of the
complaint and the CSA cross-claim. There have been no material developments
in this proceeding through December 6, 2002.
very, very interesting ... locastro and reale have pending litigation against ADSX, the successor of the company who bought ATHI in 10/96. ADSX has a pending shareholder class action as well.
In October 1996, ACT Communications, Inc. purchased 100% of Advanced Telecom Holdings, Inc. in exchange for 1,618,180 shares of Applied Cellular Technology, Inc.'s common stock, 100,000 shares of 8%
redeemable preferred stock at $100 per share of Applied Cellular Technology, Inc. and warrants evidencing the right to purchase 1,000,000 shares of Applied Cellular Technology, Inc.'s common stock. The shares of common stock issued were valued at 75% of the then current market trading value of $5.00, due to the limited market of the shares and the restricted nature of the shares. No value was attributed to the warrants because the exercise price exceeded the fair value of the underlying common shares. Each warrant can be exercised, at any time, and from time to time, beginning in October 1996 until October 2001, at a price of one warrant plus $3.00 per common share. The total value of the investment based on the above facts was recorded at $12,022,725 plus acquisition costs of $326,863, for a total investment of $12,349,588. The agreement dated October 1996, called for the effective date of the acquisition to be September 1, 1996 due
to the significant control of the Company by ACT Communications, Inc. since September 1, 1996 and the agreement called for the profit and loss to be allocated to ACT Communications beginning September 1, 1996. The 8% preferred dividend begins accruing on October 1, 1996.
The redeemable preferred shares shall be redeemed by the corporation at such time and from time to time as the corporation shall issue any shares of Common Stock, other capital stock of the corporation, or any
other security which gives the corporation in exchange for cash or other cash equivalent. Two-thirds of the cash paid by the purchasers of any Security shall be utilized by the corporation solely for the purpose of redemption of the Preferred shares. If and to the extent the Preferred shares gave not been redeemed by the corporation by the third anniversary of the initial issuance (09/01/99) of the Preferred shares, each holder of the Preferred Stock shall have the right to require the corporation to redeem such holder's Preferred by paying therefor, with shares of ACT Communications common stock (1,000 shares outstanding). For purposes of redemption of the Preferred shares, each share of the ACT Communication common stock shall be valued at $10,000
Effective January 1, 1997, the Company entered into agreements with Bruce Reale and Vincent A. Lo Castro, under which the Company agreed to pay consulting fees to each of them in the amount of $96,000 per calendar quarter, in lieu of dividends otherwise payable in respect of shares of preferred stock of the Company owned Mr.Lo Castro and by a trust affiliated with Mr. Reale.
Effective June 30, 1997, the Company exchanged an aggregate of 650,000 shares of its common stock for 48,000 shares of such preferred stock held by Mr. Lo Castro, and in exchange for certain related warrants. (in consideration for the exchange of 48,000 shares of the Issuer's preferred stock owned by Mr. Lo Castro and a warrant to purchase 480,000 shares of the Issuer's common stock, held by Mr. LoCastro and his wife.) Mr. Lo Castro exchanged his shares of preferred stock and the warrant for shares of the Issuer's common stock in order to make his investment in the Issuer more liquid. In addition, the Company's obligation to pay the consulting fees to Mr. Lo Castro described above was terminated as part of such exchange.
Effective September 30, 1997, the Company exchanged an aggregate of 668,461 shares of its common stock for 48,000 shares of such preferred stock held by Mr. Bruce Reale, and in exchange for certain related warrants. The Company's obligation to pay the consulting fees to Mr. Reale described above were terminated as part of such exchange.
Towards the end of the third quarter of 1997, the Company made a decision to exit the retail cellular operations of its Services and Solutions business segment. During the fourth quarter of 1997, the Company completed its exit strategy and incurred costs related to the restructuring of these operations, including provisions for terminations of leases and employees and writedown of the carrying values of inventory and other assets. Costs totaling $1,680,828 were included in selling, general and administrative expenses.
as a betting man, i'd wager locastro and reale's litigation against ADSX has something to do with the following provision of the ATHI agreement and plan of merger ...
