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.
I just realized approximately how much cash Pike generated with his ADY sales in the period covered by this post:
http://investorshub.advfn.com/boards/replies.aspx?msg=46903094
On 5/22/09 he held 1,500,000 shares. On 2/16/10 he held 275,000 shares. At $30 per share average (ballpark) he raised ~$36,000,000 during that time. I think he spent about half of that on SPNG shares. As far as I could tell he did not file any beneficial ownership forms during the period showing any buy transactions..there were a few Parlux exchanges within the funds, but no cash laid out.
So either he has another $18mill or thereabouts laying around or he has been buying shares in companies in which he is holding less than reportable quantities or he has been buying preferreds or bonds or something else that doesn't require him to file.
Just thought it might be interesting to show that he might still have a couple bullets in the chamber.
Simply put: "Smoke and Mirrors".
There's certainly plenty of that going around, but this appears to be the uncompensated transfer of a business entity. Apart from the inability to assign it a dollar value it's no different than the actions that you wanted to put people in jail for yesterday. Mind you I'm not recommending that in this case, but it's not an SEC issue except to the extent the transfer has gone unreported. Until it's otherwise explained, the SPNG shareholders have made a donation of unquantifiable value to VAEV. Which might be fine with some, but the fact that both firms have some common management and directorship makes it, at the very least, one step beyond mere "smoke and mirrors".
reg,
The rules don't require it in the Q and it looks like it took until Q1 of 2009 for them to realize it.
http://www.law.uc.edu/CCL/regS-X/SX8-03.html
Definition of smaller reporting company at:
http://www.law.uc.edu/CCL/34ActRls/rule12b-2.html
Reg,
Interesting post. There has been some coverage here of the "licensing" of the America's Cleaning Company monicker to Vanity.
Your link to the 2008 10K makes me wonder whether it was a licensing issue after all. In addition to your quote, it also says:
In July 2008, we incorporated 6 wholly-owned subsidiaries in the state of Nevada. They are:
· Spongetech Kitchen & Bath, Inc.;
· Spongetech Health & Beauty, Inc.;
· Spongetech Auto, Inc.;
· Spongetech Medical, Inc.;
· Spongetech Pets, Inc.; and
· America’s Cleaning Company.
Yet, in the company's most recent PR of 2/12/10, we see:
SpongeTech continues to operate its 8 wholly-owned subsidiaries that support its growing business activities. The subsidiaries are as follows:
Dicon Technologies, LLC
SpongeTech® Europe
SpongeTech® Health & Beauty, Inc.
SpongeTech® Kitchen & Bath, Inc.
SpongeTech® Auto, Inc.
SpongeTech® Medical, Inc.
SpongeTech® Pet, Inc.
The Smarter Sponge Company
One has to wonder what the nature of the transaction was that resulted in a SPNG subsidiary exiting and levitating its way over to Vanity. That's not "licensing" in the traditional sense of the term. And if there was a sale I must've missed the filing.......which there certainly should've been, especially if they followed through on their original plan:
"We plan to engage in our proposed different lines of business through each of the subsidiaries and to hold all intellectual property in our America’s Cleaning Company subsidiary."
ps. FWIW, a quick and dirty search of the Vanity filings shows the first and only filing referring to "ACC" in the 10Q for the quarter ending 9/30/09 as follows:
"In July 2009, the Company seized an opportunity to utilize the America’s Cleaning Company™ trademark and, after careful research regarding the cleaning services industry, began developing a cleaning services division. In September 2009, this division of the Company began servicing both residential and commercial clients, and has seen business increase on a week-over-week basis. The cleaning services division has also developed what it believes will be a recognizable brand that will be used both for its services and for products which it intends and developing and/or licensing."
dp,
I believe that this term excludes SPNG from the regulation: "The rule generally applies to all equity securities that are listed on a national securities exchange, whether traded on an exchange or in the over-the-counter market."
So institutional and retail traders alike can continue not shorting SPNG without fear of interruption :o)
I haven't shorted a stock in a long time and don't plan to, but for what it's worth I'm not a fan of any artificial impediments to either long or short trading. And I don't think that Wall Street is either....everybody prefers that the government leave well enough alone until the other guy finds an edge. What it will accomplish is a little panic and a minor change in strategy. And by the time it's implemented both of those effects will likely be pretty subdued. Unless there's a major market event and then the broker system will probably have trouble implementing it and the regulatory authorities will find it impossible to enforce.
