Quantum Materials Corp. (fka QTMM)

[Long-vestor]

And yet Ex-stock scam player Stephen B. Squires of a stock that held the symbol: OTC: USGA, US GLOBAL NANOSPACE INC and another bogus company 'Avcom Technologies, Inc.' both now defunct and or BK. cited in a formal complaint submitted to the SEC here, and in quote below:

https://www.sec.gov/rules/proposed/s72303/tdcarroll020104.txt

Squires is not a QDOT innovator he's an scam stock participant which is why it was no wonder, none at all, that Steven Posner who was indicted by the SEC several times was the original "lender' and ripped multitudes of millions on discount convertible note, Warrant, and cashless exercise.

That in recent insider reports Squires has been shorting this stock using wify as the named party for "borrowed" shares @ 0.00, and other form 4's @ .04, .05, .06 and .07 While market prices were .08, .10 and .12-.14 respectively.

Wow! the closer I look into history of little Stevey, the worse it gets.

From: Thomas Carroll [[e-mail]]
Sent: Sunday, February 01, 2004 10:09 AM
To: [e-mail]
Subject: Diseningenuos comments made to S7-23-03 "Our Street"
contribution

The Committee:


With respect to you I submit:


An example of a created short trade situation occurring in
2004


A recent activity by a group headquartered in London organized as
"our-street" was directed at a company called USGA. (US Global Nanospace)

For a $200.00 per month subscription (called a gratuity by our-street) they
provide a 2 day notice of upcoming "research".

Apparently the upcoming research involving USGA was an SEC complaint. It
was released to the world on the internet news . I believe M2 was the first
disperser of this press release.

IF our-street had acted within the covenant they established with their
contributors these contributors had a 2 day warning of the release.

Our-street has a receipt from the SEC that a complaint was received against
USGA that Our-street had filed.

The short opportunity.

USGA had seen significant price appreciation in the recent week with the
release of a 2 for 1 forward split. The stock price had reached over $3.00
in interday trading. It had not settled back significantly on it's climb.

(As with many Over the Counter or Bulletin Board issues, (development stage)
companies have no real or even spotty track records. Investors know this
and accept that risk. Investors believe though that every company that
complies with SEC filing requirements and qualifies for listings on our
exchanges is somehow "watchdogged" by the SEC rules and if the company was a
scam or false entity, it would never "pass muster" to be listed at all.)

USGA was an opportunity for the "short", because of it's rapid price
increase and lack of solid financial foundation. Much press and promise,
but no firm contracts. Announced but failed sales. USGA is involved in
in-theatre armor upgrade kits for Humvees and a bio-decontaminant called
All-Clear that is licensed from other parties. They are involved in
explosion containment air cargo containers. (I believe the company has
replied with no comment to callers requesting information on government
contracts.)




The method.

Our-street assembles a "laundry list" of unanswered questions and files this
research with the SEC as a detailed and very professional complaint. By the
covenant created by the request for $200.00 a month gratuities for 2 day
notice Our-street informs those generous contributors of this "research".

With this 2 day notice (funded by a generous gratuity) the conspirator
contributors can establish short positions in the stocks targeted by
Our-street for research.

Value of the Short activity.

With naked shorting, there is some risk. Shares may not be available. If
it's a sure thing however, an "in the know" conspirator can focus his
attention and husband much reward from his foreknowledge. If he is trading
the stock through an overseas account with an overseas brokerage and bank
accounts, ...

USGA may very well be the poster child for this market manipulation by press
release.

IF Our-street was a legitimate watchdog organization would they Press
Release an "SEC Complaint" before an SEC public announcement of such a
complaint?
The release as I read it inferred an SEC complaint by the SEC against USGA.

False Information in the press release:

A count in the laundry list by Our-street purported that USGA had no
patents. Later the same day as the initial PR Our-street retracted the no
patents claim. In another press release == We didn't know they had European
patents. == (Our-street lists a London address). == But we stand by
everything else. ==


Financial Terrorism

Our-street requests tips from interested parties. Obviously an interested
party suggested USGA, a startup. A defense related contractor. Are there
other defense or Homeland Security related companies in a similar position
as USGA? ADZR Adzone research in NY comes to my mind. Our-street didn't
mention them. That I know of. But I don't contribute.


Synopsis:

Our-street uses the specter of the SEC to create incidents that it's
coconspirators can profit from by either selling or shorting a stock because
they are given advance notice of the incident "to happen".

Nick Tracy Enterprises:

Nick Tracy Enterprises was listed on the Our-street website. Nick Tracy
writing for Nick Tracy Enterprises purportedley wrote the following to this
commission:

