2007 post connecting Pete Jacobs ERBB (SUNNCOMM) and Scott Stoegbauer Media Max insider scheme..hastag #OGpennyplayas
foggyday Tuesday, 01/16/07 02:35:36 PM
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SunnComm sells a product called MediaMax that's based on an impossibility --- Digital Rights Management, or DRM for short.
Theoretically, DRM allows "copyright holders" to stop people from copying their product.
It's a ridiculous claim from moral, practical and technical points of views. But putting the 'Is is right?" aspect to one suide, is it even possible?
The short answer is No.
If something can be seen and/or heard, it can be copied by many and various analog and/or digital means. It's therefore hardly surprising that SunnComm's MediaMax has been notable more for the speed with which it's been cracked than for its effectiveness.
And yet companies such as BMG, one half of the Sony BMG record label and a founding member of the Big Four music cartel, says it's using SunnComm product to protect it's product.
As we've said before, to paraphrase Oscar Wilde, the BMG SunnComm deal is perfect example of the unspeakable in full pursuit of the unattainable.
A while back, we heard from an investor who promised a close-up of SunnComm.
Read on >>>>>>>>>>>>>>>>>>>>>>>>
SunnComm to MediaMax Technology Corporation: A rose by any other name?
By Astrid Cameron (pseudonym)
On February 18th 2005, SunnComm International, Inc’s marketing arm, Quiet Tiger, Inc., announced that it was changing its name to MediaMax Technology Corporation and just 6 weeks later both SunnComm and MediaMax Technology Corporation signed a letter of intent to merge.
Anyone familiar with the history of SunnComm might be surprised at this decision. It was just 14 months before this planned merger was announced that SunnComm separated out its marketing activities into the shell company Quiet Tiger.
Why would SunnComm go to the trouble of separating out their marketing activities into a different company and then, just a short time later, plan to merge with that company, effectively creating an entity that was more or less the same as the pre-separation SunnComm?
There are two main reasons behind this.
* Firstly, it enabled certain individuals to strip SunnComm shareholders of about 25% of the value of their company without those individuals having to contribute anything.
* Secondly, following the planned merger SunnComm will no longer exist and the new company, Mediamax Technology Corporation, which is effectively the original SunnComm under a new name, can move forward without having to carry the baggage of SunnComm’s shady history.
Lets first look at what really took place over the past year in relation to the separation of marketing activities and subsequent agreement to merge.
'Several incarnations'
The 2004 marketing agreement announcement made the following statement:
Quiet Tiger, Inc. (OTCBB: QTIG), an international marketer of digital content security products for the music and entertainment industry, today announced that it has entered into an exclusive marketing agreement with SunnComm Technologies, Inc. (OTC:STEH), a leader in digital content security and enhancement for optical media.
Under the terms of the agreement, Quiet Tiger will be the sales and marketing arm for SunnComm´s MediaMax M4 suite of products that provide copy management protection for CDs while simultaneously enhancing and expanding the consumer experience. Quiet Tiger will begin marketing MediaMax M4 on February 16, 2004.
Was Quiet Tiger an international marketer of digital content security products for the music and entertainment industry as the press release stated?
Anyone can call themselves anything, but a company with no employees (excluding “directors”, a ceo who was resigning and a part time cfo) could hardly be called an international anything, apart from an international sham.
Quiet Tiger has had several incarnations in the past.
During 2000 Fan Energy Inc, as it was then called, described itself as an independent energy company engaged in the exploration and acquisition of crude oil and natural gas reserves. In 2001 it acquired some second hand floppy disk manufacturing equipment and became a manufacturer of 3 ½” floppy disks with plans (within months of the acquisition) to manufacture almost 5% of the world’s requirement for 3 ½” floppy disks, even though it had no manufacturing employees or manufacturing plant.
A year later SunnComm announced they planned to merge with Fan Energy and would use 50% of the company’s floppy disk output. The merger didn’t take place at that stage, but SunnComm did acquire a controlling interest in Fan Energy through the sale of its old copy protection technology (MediaCloq) for a majority of Fan Energy’s shares.
Fan Energy never produced any floppy disks (except for a “test” batch). It did, however, change its name to Quiet Tiger, Inc and SunnComm ceo Peter Jacobs and coo Bill Whitmore assumed the same roles in Quiet Tiger for a short period. They later resigned from those positions, but SunnComm cfo Albert Golusin continued to serve as part-time cfo of Quiet Tiger.