Sorry for the negativity. I grew up in a time when the phrase "there is no gravity, the earth sucks" was born.
EEL,
Just to be clear, all the beneficial ownership filings since April have had to rely on that 10Q filing. And the market cap calculation at any point in time since then has been the current pps of the day times 722 million. And it will be the current pps of the day times 722 million until a filing is made that updates that number.
So it's not correct to say "that's a lot more than we've known about the share structure."
We know nothing more than we knew in April, at which time the number of shares outstanding was 722 million.
I hope that's clear.
"The shares that Lazauskas has to sell to pay the 650K, do they have the super vote that SM and MM have?"
The "super vote" shares are Class B shares. For those to be involved in the court-ordered sale of the Lazauskas holdings at Ladenburg would first have required their conversion to common on a 1 for 1 basis. There's no evidence that that has occurred.
The short answer is "almost certainly not".
"Will Someone Buy Mosky an Accounting Software Package, so he can keep track of the checkbook balance."
Actually, if he is to be believed, he had a pretty good handle on his checking account balance.
In his affidavit he contends that SPNG didn't owe the $70M to MSG. So when he became aware that they intended to deposit the check, saying according to SM, "whether SDS liked it or not", he drew down their account to force it to bounce on presentation. The fact that he was able to do that without bouncing any other outstanding checks could only mean one of two things. Either 1)there were no other outstanding checks on the account or 2)he's clairevoyant. Actually, there's a third very distant outside possibility: He determined which outstanding checks hadn't cleared, contacted the payees and asked them to destroy the checks.....promising replacement checks and asking them to hold the replacements until the MSG check bounced....and either drew the balance out of the account or drew it down below $70M. It would've been much much easier to do what RM did....Stop Payment.
I'm not suggesting that this happened (personally I don't believe that it did).....only how it could have. If I had to guess, either the check was drawn on a very lightly used, perhaps dormant by intent, account or somebody was just plain tap city.
I would be, too...if I could do it with somebody else's money.
No need for that...I was itching to tell the check story anyway:o) Thanks for the excuse.
I don't remember the Cresta deal and I'd like to forget GFGU, but that's why I said I wouldn't plop down $360,000 without at least a signed napkin saying what it was for.....
But you're right, there's been a lot of money flying around and damn little definitive paperwork.
pj,
All of it!
http://iapps.courts.state.ny.us/iscroll/SQLData.jsp?IndexNo=600065-2010#
After you match the funny letters it should pop right up. If not, the 600065-2010# should help.
See Exhibit A. Blow it up.
compliments of Scion.
I'm not sure what this means. I was trying to help.
"OK, why the update?
Contrary to all the crap on this board, do some research.
Has os been supplied recently?
Is anyone required to file?
Run it by the error group."
Any special reason you decided not to look at the link that I provided in the post?
And I think I know the difference.
("There's a tiny little difference between the two. ;)")
JC,
No opinion, but a couple observations.
There's obviously enough of a disagreement on the facts, which I don't think the court will be able to ignore, so I think SM's affidavit will probably successfully overcome MSG's request for a summary judgment. And a summary judgment for dismissal would be extremely unusual. Guess those are opinions, huh?
The clearest disagreement is on whether SPNG owed MSG any money either when they handed them the check (the $70M job) or when MSG banked it. I noticed something interesting on the face of the check that might be pertinent. In the area normally used for "purpose" we clearly see "7843-1" preceded by what MIGHT be "INV#". To this layman's eye the 7843-1 was written by the same person that wrote the numerical dollar amount and the date...logically then by the drawer. In the same area, in what appears to me different handwriting, we see "cust 16729"....it wouldn't be unusual for a notation like that to be made by accounts receivable personnel. Jamming that steaming mound of speculation together, I couldn't help but wonder "If SPNG is providing an invoice number and MSG is applying the check to their account, how much of a leap is it to think that SPNG owed them some money?"
What for? I have no clue. The very last item in the affidavit says something to the effect that (paraphrasing) if MSG meant to include the Auto and Pet subsidiaries (with whom 2 of the 3 agreements were made) in their claim they should've included them in their original filing. This statement comes out of the clear blue sky....which frankly leads me to believe that it has something to do with things. Tickets are part of one of those deals and SPNG is obligated to cover the production costs of some of the advertising materials in one of them also.
The real situation with the RM check is beyond me. Every time they draw a check something funny happens. All I can say about it is, no matter how much money I had, I wouldn't plop down $360,000 without at least a signed napkin saying what it was for...and in reasonably specific terms.