NEXT PAGES TRACY COMMUNICATION
++++++++++++++++++++++++++++++++++++++++
From: [e-mail]
Sent: Thursday, November 27, 2003 12:33 AM
To: [e-mail]
Subject: RE: File No. S7-23-03
As a public company watchdog we do not trade stocks but we do have extensive
first hand knowledge of the abuses that exist within the Bulletin Boards. We
work full time uncovering those abuses and reporting them to the SEC. We
have
just published a position paper on the subject of Regulation SHO. We offer
it herein.
REGULATION SHO
A prelude to financial chaos
On October 29, 2003, the Securities and Exchange commission issued a
proposed
rule change effecting short selling in a number of ways. The complete
proposal
can be found on the SEC website. We believe their current proposed rule
changes
are the result, in part at least, of an efficiently executed campaign to
eliminate
short selling led by some of the most notorious pump and dump specialists
around.
Attention was further brought to this movement by investrend, a financial
website
that claims to provide "independent" analysis of companies while executing
"shareholder enhancement" programs for their client companies. Investrend
launched
an aggressive PR campaign utilizing an abusive technique called "ticker
spam"
adding as many as 119 company symbols in a single press release in order to
promote its site while campaigning on the side of stock promoters and pump
and
dump stock manipulators against naked short selling. Since no legitimate PR
distribution service allows abusive ticker spamming, investrend used its own
financialwire.net service to effect the campaign. Their efforts have done
more
to keep this situation in the public's eye than any other single activity we
are aware of.
There can be no doubt that the types of abuses that infect the markets
extend
from abusive naked short selling at one extreme to manipulative and
fraudulent
pump and dump schemes on the other. Unfortunately, in its attempts to deal
with
abuses within the area of short selling, the SEC has completely ignored the
market
dynamic and, as a result, has set the stage for an economic catastrophe.
They
are, in our opinion, attempting to treat a symptom while ignoring the entire
patient or considering the cause of the disease in the first place. (It
should
be noted that while naked short selling is illegal on the retail level
within
the US, it is not illegal outside the US nor is it illegal within the market
maker community. This is contrary to many statements by proponents of
Regulation SHO)
Our-Street.com is convinced, based upon years of experience, that the SEC's
current proposed ruling will exaggerate the losses experienced by the
average
investor in micro-cap companies while enriching the worst of the dishonest
stock
promoters in direct proportion to their unethical or illegal practices.
At first, people may scratch their heads and wonder how that could be
possible,
but one only has to understand the market dynamic to realize that this, in
fact,
is the only outcome possible. We're going to repeat this because we want
you to
understand that this is not some kind of overstatement or hyperbole on our
part.
We are totally serious when we say this. We are absolutely convinced that
the
SEC's Regulation SHO, as proposed, will result in utter financial chaos,
increasing
investor losses while enriching unethical stock promoters within the
bulletin
board and pink sheet markets. We further are absolutely convinced, based
upon
how the rule is currently written, that no other outcome is possible. If
you will
take the time to read this article, you will come to understand why we can
say this
with such confidence.
Before you can understand why we can say this with such confidence, you have
to
understand how the market works. The stock market is a dynamic situation.
Within
a market there are many factors all working to influence the market and a
stock's
price, all at the same time. Without going into great detail, on any given
day,
the geopolitical and economic conditions throughout the world affect the
market.
The weather and natural catastrophes affect the market. The market itself
and its
momentum both on an exchange wide basis and within a particular sector or
and
individual stock will affect a stock's performance. The company's
performance and
it's press releases also have a direct effect on a stock as does the amount
of
promotional activity and short selling taking place in the stock. All these
things
can and do affect a stock's price on any given day.
THE SEC AGREES - SHORT SELLING PROVIDES THE MARKET WITH IMPORTANT BENEFITS
When it comes to short selling in general, the SEC acknowledges that "short
selling
provides the market with at least two important benefits: market liquidity
and
pricing efficiency." The SEC explains these benefits further saying that
"Market
liquidity is generally provided through short selling by market
professionals, such
as market makers (including specialists) and block positioners, who offset
temporary
imbalances in the buying and selling interest for securities. Short sales
effected
in the market add to the selling interest of stock available to purchasers
and reduce
the risk that the price paid by investors is artificially high because of a
temporary
contraction of selling interest. Short sellers covering their sales also may
add to
the buying interest of stock available to sellers."
The SEC goes on to explain pricing efficiencies in this way, "Market
participants
who believe a stock is overvalued may engage in short sales in an attempt to
profit
from a perceived divergence of prices from true economic values. Such short
sellers
add to stock pricing efficiency because their transactions inform the market
of
their evaluation of future stock price performance. This evaluation is
reflected
in the resulting market price of the security."
Accordingly, it isn't simply short selling that is the problem, it is the
abusive
short-selling including abusive naked short selling that the SEC is
addressing with
this proposed change in the regulations. We share their concern but do not
support
their proposed solution.
In broad terms, the reason we don't support the SEC proposal is because,
like with
any dynamic situation having a number of components, when you significantly
alter
one component, you change the entire dynamic and unless you address the
offsetting
components. This can create disastrous results if not properly thought
through.
THE BULLETIN BOARD - DANGER AHEAD
With that basic truth established, let's focus specifically on naked short
selling
and exactly where the elimination of it will create economic havoc; that
would be
on the NASD Bulletin Boards. So, why is the bulletin board so different than
other
exchanges that the elimination of naked short selling would cause such a
problem?
The answer lies in the lack of certain listing requirements which are
present on
other exchanges. This would allow a company to structure their stock so as
to make
pumping the stock to unreasonable levels a snap and would virtually
eliminate any
opportunity for short sellers to find any stock to short to combat this
event.
Boxing a Stock
One of the favorite tricks of unethical promoters is to organize or
reorganize a
stock prior to a heavy promotion so that the number of shares outside of
their
control is either greatly limited or virtually eliminated. This tactic is
commonly