In January 2004, when SunnComm announced the marketing agreement with Quiet Tiger, Quiet Tiger had no known employees except for the part time cfo, Albert Golusin, and their ceo, Carrigan, who was resigning to make way for the new ceo coming from SunnComm.
'Cash assets of $840'
This was the company designated as an international marketer of digital content security products for the music and entertainment industry.
But they did announce as part of the agreement, SunnComm´s William H. Whitmore Jr had been appointed to the Quiet Tiger board of directors and was named president and ceo of Quiet Tiger effective immediately. They later hired Scott Stoegbauer as vp sales and marketing, and all subsequent Quiet Tiger SEC filings list Whitmore, Stoegbauer and part-timer Golusin as their only employees.
As of the date of this report, the Company had two full-time employees involved in the sales of MediaMax and one part time employee………..
The Company currently has two full time employees: William H. Whitmore, Jr, as its ceo and Scott Stoegbauer as its vp sales and marketing.
If it didn’t have employees at the time of the agreement, what did it have?
It had cash assets of $840, the second hand floppy disk equipment valued as of 12/31/2003 at $100,000 and deposits of $10,650. The floppy disk equipment has been subsequently fully written off.
Liabilities were $574,670.
It also had shareholders who seemed to benefit enormously by the agreement which gave Quiet Tiger 40% (50% following a sales threshold) of the MediaMax product revenue, which included the revenue from SunnComm’s then existing BMG contract.
SunnComm received 74M shares of Quiet Tiger (and already had 22.2M shares from the previous agreement with Fan Energy), so would own 70% of Quiet Tiger following the agreement. So SunnComm shareholders lost 15% of the revenue from the technology they funded by this agreement (assuming a 50/50 split, their share amounted to 50% plus 70% of 50%, or 85%).
But it gets worse.
SunnComm announced they would distribute their 96M (initially announced as 80M, but later changed to 96M) shares of Quiet Tiger to SunnComm shareholders as a dividend over 4 quarters. They made one distribution of 24M shares on October 22, 2004 and then suspended the remaining distributions.
Although the announcement of the planned distributions was made with much hoopla and had five different press releases devoted to it over a six month period, the cancellation of the remaining three dividend distributions was only formally made known through an SEC filing by Quiet Tiger (now MediaMax Technology Corporation) and not by SunnComm:
On October 21, 2004, SunnComm International, Inc distributed a total of 23,879,049 MediaMax Technology Corporation common shares under this Prospectus to its shareholders of record at September 30, 2004.
All shareholders of SunnComm International, Inc who received MediaMax Technology Corporation common shares were listed at Exhibit 99.1 to MediaMax Technology Corporation's
Post-Effective Amendment Number 1 filed on December 20, 2004. SunnComm does not intend to make any further distributions of MediaMax Technology Corporation shares to its shareholders.
The SEC filing didn’t give any explanation for this decision, but a spokesman for SunnComm, Mario "Ike" Iacoviello, posted this condescending explanation on the Investorshub message board for SunnComm that's frequented by many SunnComm investors:
1. Dividend/Merger,
1 for 1 - a shareholder friendly deal for our long term shareholders, I understand that you believe you deserve the dividend too however the 1 for 1 fair valuation is a better deal than the former remaining dividend distributions could have possibly been. We replaced your bread with CAKE and in order to bake your cake we need to spend the bread. If you are unaware of how WELL you have been taken care of here, please call me and I will discuss it with you. Managements position is that the former dividend will either be retired into the treasury or used to pay off debt.
Mario "Ike" Iacoviello, it should be noted, has had an illustrious career in the securities industry. This is an SEC litigation release from 1999.
According to the Commission's Complaint, filed on May 14, 1998, Iacoviello violated the antifraud provisions of the federal securities laws while employed as a registered representative with the San Diego branch office of La Jolla Securities Corp. by accepting undisclosed compensation for recommending and selling stock in RMS Titanic, Inc. to his clients.
Since there are approximately 450M shares of SunnComm issued and 180M MediaMax Technology Corporation shares issued (24M of which are in the hands of SunnComm shareholders following the first dividend distribution mentioned above), then after a 1:1 merger SunnComm shareholders will hold 474M of the total 630M MediaMax Technology Corporation shares that will be outstanding.