Finally...it doesn't make any sense to me that the case can go forward without it being severed. If it's true that there are no MSG agreements with RM, then it doesn't make any sense to me that SPNG and RM should be co-defendants. I'm not a shareholder, but if I was I'd be wondering why I'm footing a piece of RM's legal bill....unless it's in return for
You know where this goes.
Luppy,
He originally filed a 13G.
http://sec.gov/Archives/edgar/data/1201251/000101359409001617/spongetech13g-102909.htm
However, he could no longer use that form when his holdings exceeded 20%.
"Notwithstanding paragraph (c) of this section and Rule 13d-2(b), persons reporting on Schedule 13G pursuant to paragraph (c) of this section shall immediately become subject to Rule 13d-1(a) and Rule 13d- 2(a) and shall remain subject to those requirements for so long as, and shall file a statement on Schedule 13D within 10 days of the date on which, the person's beneficial ownership equals or exceeds 20 percent of the class of equity securities."
http://www.law.uc.edu/CCL/34ActRls/rule13d-1.html
"I knew it was an amendment but why was an 13D amendment not filed with the last batch of stocks that pike bought?"
Actually there were....remember those "private transactions" where he just swapped shares between his own funds don't count.
http://sec.gov/Archives/edgar/data/1201251/000114036110001954/0001140361-10-001954-index.htm
"If it does nothing then why does the 4 form not suffice?"
Not smart enough for that one.....but the 4 doesn't provide for the filer to indicate his intentions, while the 13D does.
sd,
The 13D is actually a 13D/A (A=Amendment). It simply updates the new cumulative holdings of the Pike entities based on the recent buys reported on the Form 4 filed last night.
There's really nothing in the way of new information on it.
ps. He bumped past the 20% mark a while back and that DID require the filing of the original Form 13D.
Big,
re: "What about the time line on the restricted shares that were issued as payment for services in lieu of cash?"
I have 2 answers:
#1, and most reliable answer is "I don't know for sure".
#2:
I believe the officers of the company were issued common shares (versus Class B) in lieu of cash for salaries a number of years ago. To the extent that they were restricted I'm quite certain that whatever period applied has expired.
If you were asking about shares issued to non-employees, as in the following that were reported in the last 10Q filed....
"On July 16, 2008, the Company issued an aggregate of 2,253,436 shares of common stock to Sichenzia Ross Friedman Ference LLP as compensation for legal services rendered to the Company.
On June 2, 2008, the Company entered into a consulting agreement with R.F. Lafferty & Co., Inc. pursuant to which R.F. Lafferty & Co., Inc. agreed to provide certain strategic financial and advisory services to the Company for a two-year term. In consideration for their agreeing to act as a consultant, the Company agreed to issue an aggregate of 2,000,000 shares of common Stock to R.F. Lafferty & Co., Inc."
.....I believe that those shares are issued free of restriction and are available for immediate sale. I THINK (see answer #1) that restriction only applies to 1)employee issuances and 2)Sales of shares that are not also offered for sale to the public.
Wish I could give you a more certain answer.
Karma,
I belated realized that most of my previous post had already been covered.
I left the following 8-K quote out of it regarding the transfer of Class B shares:
"No person holding shares of Class B Stock of record may transfer, and the Company shall not register the transfer of, such shares of Class B Stock, as Class B Stock, whether by sale, assignment, gift, bequest, appointment or otherwise, except to a permitted transferee (as described in the Certificate of Amendment) and any attempted transfer of shares not permitted shall be converted into Common Stock as provided by subsection."
Any attempt to determine what a "permitted transferree" might be required a wait of about 14 months.
Note that the above was filed on 7/28/08, referring to a Certificate of Amendment filed on 7/16/08. For some reason the company appears not to have made that CofA public until the Form 8-A registration was filed on 9/28/09. Unfortunately it is in a form that I cannot copy and paste.
http://www.sec.gov/Archives/edgar/data/1201251/000114420409050269/v161426_ex3-3.htm
FWIW, the restrictions on the transfer and estate handling of Class B gets a ton of ink in the above document. However I haven't found any filing at all that describes the general basis for the actual issuance of Class B shares. The basis for the issuance of the original 10,000,000 was covered in the July 8-K. 18,000,000 have been issued since, some to an outside entity (RME), without any explanation at all.
If there were no other reasons at all for this being a penny stock, this alone would be a good one.