3.4 Earnout Provisions.
------------------
(a) On or before April 30, 2002, Applied Cellular will deliver to the ATI Shareholders an aggregate additional consideration ("Additional Consideration") equal to three (3) times the average annual EBDIT (as defined in Section 3.4(c) for the five year periods commencing on October 1, 1996 and ending on September 30, 2001 (the "Payout Period"); provided however, that (i) if the average annual EBDIT is less than $2 million, the ATI Shareholders shall not be entitled to receive any additional consideration and (ii) the amount payable to the ATI Shareholders as Additional Consideration shall not exceed $15 million.
(b) As used in this Section 3.4, the term the "Company" shall include the Surviving Corporation, ATI and the Subsidiaries as well as any business or businesses conducted by either Purchaser, which represent a succession to and a continuation of the businesses presently conducted by ATI and the
Subsidiaries, as the same may be expanded as provided in Section 3.4(c) or 3.5.
(c) As used in this Section 3.4 and in Section 11.1(c), the term "EBDIT" shall mean the earnings of the Company, before depreciation, interest and taxes, computed on the accrual basis of accounting in accordance with generally accepted accounting principles consistently applied (and consistent with the accounting principles applied by the Subsidiaries in respect of the prior fiscal years) except that the following provisions shall govern the computation of EBDIT for purposes of this Section 3.4:
(i) Any extraordinary nonrecurring items of income, gain, loss or expense shall be excluded from
such computation.
(ii)Any loss, charge or expense (A) not related to the ordinary business operations of the
Company, or (B) paid, incurred, or charged in connection with the expansion of the business
operations presently conducted by the Subsidiaries as a result of the making of acquisitions or the opening and staffing of new offices, or any income or revenues directly derived therefrom, shall be excluded from such computation, unless Bruce Reale and Vincent A. Lo Castro ("Seller's Representatives") initiate consent in writing to the transaction giving rise to, or the payment of such loss, charge or expense.
(iii) Any loss, charge or expense related to the ordinary business operations of the Company by
either Purchaser or any of their affiliates and not covered by the provisions of subparagraph
(ii) above shall be excluded from such computation unless Seller's Representatives initiate or consent in writing to the transaction giving rise to, or the payment or assumption of the obligation to pay, such loss, charge or expense.
(iv) Any charge or expense for the amortization of goodwill arising out of the fact that ATI has
been merged into Acquisition Corp., pursuant hereto or otherwise, or that the consideration
paid by the Purchasers is in excess of the net worth thereof, shall be excluded from such
computation.
(v) In the event of an election with respect to the Division pursuant to Section 338 of the
Internal Revenue Code of 1986, as amended, such computation shall be made as though no such
election had been made.
(vi) Any payments, charges or expenses for allocation of home office, executive, general
and administrative expenses or other payments, charges or expenses of either Purchaser and/or
their affiliates shall be excluded from such computation.
(vii) The deduction for salary paid or payable to each of ATI's Shareholders shall be limited to
$72,000 per annum, regardless of the amount actually paid, and there shall be no deduction
for any other compensation paid or payable to either of them.
(viii) To the extent consistent with generally accepted accounting principles, all available
accounting elections (including, without limitation, the capitalizing of charges and the
setting up of reserves) shall be made in such a manner as to reflect the highest possible
earnings of the Company.
(ix) Such computation (including, without limitation, the reflection of intercompany
transactions) shall be made as though ATI had not been merged with Acquisition Corp. and the
Company were a single corporation with all of the capital stock of the Company owned by
persons who are neither directly nor indirectly related to or affiliated with either Purchaser
or any of their affiliates.
(x) Any and all expenses paid or incurred by the Company (other than those expressly permitted
by the above provisions) which would not have been so paid or incurred if not for the Merger
and the other transactions contemplated by this Agreement shall be excluded from such
computation.
(xi) Any and all equipment lease or other lease expenses incurred by the Company shall be
capitalized.
(xii) Except as otherwise expressly provided above, all amounts determined in accordance with
subparagraphs (i) through (x) of this Section 3.4 shall be determined in accordance with
generally accepted accounting principles consistently applied.
(d) During the Payout Period the ATI Shareholders shall have free and unrestricted access to the financial books and records of the Company.