That's just 75%.
Desert Winds Entertainment
So the merged company, that will carry the name MediaMax Technology Corporation, will be identical to the SunnComm International that existed prior to the 2004 marketing agreement, except the original SunnComm shareholders will now only own 75% of the new entity instead of the 100% that they initially held.
That's a lot to pay to move a few employees across the hallway and back.
Not only did Quiet Tiger (now MediaMax Technology Corporation) have no employees, it was also located just across the hallway from SunnComm at the time the marketing agreement was entered in to.
The other reason for this convoluted separation of function, name change and subsequent planned merger is to hide from SunnComm’s shady past.
Prior to becoming SunnComm, the company was called Desert Winds Entertainment and its president and ceo was Michael Paloma.
In August 2002, the United States District Court for the District of Columbia entered this final judgement against Desert Winds Entertainment and its Principals.
The Commission's complaint against the defendants alleged that Paloma, Bardasian and Desert Winds committed securities fraud when they issued numerous press releases falsely claiming that Desert Winds had signed a $25,000,000 contract with Warner Bros. Television. The Desert Winds' principals also filed a registration statement with the Commission on Form 10-12G, making the same false claim and recognized a receivable from the alleged contract as an asset of the Company. No such contract existed. The complaint further alleged that Paloma and Bardasian profited from their involvement with the company by illegally selling restricted shares of Desert Winds stock.
In early 2000, Desert Winds Entertainment changed its name to SunnComm and Peter Jacobs took control as president and ceo.
In December 2000, SunnComm issued this press release:
SunnComm Inks $20+ Million Copy Protection Deal With Major Pacific Rim CD Manufacturer
PHOENIX--(BUSINESS WIRE)--Dec. 14, 2000--SunnComm Inc. finalized a seven-year (minimum) $20+ million dollar contract with Will-Shown Technology Co., LTD Taipei, Taiwan to provide audio copy protection for Will-Shown Manufacturing of audio compact discs……….
In the weeks following this announcement SunnComm’s share price tripled.
Shortly afterwards, some investors on Raging Bull’s message board for SunnComm (ticker SUNX at the time) decided to do some DD on Will-Shown, the so-called Major Pacific Rim CD Manufacturer, and discovered the company didn't exist.
It had no web site, there were no references on the web to such a company (apart from those related to that press release) and it wasn't listed in the Taipei phone directory.
Despite numerous requests, SunnComm refused to provide any contact information for Will-Shown to the message board posters.
SunnComm was in a fix. How could itcontinue with the deception for the seven years of the deal without being caught out, now that so much attention was focused on it? But to own up would be admitting to securities fraud.
Canceling the deal seemed like the best option.
In its SEC filing on 4/18/2001, SunnComm stated that, “the Company and Will-Shown have each mutually agreed to defer the effective date of the license agreement so we may focus our efforts on the domestic market”.
That SEC filing also included the “contract” with Will-Shown Technology, and that contract gave the address of Will-Shown Technology as: 2A, No 137, SEC, 2, TA-Tung Road, Shiju City, Taipei Hsien, Taiwan.
'The deal went awry'
But that was a bogus address. All addresses on TA-Tung Road have a common address format. If the company is on a floor of a building, it will be given as 2F or 2nd Floor (if the 2nd floor for instance), otherwise just the street number is given.
A Google search on “TA-Tung Road” Taipei will reveal this common format. But the contract showed 2A, not 2F. Even if one were to accept that this might be just a typo (although it appeared twice in the contract) and should have been 2F, then Will-Shown must be sharing that room with Mixermate Technology Corporation, because that's its address.
In any case, e-mails to other tenants at No 137, SEC, 2, TA-Tung Road revealed that no one there had ever heard of Will-Shown Technology.
When confronted with these allegations by Ashlee Vance of The Register, this was the reported excuse for canceling the deal:
Behind the scenes, however, the deal went awry as SunnComm became concerned about entering the Chinese CD market.
It was advised by government officials and a consultant that certain groups in China and Taiwan would probably try to break SunnComm's DRM technology.
"We went over there and had numerous discussions," said Anthony O'Brien, a one-time consultant for SunnComm.