called "boxing a stock". This is most usually done through a reverse split
and, in
the case of a shell company, is followed by a reverse acquisition. In
accomplishing
such a reorganization, the amount of freely traded shares is often reduced
to the
level where a legitimate market really can't exist.
The poster child for both the campaign against naked short selling and as
fine an
example of the effect of aggressive promotion a boxed stock as one is likely
to
see was Genemax Corp. (OTC BB: GMXX). With over 15 million shares initially
outstanding, the company began pumping their stock under the direction of
Vancouver
promoter Brent Pierce, whose activities in British Columbia were already
restricted
by a 15-year trading suspension imposed on him by the B.C. Securities
Commission
in 1993.
According to Grant Atkins, one of Genemax's directors, the number of shares
actually
available to the public for trading at the time was 250,000, hardly enough
to allow
for a legitimate market but perfect for those running the promotion to pump
the stock
to beyond $20 from a pre pump level of $1.05 even in the face of heavy naked
short-selling.
Of course, 9 months later, the stock is approaching its pre pump levels as
the
people close to the pump, began dumping their shares into the elevated
market and
reaping a windfall at the expense of all those investors who believed the
promotional hype. Now, the shorts are gone for the most part, and with the
expanded
float, the stock trades at a level that the market is deciding rather than a
level
being decided by the promoters who initially controlled the market for all
intents
and purposes.
One can only speculate how high the stock might have gone had the naked
short
sellers not been there to counter the aggressive promotion of Pierce and his
pals.
Had Regulation SHO been in effect when GMXX was being pumped, there is no
telling
how high they could have pushed the stock since there would not have been
any stock
for short sellers to borrow, hence there would have been no short sellers.
Accordingly, another unfortunate side effect of this lack of short sellers
would
be that there would be no one to counter the aggressive promotion on the
various
message boards where touts hype the stock and short sellers often bring
forth the
negative side of the company.
CONCLUSION
In order to protect the markets serve the common good and maintain a
realistic
market price for stocks we oppose the elimination of naked short selling.
However,
if the SEC determines it wants all to eliminate all non-market maker naked
short
selling, they better make sure that the short selling community has the
ability to
borrow stocks by instituting float requirements on all stocks. We recommend
the
following for a stock to be traded on the Bulletin Boards: A failure to meet
these
standards will move a stock to the Pink Sheets.
1. Public float must exceed 35% of the total issued and outstanding in order
to
qualify for trading on the bulletin boards.
2. At least 60% of the float must remain in street name to maintain a bid
and
offer on the stock. If the number falls below that, the market will revert
to
a "work out" market. (this is where each trade is negotiated and no bid or
offer
is quoted by market makers).
3. A stock must have a minimum of 100 non-affiliated shareholders, each with
a
minimum investment of $1,000 prepaid in cash and in free trading stock in
order
to qualify for initial trading.
TOXIC FUNDING
(THE FLOORLESS CONVERTIBLE SECURITY)
ALSO KNOWN AS "THE DEATH SPIRAL"
In our opinion, the biggest source of short selling and naked short selling
abuses
comes from the use of toxic funding strategies. These come in many forms
from
convertible debentures and options to simple private placements with a
variable
pricing structure based upon future market values. Regardless of their form,
they
all share one common trait. They all allow the funding source to purchase
shares
at a significant discount below the existing market, regardless of how low
the
stock price might fall. This sets the stage better than anything else for
short
selling abuses. A ruthless individual can literally drive a stock from over
$1 to
the sub penny level using toxic funding strategies and make risk-free money
doing it.
Since many, if not most, toxic funding sources exist within obscure offshore
corporations, it is easy for them to short sell at will, undetected and
assure
themselves high profitability with complete disregard for the other
shareholders
in the company.
Still, there are unsavory elements everywhere in business and it is up to
the
unscrupulous or lazy corporate executive to invite these funding strategies
in
before they can abuse the company. Since the dangers of toxic funding are
so
widely known, only a CEO lacking any ethical foundation or one so lazy and
stupid
he doesn't deserve your support would enter into one of these agreements. To
claim
that the capital source promised or agreed not to sell and hurt the stock or
not
to short the stock falls into the same ignorant excuses as "the checks in
the mail"
and "it's only a cold sore".
Toxic funding is an invitation to short selling abuses, it is as simple as
that.
Blaming the system that allows naked short selling for the abuses caused by
toxic
funding is as stupid as blaming the lock manufacturer for your loss after
giving
the fox the key to your hen house.
CONCLUSION
Regardless of the outcome of the SEC's review of naked short-selling we
support
the elimination of floorless toxic funding strategies entirely. If you want
to
stop short sellers from torching a stock, take away the fuel, not the match.
Loosen
regulations so that companies can sell their stock privately at any discount
to
the market they want, just require they disclose it and publish the terms in
a
press release. If they want to sell stock privately for $.01 when the market
price
is $1.00, let them. Just make them disclose it in a press release. For the
market
to survive we must eliminate any opportunity for stocks to be priced at
anything
in the future but a fixed amount or an amount higher than the existing
market price
of the stock.
GET RID OF THE PRIVATE EYE'S AND YOU ARE GOING TO NEED MORE COPS
Curtailing the number of short sellers by eliminating naked short selling
translates into a reduced number of serious investors doing due diligence
and
passing their findings on to the markets and the SEC. The direct result of
this
will be more abuse and less prosecution by the SEC since they will have to
rely
upon themselves more to gather evidence now being provided by short sellers.
In
order to protect the investing public the SEC must look to increasing its
staff
or hiring outside watchdogs as subcontractors to fill in the gap left by the
short seller's departure from the markets.
CONCLUSION
Because of the negative effect it will have on the amount and quality of
support
given the Enforcement division by the short selling community, we oppose the
elimination of naked short selling and favor a focus designed to remove the
opportunity for abuses within all kinds of short selling instead of naked
short
selling itself.
If the SEC moves to eliminate naked short selling, we recommend the
establishment
of subcontractors to act as watchdogs on behalf of the market. This can be
in the
form of a bounty or fee basis.
Respectfully,
Nick Tracy Enterprises, Ltd
Our-Street.com
++++++++++++++++++++++++++
END OF TRACY LETTER