Karma,
From the 8-K announcing the initial issuances:
"Description of Class B Stock
Holders of Class B Stock are entitled to vote on all matters submitted to shareholders of the Company and are entitled to 100 votes for each share of Class B Stock owned. Holders of Class B Stock vote together with the holders of common stock on all matters.
Each share of Class B Stock is convertible at the option of the holder, into one fully paid and nonassessable share of Common Stock."
http://www.sec.gov/Archives/edgar/data/1201251/000114420408042150/v121013_8k.htm
I saw nothing that required a waiting period and I don't think the term "unrestricted" applies. Actually they appear to be free to make the conversion at any time.......the issue of whether they could immediately sell the common would have the same treatment as any of their other common holdings.
Anyway, would they give up control of the company for $1,120,000 (.04x28,000,000)?
I know this is risky, but......
YOU HAVE TO BE KIDDING, RIGHT?
In case you aren't.......175,000,000 divided by 723,000,000 is 24.2%.
" And if he signed an NDA, would that give him the right to then buy shares based on what he knows? My guess is 'no' he couldn't. But that's just a guess. "
You don't have to guess about that. It's true. Unless the NDA covered Metter's shoe size or some other useless non-public information.
OT,
Thanks for responding...sorry my post was so confusing. Judging from the lack of response to some of 'em I guess a lot of them are.
I'll simplify it if I can do so without missing the key stuff:
Right now the current SPNG investors and any potential SPNG investors don't know whether Pike can legally buy or sell shares.
And I don't like it.
If SPNG were to PR an NDA with Pike, which they can and as ADY did, there is no rule that allows current and potential investors to know at what point in time thereafter that Pike could resume legally buying or selling shares.
I don't like that either.
I would propose, to keep it simple, that any NDA between a beneficial owner and an issuer be reported as a material agreement in an 8-K.......not it's substance of course, but the act of signing the agreement. And should the purpose of that NDA be no longer required by the parties, that fact should be filed as a dissolution of the NDA in an 8-K as the termination of a material agreement.
This would allow the public to know whether an investor in the position that Pike is in, a beneficial owner, is not buying or selling because he doesn't want to or because he can't.
I'm starting to think that I'm the only one who thinks it matters.....but don't nobody be asking me why I think Pike isn't trading :O)
Jay,
I try, but I wouldn't necessarily call taking note of the reported disappearance of 71,000,000+ shares of stock "attention to detail" :o)
The Pike funds reported that they sold ADY shares in a number sufficient to bring their holdings to below 10% on 5/22/09. (See the little X on the top left of the form).
http://www.sec.gov/Archives/edgar/data/789868/000101359409001117/xslF345X03/americanfm4-052209_5ex.xml
The "ADY's registration statement, and the subsequent prospectus" process was initiated in September. There is nothing indicated in either of those documents, or the several subsequent prospectuses, to indicate that Pike was involved in any way in the offerings described by them.
The fact that Pike is actually withdrawing from his ADY position is further supported by his filing reporting that he has sold his position to below the 5% level from last week that I previously mentioned.
http://www.sec.gov/Archives/edgar/data/789868/000101359410000192/americandairy13ga-021610.htm
"That leaves ADY's registration statement, and the subsequent prospectus, to consider, FWIW."
Unless his withdrawal from ADY was your point, I guess I missed it.
cpar: "really, the last i read said nothing about charges, just an investigation. care to clear that up for all of us?"
pj: "No, its a notice of the charges SPNG will face in court. Put whatever spin on it that makes you sleep well. The facts are that those 16 items are what SPNG, its mangement and insiders will face."
I should know better than to get involved in this, but........
Obviously the Wells Notice has a list of charges in it.
But is not necessarily the charges SPNG will face in court.
It is the list of charges that the SEC staff preliminarily intends to ask the Commission to file against the recipients. And the purpose of the notice is to allow the recipients to respond so that the response might be included in the Commission's deliberations as to which charges to ultimately bring, if any. It provides a focus for settlement discussions.
Everybody's wrong. I win! :O)
Hello Jay,
Just a couple FYI's regarding your recent post:
"From other directions. Parlux directors given stock options during this time. American Dairy requests and receives an expedited Shelf Registration from the SEC. "
I assume these were included due to the Pike investment in SPNG. I may have missed something, but I saw nothing that tied either of the events mentioned to any October SPNG activity.
The Parlux option issuances were just their annual director payments of 15,000 options each.....they were issued at the same exact time in 2008 and weren't tied to any special event.
I'm not sure if you noticed, but Pike filed a Form 13 G/A just a week ago which had the sole purpose of providing notice that his holdings in American Dairy had dropped below 5%.