(e) As soon as may be practicable after December 31, 2001, but not later than April 30, 2002, purchaser will deliver to Seller a statement setting forth in reasonable detail its calculation of the average annual EBDIT of the Company during the Payout Period and the amount of any Additional Consideration to be paid to Seller pursuant to this Section 3.4, which statement shall be accompanied by payment to the ATI Shareholders, by wire transfer of federal funds to accounts designated by them (or to such other accounts as they may designate), of the Additional Consideration as shown thereon. If within 30 days after delivery of such statement the ATI Shareholders have not given written notice to Applied Cellular disputing such statement and indicating the basis of such dispute, then neither Purchaser shall thereafter have any further liability to Seller under this Section 3.4. In the event the ATI Shareholders give Applied Cellular such notice of dispute within such 30 day period, the ATI Shareholders and the Purchasers will use their best efforts to settle the dispute within 30 days after the giving of such notice. Any dispute unresolved after such 30- day period shall be submitted to a national public accounting firm satisfactory to the ATI Shareholders and to Applied Cellular, or, in the absence of agreement on such firm, to a panel of three public accounting firms, one designated by Applied Cellular, one designated by the ATI Shareholders and one jointly designated by the other two firms. The decision of such accounting firm or such panel of accounting firms, as the case may be, with respect to such dispute shall be final and binding on the parties hereto. The Purchasers shall make any further payments to the ATI Shareholders required in order to comply with such decision within 10 days after such decision is rendered. The fees and expenses of such accounting firm or panel of such accounting firms will be equally divided between the Purchasers and the ATI Shareholders unless the ATI Shareholders shall be determined entitled to further payments of Additional Consideration, in which case the Purchasers shall be responsible for all such costs and expenses.
we must different between figurehead title COO, a figurehead officership, and president. treasurer and secretary ... THE officers of a nevada inc'd corp.
that's what dance partners are far! 8)
and ruin a perfectly good fork??????
fung-free day two.
no derf? hmmmmmmmm
happy day of birth (ya ol' fart!) eom
jumping up and down, waving hands above head!
you don't get it ... without career politians, there would be far (FAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAARRRRR) fewer persons with net worth over $150k. many more willing and able
republicans ... democrats ... career politians all ... to them its pubic service, not public. too many millionaires and power brokers. make it simple, every elected office in the federal gov't must be "manned" by citizens whose net worth does not exceed $150,000. conscripts all
i am laughing ... you are (were) whining, hence ba waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah.
ba waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah
as well you should! for i am much hotter! 8)~
gooooooooooooooooooooooooooo DYN!
duh boyz claimed $55-$70k annual incomes from '97-'00 on the edgar filings. perhaps turino's wife is a big earner, or one or both their families helped them out? to date, i have seen no one mention the amount mortgaged. there could have been an inheritance.
very true!
isn't elgindy still in jail awaiting trial?
who is don harmer?
why, yes i did ... the the recipient hasn't confirmed delivery of them yet. women!
did ya get the cookies?
employment agreements. signed, THE BOSS
everything hangs on effective registration statements. eom
huck, EP is another ticker symbol.
i'm not selling it all ... just diminishing exposure. i'll still watch how it plays out.
you boyz think EP is done free-falling yet?
2 mil shares left. cost basis .0007 and a 100k cert whose cost i prefer not to determine. ;)
Hadas ... next American Idol.
oh oh! then a turkish chick is getting your cookies then.
depends! are you Turkish? (see that pete? i used the shift key)
no, you derf! it's "my mate USED to be SOOOOOO romantic" day!
shipping costs are killing me ... roses to WI, chocolate to CA, cookies to NY. waaaaaaaaaaaaaaaa
this board ain't big enough for two troublemakers! suzie decides who has to behave! (tapping foot, waitin')
i can't even delete the blank post because the subject line is blank under the "manage" function. now don't go getting any ideas you hoodlums.
i lightened my exposure profitably. i could sell the remainder at .0004 and leave the whole mess behind with a ~$1K profit. how many others can claim the same?
man! feathers ruffeled again.
yes, it is priv·i·leged
suzie, this board his 25 membermarks and 5-6 posters. lol
never met a grammarian with weak pinkie fingers? *wink
baaaaaa ha ha ha ... the tyranny of it all