If you would like to contact Mr. Tracy I believe his E-mail is:

[e-mail]

our-street.com is reachable on the web.


Conclusion:

Mister Tracy and his Co-Conspirators have spent much time on this scheme
that they are using to wage a war of Financial Terrorism against the US
Markets. The presence of short selling in any form, allows leverage beyond
imagination. Criminal activity is a cancer and breeds on it's own success.
Short selling allows people who are willing to operate outside the norms of
civil or moral responsibility an untold advantage over the individuals who
play by the rules.

Since this hearing is to reach a conclusion, and it's conclusion if applied
will have no real effect on foreign markets, I might disrespectfully suggest
that opening the US market to allow even individual investors to naked short
would be the most equitable solution. Of course if you reach that
conclusion I'm leaving the country and shorting US Savings Bonds, in an
overseas account.

Thomas D. Carroll. US Citizen.

[e-mail]

PARTIAL TEXT COPIED FROM OUR_STREET WEB SITE FOLLOWS:
++++++++++++++++++++++++
Join us today and together we can take back Our Street and preserve the
American Dream. As a member you will be notified when reports are published
on our site and, if you are the kind of person that wants to be notified
early, before everyone else and want other special service and benefits that
comes from being our primary supporters, we understand and have a special
membership just for you.
+++++++++++++++++++++++


USGA PRESS RELEASES:
+++++++++++++++++++++++++++++++++++
There were 8 results from your search,

US Global Nanospace ,
,SEC Confirms No Complaint Released Against US Global Nanospace - Jan 28
3:35 PM EST,
US Global Nanospace ,
,US Global Nanospace, Inc. Approves Increase in Authorized Shares and
Forward Split - Jan 21 11:28 AM EST,
US Global Nanospace ,
,US Global Nanospace Joins NanoBusiness Alliance - Jan 16 11:07 AM EST,
US Global Nanospace ,
,Dr. Jiang Zhu Appointed Chief Science Officer US Global Nanospace - Jan 06
11:49 AM EST,
US Global Nanospace ,
,US Global Nanospace and Cyclone Aviation Products Announce Manufacturing
Agreement and Initial Order for Twenty S.A.G. Humvee Turrets - Jan 05 9:13
AM EST,
US Global Nanospace ,
,TSWG Technical Brief on All-Clear Chem/Bio Decon Foam Now Available Online
- Dec 24 9:17 AM EST,
US Global Nanospace, Inc. ,
,US Global Nanospace, Inc. Corporate Update - Dec 09 7:15 AM EST,
US Global Nanospace, Inc. ,
,Guardian(TM) Antiballistic Replacement Door Skins (GARDS(TM)) Now Shipping
- Nov 20 5:00 AM EST