"And interestingly, Pike reporting a total acquisition of 42 million shares during the week on a Form 4 filing. The referenced filing, however, reflecting an increase in his holdings of 113,407,781 shares. The other 71,407,781 shares? "
Unfortunately your analysis results from a misreading of the form. The Pike holdings are in two Funds, which held a total of 100,000,000 prior to the referenced filing. The first 4 columns of column 4 are additions to Fund A and the second four items in column 4 are additions to Fund B. The new cumulative totals for each fund are the 4th and 8th items in column 5. The form is mathematically accurate and complete. (It was incorrect to call the difference between the first and last items in column 5 "an increase in his holdings of 113,407,781 shares.")
"Are we on the same page?"
Surely you jest.
Let's start with "artificially inflated".
The price is the price as determined in the marketplace. If a stock's price gets to a point where it is higher than you, the investor, believe it should be then you should sell it. But it didn't get there by itself. The perceptions, real or imaginary, that the buyers of those shares had when they bid that stock up, got the price to where it is.....there's nothing artificial about it and "inflated" is strictly in the eyes of the beholder. I HAVE NOT suggested that any information be put in the public domain that is false.
If you are comfortable telling me that "pr'ing an NDA would be foolish.", then I suppose I shouldn't be reticent to tell you that saying "Sometimes, too much information can be just as dangerous as not enough." is easily the silliest thing that I've ever heard you post. (BTW, I was proposing 8-K treatment as a material agreement...the SEC wouldn't enforce "pr'ing").
"The shareholders who get in at the high will be stuck because the price will drop right back down."
And??? How could you possibly prefer to have it any other way? What in Sam Hill (sometimes I miss Yahoo) happened to the concept of accepting the consequences of one's own actions? Those people took a risk that they found acceptable when they made their buy. Nobody tricked 'em into it.
Now let's deal with the original cause for my concern:
"It's my opinion that if two parties get together and sign an NDA and, while discussions are ongoing, one of the parties, maybe thinking the discussions are going well, decides to start buying shares in his, or the other company, that would be illegal".
Well hotdiggittydog...that's my opinion, too!!!
"It's been my experience that once you sign an NDA, if the deal falls apart, that's it. There is no signing a document that says the NDA is now null and void."
Uh-oh.
My turn for an example:
I'm sure that you've heard that Pike once had an NDA with American Dairy. This fact was revealed, perfectly legally, by the issuance of a PR by ADY, whose purpose....let there be no mistake about it.....could only have been to provide some support to its share price. (If you can think of any other reason for a company-issued PR for ANYTHING please provide it). It's pretty clear to me from your posts that you would expect some people to have bought shares based on that PR....and Pike and ADY would've obviously hoped for the same result. At that point, however, Pike would have been required to stop making open market transactions in the shares (note our above agreement on this).
Here's where the problems begin:
"It's been my experience that once you sign an NDA, if the deal falls apart, that's it. There is no signing a document that says the NDA is now null and void."
As we agreed, it would have been improper for Pike to trade after the signing of the NDA. However, based on your quote, the phrase "after the signing of the NDA" applies, as the saying goes, until the last syllable of recorded time. The common shareholder, relying on the auspices of the SEC to require his company to keep him informed, now does not know if Pike is not buying or selling because he doesn't want to or if he is not buying or selling because it's "after the signing of the NDA", which it always will be. And all I'm saying is that that's not right. Leaving the investing public uninformed as to whether there is an ongoing agreement between the parties...especially those that invested based upon it...is wrong. As it stands, the rules allow a company to attract investors with what I see as a material agreement that carries insider trading restrictions yet has no fixed terminus and I can't believe that that's just peachy with you.
"I have been involved in a lot of NDA's".
I have been involved in none (-0-), yet I don't feel that I've suffered any significant handicap in this discussion....so far, anyway. I always appreciate your opinion. Whether it helps or not. LOL.
The thing is.....I LOVE speculation. Why avoid it?
I would never actually buy the stock of a company merely because it signed an NDA with a potential suitor, just as I would never buy stock in a company based on its signing an NDA with a major fund investor. But the freedom to do it is what investing is all about. Every investment is a speculation.....the only difference from one to another is degree of risk and its perception.
Besides, communicating the mere signing of an NDA doesn't communicate the actual purpose of the signing at all. Remember, I'm trying to address the issue as it applies to "insider trading".
OT: "An NDA should never be under the control of the SEC."