+++++++++++++++++++++++++++++++++++++++
Cut and Paste from Our-Street.com
,

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HELP SUPPORT OUR-STREET.COM WITH A GRATUITY
US Global Nanospace, Inc.
OTC- BULLETIN BOARD SYMBOL USGA
Corporate Headquarters:
2533 North Carson Street*
Suite 5107
Carson City, Nevada 89706
775-841-3246
[e-mail]
The Ones Responsible
Officers and Directors and Significant Players
John Robinson
Stephen B. Squires
SEC FILINGS
Some Basic Facts - as of September 30, 2003
Shares outstanding 13 November 2003 - 86,237,839
Total Assets September 30, 2003- $98,029
Total Liabilities - $2,987,244
Revenues for 6 months ending 9/30/03- $125,679
Total Net Loss for 9 months ended 9/30/03 - $3,126,081
Accumulated Deficit - $10,180,436
Stock price when report was published $2.85
Market capitalization $245,777,841
Date Complaint filed: January 28, 2004
Filed with: Enforcement Division Securities and Exchange Commission
CONFIRMATION OF RECEIPT OF COMPLAINT
Known actions to date - None
NOTE: 28 January 2004 - We have received information pertaining to the
foreign patent applications filed by Squires and USDR. These were filed with
the European Patent Center.
We apologize for this oversight but searched the USPTO as indicated by USGA.
We will continue to investigate this matter to determine the status of these
patents. We have also informed the SEC of this error and apologized to them
as well.
As stated below, we previously inquired directly to the company for this
information but they did not respond in a substantive way. We appreciate the
reader who took the time to get us this information.
PATENT INFO
THE SEC COMPLAINT
SUMMARY
BELOW IS A SUMMARY REPORT. TO READ THE ACTUAL COMPLAINT CLICK ON IT.
Before we get into this report in depth, we want to make it very clear here
that we support the idea behind anything that will make the troops in Iraq
and elsewhere safer.
As much as we support the war on terrorism and Homeland Security, we also
have a problem with companies that use these and other hot topics to promote
their stock and that is the focus of our report today. US Global Nanospace,
Inc. is a company that has capitalized on both and seen their stock
skyrocket while consistently failing to deliver. We find this most
troubling.
Due diligence produces clues as to some possible reasons why these failures
occurred.
US GLOBAL'S PRODUCTS
ALL-CLEAR(tm)
We also have some real problems with USGA's representations about this
particular product.
We have noticed that USGA posted the following claim on their website, that
ALL CLEAR (tm) is "designed to allow expansion to include remediation of
agro-terrorism or pesticide threats and to mitigate other livestock or
agricultural risk from diseases such as Mad Cow, Hoof & Mouth or bacterial
wilt"
They also claim
"In addition, ALL-CLEAR is being efficacy tested internationally for
eradication and containment of both Hoof-and-Mouth and Mad Cow diseases and
for use in other wide area applications, such as decontaminating aircraft
arriving from quarantined areas and decontaminating farms and ranches"
Mad Cow disease is caused by prions. Animals are infected when they eat food
containing these prions. We have seen no evidence that MCD is transmitted by
casual contact or even between cows who may from time to time kiss
passionately.
Animal feed is contaminated with prions when feed processors grind up parts
of animals infected with the disease to make food such as bone meal. It is
not spread like a virus or bacteria might be spread. Basically, when you
feed a cow, food containing bone meal from another cow (cannibalistic cows,
imagine that) and that bone meal was made from a cow with MCD, then the
disease is spread to the cow eating cow. (tofu burgers anyone?).
Just like many people pumped their stock based upon some far fetched
connection to anthrax when that scare was most vivid in American's minds,
today many companies are attempting to attach their products to one of
today's latest hot-buttons, two of them being nanotechnology and Mad Cow
disease.
More than being a product which actually represents the ability to interrupt
the MCD cycle and play a material part in its eradication, we believe that
the only cycle being truly affected here is most likely the pump and dump
cycle. In fact, we think the best way ALL CLEAR(tm) might be effective in
preventing a cow from becoming infected with Mad Cow disease would be to
stick the spray nozzle up the cow's ass as it approached the contaminated
feed and discharge the unit until the cow thinks better of it and changed
directions.
Neither TIAX or the US Government has suggested this product is designed to
impact the global Mad Cow problem and we would like some scientific support
for US Global's contentions prior to taking them at face value.
Guardian anti-ballistic security cockpit door
SALES BUT NO REVENUE
Another serious problem we have with US Global Nanospace is their
consistency in announcing and promoting their stock based upon contracts
that never materialize.
Let's examine the many claims and statements as well as the truth
surrounding the alleged sales of the companies Guardian cockpit door.
On July 25, 2002 USGA, (then Caring Products, Inc) announced that their
"proprietary Guardian Anti-Ballistic Panel Cockpit Security Door was
selected for installation in DHL Airways' DC8 cargo aircraft. DHL, an air
cargo industry leader, is anticipating the need to comply with broadening
FAA flightdeck security regulations, initially enacted only for
passenger-carrying aircraft."
They went on to claim that "The Guardian Door is expected to be the first
reinforced cockpit door to receive STC certification from the FAA, which
USDRGA anticipates receiving by August 2002."
They earlier announced in June 2002 that the application for STC
certification had entered phase 5, the last phase in the approval process.
In their February 2003, 10Q, the company claimed that "on September 11,
2002, we entered into an agreement with El-Al Israel Airlines to install the
Guardian (TM) Door on El-Al's 747-200B aircraft."
Then again on April 25, 2003 the company announced that "US Global
Aerospace, Inc. (OTC Bulletin Board: USGA) announced today it has received
new orders totaling $1,440,500 for 38 of the Company's Guardian(TM) Cockpit
Security doors. The new orders include doors for El Al Israel Airlines'
Boeing 737, 747, 757 and 767 fleets, and Aer Lingus' Airbus A320 and Boeing
737 fleets. The USGA Guardian(TM) door is the only enhanced security flight