Based on your example you are offering the following as a good reason for two publicly held companies to keep the signing of a non-disclosure agreement a secret from their shareholders and the investing public:
Volatility. The stock might run up on the news of the signing and, if nothing further transpired, the stock might come back down again. So current and prospective shareholders are better off not knowing.
The owners of the company should avoid staying fully informed if the potential price for doing so is volatility in the stock price.
Have I got that right?
If one were to base their guess on average price alone ($.13+) they were bought on the open market.
Thanks for that Tex.
Unfortunately those changes were made 10 years ago and they don't fix what I see as the problem.....that being that the signing and termination of an NDA does not have to be made public.
The two main "changes" deal primarily with:
1. the requirement of a company that has divulged non-public info to certain described parties to then divulge that information to the public and
2. confidentiality and trading on confidential information. Specifically, "the purchase or sale of a security of any issuer, on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information."
I agree that it SOUNDS like they should address my problem, but they don't. We already knew, or should have known, that Pike couldn't trade common shares on the open market while in the possession of non-public information obtained under an NDA. We did know that, didn't we?
Nice find.
I thought that it was interesting to see that he signed the NDA on 8/18/05 and then appears to have participated in a private placement of preferred shares, convertible into common that the company reported on 12/20/05. At least he reported ownership of preferred shares on 1/3/06 that he hadn't reported before.
This can only mean one of 2 things. Either 1)the purchase of the preferred shares isn't treated the same for insider trading purposes as an open market purchase of common shares would be and is a permitted transaction or 2)the NDA was over in less than 4 months.
The disclosure rules for NDA's are messed up. Simply...there aren't any. I guess the SEC decided at some point that they didn't require "material event" treatment. So what happens the vast majority of the time is that the company heralds the signing of the agreement in a PR because it's such FANTASTIC NEWS and then nobody EVER finds out when it has ended. (I know this from an effort to find out when the Pike/American Dairy agreement ended....ADY IR wouldn't tell me because "they weren't required to"). This allows everyone to speculate as to the propriety of any trading by the investor after the NDA is signed. And more questions if there ISN'T any trading by that investor.
So, and I'm not suggesting this is true, Pike could have an NDA with SPNG right now and we wouldn't know about it unless the company pr'ed it. And while Pike theoretically couldn't buy or sell his shares during the agreement period, we wouldn't know if any lack of trading on his part would be of his own volition or if the agreement had ended.
Can anyone suggest a good reason for the SEC to leave this lack of transparency intact? (Non-conspiratorial reasons preferred.)
Actually the o/s share question was in jest. But the D&B's that I've seen would allow you to provide some details supporting that "their credit is fine."
I don't recall "fine" being one of the D&B rating categories, so I can only assume that some specific details of the report led you to that conclusion. Please tell us what they were.
Was it Timeliness of Historical Payments, Risk of Payment Delinquency, Risk of Financial Stress, Financial Condition, D&B Rating, Financial Strength, Paydex?
There's a ton of stuff even on the most basic D&B, isn't there?
" but have you looked at their D & B report? i have. their credit is fine."
Please provide the basic rating.
And I know this is a silly question, but what do they show for an o/s share number?
"the rule is that eventually, spng may get asked to provide a reason why they have not filed..at which point they can either file or provide an explanation why they havent..." AND WHEN THEY WILL. Based on which a judge (not you, me, Mingy or puppy) will decide whether to extend or revoke.
Some people have indeed claimed that "spng could be revoked at any minute..."
That could only occur if an administrative hearing occurred without us being aware of it. Of course, in order to hear about it from the company would require a FILING......something on which it appears we would be unwise to rely.
It would seem likely that those people might be closer in their estimate simply by their understanding of the process than anyone who expresses the opinion that "they will never be revoked...eom".
Because the basis of revocation is a failure to file.
It isn't, and has nothing to do with:
"because in the end, the justification for it wont be there...i believe a lot of people are misreading the wells notice...the wells notice lists the sections that the sec believes may have been violated..but some are looking at the worst case scenario for each of those violations...and those individuals have decided that the degree or severity to which those violations may have occured must certainly be to the extreme."
And it's not a penalty:
".obviously violations occured...obviously there will be penalties...the likelyhood that spng will escape unscathed is very very small...as is the likelyhood that they will recieve the severest penalty.."
So this makes no sense:
"my concern is with spng the company...and i dont see revocation as a reasonable penalty for spng... "
Please refer to my post the next time you are tempted to contend that "they will never be revoked...eom". In fact, you're welcome to link to it the next time someone asks, as I earnestly asked you, "Why will they never be revoked?" Because, as I pointed out, you provided the "wrong answer....eom".
I'm pretty sure that there are a few people who are legitimately interested in knowing what the rules really are, without the bias that people on both sides seem to be obsessed with. Mingy's question gave me the opportunity to try and provide some answers to THEM.
But the thing that it does for me, selfishly, is provide the future opportunity to copy and paste the answer when the question comes up again......which it surely will.......without having to put down my sandwich.
Mingy,
"It is my understanding that while we are on the greys, since we are not traded on an exchange, but rather traded among broker dealers, we do not have to file."
We all know people who can be described as "someone who’s judgment I trust" and my purpose is not to suggest that your friend can't be trusted, but rather to suggest that his advice to you was incomplete.
I'm going to start by addressing the law and follow with its application in the real world......the latter presumably being the source of your feeling that it "Seems like a pretty grey area." (Please note that I'm not familiar with the rules that apply to foreign companies and that they may differ.)
First, the short version of the rule requiring filing, highlighted in my previous post:
Every issuer of a security registered pursuant to section 12 (which SPNG is) shall file with the Commission such annual reports and such quarterly reports (and such copies thereof), as the Commission may prescribe.
I hope that you can understand and accept that the above requires SPNG to file.
Next, if a company does not comply with that rule, they RISK the following penalty (From Securities Exchange Act of 1934 Section 12(j)):
The Commission is authorized......to revoke the registration of a security, if the Commission finds, on the record after notice and opportunity for hearing, that the issuer, of such security has failed to comply with any provision of this title....
I hope that you can understand and accept that the above exposes SPNG to the possibility of revocation if the company fails to file.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
1. "It is my understanding that while we are on the greys, since we are not traded on an exchange, but rather traded among broker dealers, we do not have to file."
I would hope that the above addresses this issue in a way that you understand it. The rules applies to ALL companies that are registered under Section 12 of the 1934 Act, REGARDLESS of whether they trade on the NYSE or no exchange at all. Spongetech is registered under Section 12.
2. "I have also found several companies who’ve been trading on the gerys for years, without any financials."
Several? There are probably dozens. This is not because they "do not have to file". They do. These companies generally fall into two categories:
The first, and by far the largest group, represents companies that no longer have any viable operations and trading in their stock has dried up accordingly. The SEC, which had been slow to address this group in the past because it represents a relatively small risk to the investing public, has within the last few years been revoking the registrations of these companies en masse. The process requires the Commission to notify the company of a hearing and allow them to provide reasons why they shouldn't be revoked. Most in this group don't respond to the hearing notification at all and are revoked by default as a result. There are still a number of companies that the SEC just hasn't gotten around to......the "several companies who’ve been trading on the gerys for years, without any financials" almost certainly fall into this group.
The second, much smaller group, is primarily comprised of companies who have not filed...sometimes for a period of years....but do have ongoing operations and/or active stock trading and, when notified by the SEC, elect to attend the hearing and provide what they feel are reasons why they should not be revoked. However, since the reason for the SEC action is lack of filing, the only reason historically found to be acceptable by the hearing judge, is some version of "we're working on them and they should be ready by __/__/____." Often there is an issue as to the proper accounting for a complicated transaction or maybe even "the dog ate my filing", but it is strictly up to the discretion of the judge as to whether to allow an extension or immediately revoke. Judges have been known to provide multiple extensions based on their assessment of the legitimacy of the reasons for the delay and the credibility of the issuer.
3. "I also have not been able to find any rule, where after a set period of time of no filing, a company is revoked."
That's because there is no such rule. The timing of the decision to request a revocation hearing varies.
Theoretically the SEC is engaged in an ongoing process of trying to determine whether the lack of current information (filings) available to the investing public regarding ANY company (registered under Section 12) results in an undue risk to any POTENTIAL investors. Historically, the decision to revoke is weighted in favor of these potential new investors even in light of the obvious cost to existing shareholders. Apparently the SEC's mission has been interpreted to be the protection of the investING public versus the preservation of the investED public.