deck door that has passed the Israeli Security Agency's (ISA) extensive
testing and been determined by the ISA to meet its rigorous standards." (Was
this the same or a different El Al order?) (We also want to note that US
Global has subsequently edited the original press release on their website
to remove any mention of Aer Lingus for reasons which will become apparent).
In May 2003, this claim was expanded by Stephen Squires, who at that time
was claiming to be the "Vice Chairman" of the company in an interview with
the Reno Gazette. He claimed then that ""We have 200 firm orders from
existing airlines, inside and outside the U.S., including (Israel''s) El Al
Airlines"" In this same article, Squires claimed that "About 50 of the
Carson City-based company''s nearly 500 employees are involved in" the
Guardian door program." Of course, USGA never has had anything close to 500
employees.
It is now 1 1/2 years after August 2002 and the FAA has still not issued the
STC certification for the Guardian door.
According to his resume, President John Robinson had considerable experience
working with the FAA prior to becoming President of USGA. We believe he knew
or should have known that FAA approval would be highly unlikely or
impossible within the 35 days as he claimed when announcing the DHL sale.
In their July 11, 2003 filing of their 10K, the company basically attempts
to unwind everything it claimed previously by saying:
In April 2003 El Al Israel Airlines, while it was under the control of the
government of Israel, submitted an order to USGA for the purchase of
Guardian Doors for its fleet of aircraft. Since that time, however, the
airline has been privatized. Currently we are unsure whether the change in
ownership will have any effect on the purchase of the doors. In April 2003
we also received a purchase order from Aer Lingus, the national airline of
Ireland, for Guardian Doors. Shortly after we received the purchase order,
Aer Lingus notified us that it intended to award the contract for the
cockpit doors to Airbus. We believe that the major original equipment
manufacturers (OEMs) in the aircraft industry have such overwhelming
resources and influence in the marketplace that it will be difficult or
impossible for us to gain entry, even though we believe that the Guardian
Door is the best product available. We are currently reassessing our ability
to compete successfully in the OEM-controlled market for secure cockpit
doors. However, we will continue to obtain a wide range of STC's for very
specific markets, as we have identified a number of profitable custom door
opportunities in areas that we believe the major OEMs are unwilling or
unable to supply.
Although anything is possible, after researching matters we have serious
doubts about the accuracy of these claims. Here's why
1. El-Al only floated between 15% and 24% of their outstanding stock so the
government retained control of the company. If firm contracts were in place,
we believe that El Al, as a corporation, would still be required to honor
its commitments. Of course this assumes that USGA was being completely
truthful when it clearly stated that these were firm orders.
2. Air Lingus, on the other hand, announced the very next day after the US
Global press release that they had completed installation of secure cockpit
doors on all 7 of their international Airbus 330 jets. Additionally,
according to USGA their doors are designed to Boeing model 7x7's and the
Airbus 320. USGA doesn't mention the Airbus 330 which is an entirely
different plane from the 320.
The article also indicated that Aer Lingus was "in the process of examining
options for the introduction of the doors on all short haul flights". Come
on now, let's take a reality pill here. Aer Lingus was even more financially
troubled following 9-11. Furthermore, it is common knowledge that Airbus is
a government subsidized airline. Their only immediate requirements were to
have security doors installed on their international flights and that was
announced as COMPLETED THE DAY AFTER US GLOBAL ANNOUNCED THE SALE!
I admit to being born at night, but it wasn't last night! Something stinks
here. Something stinks real badly.
So, did Aer Lingus cancel or was there ever a purchase order produced in the
first place? Another aspect of this we find if very hard to accept is that
any reliable companies would cancel a purchase order. Purchase orders
normally are the final step in the process of acquiring a product and are
designed to specify exactly the details of the item being purchased at that
time. For example, a company might contract to purchase 7 cockpit doors from
a supplier then issue the first purchase order for 2 of those doors to
signal the desire to have them shipped pursuant to the contract.
Something stinks here and we would like to know exactly what happened with
the orders and the certification. We simply aren't buying the excuses given
by USGA.
AND, BY THE WAY, WHERE ARE THE OTHER 162 DOOR ORDERS?
Let's not forget what Vice Chairman* Stephen Squires told the Reno Gazette.
""We have 200 firm orders from existing airlines, inside and outside the
U.S., including (Israel''s) El Al Airlines"".
According to Rich Schineller, the man in charge of investor relations for
USGA, the El Al and Aero Lingus orders totalled 38 of the 200 represented in
the Vice Chairman's statement. So, where are the orders for the other 162
Guardian Anti-Ballistic Cockpit Security DoorS?
Here's another question that really needs to be answered. Is USGA a
Production Approval Holder? A Production Approval Holder (PAH), according to
the FAA, is the holder of a Production Certificate (PC), Approved Production
Inspection System (APIS), PMA (Parts Manufacturer Approval) or TSOA
(technical standard order authorization) who controls the design and quality
of a product or part thereof. Since USGA is quick to brag about
accomplishments, many of which are called into question because they never
materialize, you would think they would disclose it if they were. It seems
that the FAA requires not only certifies parts like different doors used to
retrofit passenger airplanes, but they apparently certify manufacturers and
designers as well.
The last mention of the Guardian cockpit doors in a company press release
was in an October update where it merited only three lines saying that the
company claimed to still be talking to El Al about their doors and that they
hadn't yet received the FAA certification that John Robinson assured the
current and potential investors would be granted by August 2002. The
subsequent Company Update listing the company's primary products didn't even
give the Guardian door a mention.
Total value of door orders
between Aer Lingus and El Al $ 1,440,500
Total approximate value of all
200 firm orders @ $50,000 each $10,000,000
(USGA claims a value of $40,000
to $180,000 per door)
TOTAL REVENUE FROM SALE $ ZERO - ZIP - NADA
OF DOORS
NO SALES! IS THERE ANYTHING ELSE?
Well, let's try to be accurate, USGA did manage to sell some Radomes for
total gross revenues of $125,679 in the last 6 months. These were the first
revenues since the company's inception in March 2002 and allowed the company
to hold the accumulated deficit for the first 21 months to only $10,475,838.
MOOSE RIVER CONSULTING? WHO COULD FORGET MOOSE RIVER CONSULTING?
On October 29, 2002, the company proudly "announced its acquisition of the
Nanosil treatment technology through an exclusive license agreement with
Moose River Consulting, Inc. Nanosil is a proprietary super hydrophobic
surface modification process that produces surfaces that are designed to
repel water completely."
They also announced that their market potential for their Nanosil technology
would exceed $50,000,000 per year!
The acquisition was disclosed in the subsequent 10Q in November 2002 and was
never heard of again.
ANYONE CARE TO TELL US WHAT THAT WAS ABOUT? DID THEY ACTUALLY ACQUIRE IT?
WHAT HAPPENED TO IT?
WHO IS MOOSE RIVER? WHERE ARE MOOSE AND SQUIRREL?
Vice Chairman?
Stephen Squires, inventor of many of USGA's technology and Chief Technology
Officer of USGA was interviewed by The Reno Gazette in May 2003. Steve
demonstrated, better than most, the companies complete disregard for
accuracy. First of all, he presented himself as the Vice Chairman of USGA.
This position usually describes a director of the company who would serve as
Chairman in the event the Chairman wasn't able to. Of course, when the
company filed its 10K in July, Squires was not listed as director or an
officer and certainly not Vice Chairman.
Of course Squires had other interesting statements which were equally as
questionable. Here they are.
US Global Aerospace Inc.''s previous work was mostly classified, ""so you
wouldn''t see a lot about us,"" said Vice Chairman Steve Squires.
Of course, prior to getting involved in the Guardian cockpit door, the
company called itself Caring Products International and their work was
designing "a line of proprietary urinary incontinence products with
disposable liners which were sold under the Rejoice brand name in the U.S.,
Canada and Europe" Of course, we never realized that adult diaper technology
falls under the heading of national security requiring their development to
be "mostly classified" but that is what Vice Chairman Squires seemed to be
telling us.
""Really our expertise is in advanced materials development, mostly
nanosciences,"" Squires said.
Prior to announcing the hiring of Dr. Jiang Zhu on January 2, 2004, the
company had not revealed any credible evidence to support this claim. We
have seen no resume for Steven Squires, USGA's Chief Technology Officer so
only know he used to be the president of Avcom Technologies and was
responsible at least in part for Wheelits a lighting system designed so
"THAT PEOPLE COULD SEE YOUR COOL CUSTOM WHEELS AT NIGHT WHILE YOU ARE
DRIVING DOWN THE ROAD"
Strangely enough, Avcom Technologies' parent company before it went bankrupt
was United States Defense Research. Hey, isn't USDR owned by John Robinson?
Small world!!
Here is another statement from the Vice Chairman.
""We have 200 firm orders from existing airlines, inside and outside the
U.S., including (Israel''s) El Al Airlines,"" he said. ""That will grow
substantially now that the rest of the carriers can see the time savings.""
We already have covered this claim so no sense going over it again. Are you
starting to get the picture here? But wait, here is another Squires-ism.
About 50 of the Carson City-based company''s nearly 500 employees are
involved in this program, he said.
""We hope for 2003 to have 5 percent market in the U.S. and 10 percent of
the world share,"" the executive said. ""That''s $56 million in revenues
and we think that''s conservative.""
When USGA filed its 10K in 60 days later, it was revealed that the company
only had 11 full time employees. Plus, given what we know now about the door
situation, and given at the time, the door was not certified and the company
had zero revenues from inception, does anyone think $56 Million in the next
9 months was conservative in Squires or Robinson's mind?
Executives offices are WHERE???
* The article also described the company as a Carson City based company.
What the company has never bothered to disclose to the market is that their
address of
2533 North Carson Street*
Suite 5107
Carson City, Nevada 89706
belongs to Laughlin Associates, a Nevada incorporation company that also,
for a fee, allows you to call their offices yours. There isn't a 5th floor
in this two story building so Suite 5107 will be kind of hard to find. Now
technically, Laughlin Associates offers their incorporation customers a
special package where, for a fee, you can probably qualify to CALL their
offices your office to qualify under the tax codes as Nevada has no
corporate income tax. You also get use of conference rooms and other office
features when you are in town but if you ask yourself the question, does
John Robinson and his associate of many years Julie Seaman or any other full
time employees (actual not technical) show up for work at the Laughlin
offices every day? We don't think so. They are all working out of their
actual offices at 1016 Harris Road, Arlington, Texas. Now frankly, we don't
care what kind of charade a company wants to use to get the proper tax
breaks but we think it is inappropriate at least to represent to a reporter
that your company is a Nevada based company like Squires did and make it
sound like it is a genuine part of the Nevada economy.
Of course, one has to question what kind of reporter would simply interview
a person then write a story without even bothering to check any of the
facts. Talk about lazy and irresponsible reporting! PR companies do that but
they are paid to regurgitate company promotional rhetoric. We always thought
reporters and ESPECIALLY business editors like Ed Shur were supposed to be
more responsible than that. We wrote Mr. Shur to see what steps he took to
confirm the various representations made by Squires and the only reply we