I hope that you've read the above carefully and that it has been helpful. No one can say when a revocation hearing might be called. As long as a company is not in compliance with their requirement to file it is at risk of being required to justify their failure to file at a hearing. And based on the adequacy of that justification in the eyes of the hearing judge and his feelings regarding the likelihood of the company achieving compliance in a reasonable time (which he alone defines), a company can be revoked. It can happen today or it could happen in the year 2015, but as long as they don't file it can happen.
ps. An operations' "theoretical" revenues and profitability place a distant second in these considerations. The following link is to the appeal (unsuccessful) of Nature's Sunshine to the revocation of their registration wherein the 10K filed PRIOR TO the period of non-filing began reflected "net sales revenue of about $331 million and net income of about $17 million."
They also argued the following to no avail:
"Nature’s Sunshine argues that revocation is unwarranted because it is not a “shell company,” but a “healthy, viable company with substantial revenues, assets, and operations.”
and perhaps the most important excerpt is:
"Nature’s Sunshine argues that revocation is unwarranted because it will harm existing shareholders. We have stated that any harm to existing shareholders is not the determining factor in evaluating whether an issuer’s securities registration should be revoked. We have also stated that existing and prospective shareholders alike are harmed where, as here, the required filings about the issuer are not available and, as a result, existing and prospective shareholders cannot make informed investment decisions:
We previously have recognized, however, that, in any deregistration, current shareholders could be harmed by a diminution in the liquidity and value of their stock by virtue of the deregistration. We also have held that the extent of any harm that may result to existing shareholders cannot be the determining factor in our analysis. In evaluating what is necessary or appropriate to protect investors, regard must be had not only for existing stockholders of the issuer, but also for potential investors. Indeed, we have emphasized the significant interests of prospective investors who can be substantially hindered in their ability to evaluate an issuer in the absence of current filings. In any event, both existing and prospective investors are harmed by the continuing lack of current and reliable information for the Company."
http://www.sec.gov/litigation/opinions/2009/34-59268.pdf
If I have left any "grey areas" in your mind on this issue please let me know. My purpose is to provide you clarity once and for all. I can't help but pointing out that I don't pretend to any expertise on these issues beyond that which I picked up in the reading of the rules and if I am mistaken in any of my understandings I welcome their correction. It is not my purpose to mislead.
"Are we required to file financials on the grey's????? Please provide link."
That sounds familiar.
Oh, that's right.....it's the same question you asked on 2/3:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46254226
"Can you please provide me a link where it says that a company trading on the greys has to file?"
And the same question that I answered on 2/3:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46254877
"If I may: http://www.law.uc.edu/CCL/34Act/sec13.html
Securities Exchange Act of 1934
Section 13 -- Periodical and Other Reports
Reports by issuer of security; contents
A. Every issuer of a security registered pursuant to section 12 (which SPNG is) shall 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--
1. such information and documents (and such copies thereof) as the Commission shall require to keep reasonably current the information and documents required to be included in or filed with an application
or registration statement filed pursuant to section 12, except that the Commission may not require the filing of any material contract wholly executed before July 1, 1962.
2. such annual reports (and such copies thereof), certified if required by the rules and regulations of the Commission by independent public accountants, and such quarterly reports (and such copies thereof), as the Commission may prescribe. "
Then, after being provided with the above...the link you asked for....you responded with:
http://investorshub.advfn.com/boards/replies.aspx?msg=46254877
"It is my understanding that while we are on the greys, since we are not traded on an exchange, but rather traded among broker dealers, we do not have to file."
That understanding is not correct.
Mingy.....I made the effort to provide you with the link that you wanted. Twice at this point. Persist in your denial if you must, but please stop asking for proof of that which has already been proven.
Mac,
It was a well written piece, heavy on the detail, but I believe his point may have been arrived at late in the going. Maybe you didn't get that far.
The Lazauski (Lazauskuses?) apparently were granted until the end of April to sell their SPNG shares to cover the judgment due. Their basis for that timing was an implication that the SPNG shares couldn't be sold until then BECAUSE one of the requirements for selling those shares under Rule 144 is that the issuer of the shares be current in their filings. The author concludes from that that we can expect SPNG to achieve a current status in their filings by April 30, if not sooner. So it's not the selling that's a good thing, it's the achievement of a long awaited prerequisite that's a good thing.
I don't know that I agree with his conclusions...or the credibility of the players making the promises, but Fred deserves a lot of credit for his efforts.
ps. A while back I noticed, and posted, that the PR that announced the insider purchases of some 18,000,000 shares (if memory serves) actually reflected, in large part, shares held in the account of Mrs. Lazauskas. Fred's work shows that the shares were actually bought for the account of FL....and he transferred them to his wife shortly after finding out that this judgment went against him. He then tried to get the court to exclude his wife's shares from the settlement. The judge didn't buy it.