got was that they didn't share non-published information but "the proper
attributions were in the story". Given the strength of his work here, he
should consider applying for a job at the New York Times.
TROUBLE WITH PROCEDURES
Normally we wouldn't concern ourselves if a company failed to measure up to
the standards expected by an accounting firm for reporting to the SEC.
However, US Global is a company that has set its sights on working with the
FAA and meeting their ever so stringent record keeping requirements. Because
they are responsible for keeping air travel safe both mechanically and in
matters of security, we are certain that the level of compliance required
for companies working within the industry probably exceed that of a public
company. Furthermore, when it comes to the war on terror, national security
and the military and the war on terror we also believe companies who seek to
do business with the the military and the manufactures who supply them with
equipment must also have their internal systems for recording and reporting
efficiently established. That is why we find it so troubling to read this
disclosure in the company's last 10Q.
"Our Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO")
carried out an evaluation of the effectiveness of our disclosure controls
and procedures as of the end of the period covered by this report. Based on
those evaluations our CEO and CFO believed that our disclosure controls and
procedures were designed to ensure that information required to be disclosed
by us in the reports we file under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods
specified in the Commission's rules and forms and that such information is
accumulated and communicated to our management, including the CEO and CFO,
as appropriate to allow timely decisions regarding required disclosure.
However, this review was based on historical practices and procedures. Our
CEO and our CFO were informed by Grant Thornton LLP ("GT") in July 2003 that
our historical practices and procedures were not effective, would not insure
timely reporting of the information required to be reported and would have
to be changed. As a result of the foregoing, we will be implementing
significant changes in our disclosure controls and procedures. We intend to
take immediate corrective actions."
We are concerned this could be a visible symptom of a problem far greater
than what has been revealed. Is this company run with the type of a
commitment to accuracy and efficiency that should be contracting to help
provide for your defense and the defense of your military?
POSSIBLE LEGAL PROBLEMS?
We also located information pertaining to some litigation involving Stephen
Squires and his Avcom Technologies, Inc. We have highlighted the troubling
phrase in the failed appeal made by Avcom and Squires. During the trial, it
reveals that:
Due to a ""dire financial situation,"" Avcom subsequently executed an
assignment for the benefit of creditors, transferring all of its assets to
another company.
Now, we are not attorneys so we are only speculating here but were these
assets the rights to the technologies now being developed by US Global that
were transferred and was Robinson's USDR Global Aerospace, Ltd. The timing
certainly seems appropriate and these technologies were transferred
apparently first from Squires and/or Avcom to USDR then from USDR to US
Global. If this is the case, then this makes the fact that USDR appears to
have been the parent company of Avcom at one time even more relevant and
interesting.
Since it appears also that the failed appeal resulted in a possible
judgement for the plaintiff, we are also wondering if the plaintiff might
also have a claim against the property transferred. We are attempting to
contact the plaintiff to determine if this is the case. If there is
something here, it could certainly explain why Stephen Squires suddenly
decided to start going by S. Brad Squires. One thing for sure. We have a lot
more questions than we have answers about this particular situation.
CONCLUSION
US Global Nanospace, Inc. is a company that has demonstrated the ability to
talk the talk an awful lot more than it has walked the walk.
They are a company that has promoted themselves based upon claims of FIRM
orders for about $10,000,000 worth of their cockpit doors yet failed to
generate a single dollar in revenues from those doors despite the fact that
they claim these orders go back as far as September 2002.
They are the kind of company that explains to a reporter that the reason
they hadn't been heard of much before was because their work was mostly
classified when their previous products were adult diapers.
They are a company that appears willing to jump on just about any bandwagon
in order to promote their stock including the Mad Cow disease bandwagon.
Now they are asking us to believe that the military is actually testing
their Humvee turret in Iraq and Afghanistan. Given their past tendencies,
are we to believe them or is this simply another exaggeration? They recently
announced that they have made a deal with an Israeli manufacturer to build
their turrets and that the deal included an initial order of 20 turrets.
What they didn't spell out, as usual, was who ordered the turrets. We
suspect this order was not an order from a USGA customer but rather from
USGA itself. Not surprisingly, the news release didn't make this point
clear.
Many of the answers to our questions raised here lie within the files of
USGA's corporate offices... no... let's try to be more accurate. Many of the
answers to the questions raised here lie within the files at the company's
offices in Midland, Texas. We have written them to clarify the issues about
these contracts and sales and will report here what we learn when/if they
respond.
Frankly, we are concerned enough about the apparent deceptions going on that
we feel the SEC should give serious consideration to taking a look at
exactly what is going on at this company.
As always, we will gladly provide a forum for any documented and verifiable
comments by the company and will promptly and sincerely apologize for any
errors in our facts. Our commitment is to bring forth the truth and the
facts in the matter and we encourage US Global Nanospace to produce whatever
documents they can to clear up our concerns and the concerns of what we
assume are many USGA shareholders.

END MATERIAL FROM FROM OUR-STREET WEBSITE

End of submission by Thomas D, Carroll

Respectfully,

Thomas D. Carroll

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