"My advice was not to do anything because the technology would only be used by companies to break it and abuse it. Everything was murky over there then, and no one could guarantee it could be protected."
This advice prompted Jacobs to pull out of the deal.
"Once we learned that, we told (Will-Shown) we were not ready to expand internationally. At worst, it's the worst example of our work to date," Jacobs said.
That simply doesn’t hold water.
'Technology wasn't top-secret'
Is the suggestion that only Chinese “groups” would attempt to break the DRM? Are there no hackers in the USA? And if the technology was so top-secret that the government advised not to sell it in China (presumably because it would give some technological advantage to the Chinese), couldn’t the Chinese just acquire a CD protected with the DRM from whichever country it is released in.
What’s more, the technology wasn't top-secret and the method employed was described in the above SEC filing (and in a previous one from the company). It was based on a corrupted CD’s Table of Contents, a method employed by many other copy protection companies.
It is unfortunate that Vance didn't pursue the allegations that Will-Shown didn't exist. After all, a Major Pacific Rim CD Manufacturer shouldn’t be too hard to locate.
He left Jacobs off the hook, apparently accepting that Will-Shown Technology existed because those interviewed for this story have documents detailing negotiations with the firm. The issue had been raging for almost four years and could have resulted in hefty jail sentences or fines for those involved if the deal was proven to be a fabrication, so there was plenty of time to “create” evidence of negotiations.
Did he expect them to own up and say they were sorry?
A simple check of Taiwan’s company register would have proven that no company by the name of Will-Shown Technology existed at the time of the Press Release, and a quick taxi ride by The Register’s contacts in Taipei would have proven that the address was bogus.
And what of Jacobs’ quote: "Once we learned that, we told (Will-Shown) we were not ready to expand internationally".
I’m sorry Mr Jacobs: you also told that to the SEC in your SEC filing, so are you now stating that you lied to the SEC in that filing?
Two months after making that SEC filing, SunnComm withdrew the filing and hasn’t filed since with the SEC.
Another part of their history that they might like to hide was when they announced (the PR now removed from their website) back in November 2001 that it had licensed its technology to Dstage Inc for a one-time fee of $4M.
This is how the press reported it:
SunnComm Inc. today announced that it has licensed its proprietary copy management technology to Dstage.com Inc. for a one-time fee of $4 million.
The press release failed to mention that this wasn't a cash transaction, as the PR implied, but for 2M restricted shares in Dstage.
For those who might have checked, they would have noted that Dstage’s quarterly filing for September 2001 revealed they had just $1.7M in assets, predominantly made up of pre-paid services and an idle shoe manufacturing facility built in 1998 and located in Davao City, Philippines (this was later written off completely).
Their cash position was just $11,624. Their total revenue for the nine months to September was just $53,500.
It was only through reading Dstage’s SEC filings that investors discovered that the $4M was for 2M restricted shares in Dstage at a nominal value of $2 each (Dstage traded just a few hundred shares per week and the highly manipulated price averaged about $1).
'A cupboard in an office'
SunnComm then issued a press release saying it would pass on all these shares to SunnComm shareholders as a dividend.
Phoenix-based SunnComm Inc. Thursday announced that it will be issuing 2 million shares of Dstage.com Inc. stock to its shareholders as a stock dividend.
They never did issue those shares and the Dstage’s (now Camelot Entertainment) share price drifted down to just 0.01 cents by early 2003.
They may also want to forget their announcement that they'd formed 11 new international subsidiaries and that SunnComm shareholders would receive a share dividend representing ownership in each subsidiary.
A year later and not one further mention of the subsidiaries or the dividends.
They may also want to forget some of the statements they made when the originally planned to merge with Fan Energy (later to become Quiet Tiger and now MediaMax Technology).
They stated:
Fan Energy’s disc production facility is currently being prepared for shipment to a new facility near SunnComm’s headquarters in Phoenix, Arizona. When operational, the plant can produce 6 million floppy disks per month. As part of the merger, SunnComm has committed to use at least 50% of the plant’s capacity over the next two years.
The plant (actually a cupboard in an office where the equipment was stored for a few years) produced nothing but some mysterious “test batch”. But what about SunnComm’s commitment to use three million floppy disks per month. They didn’t use any. What could they have been possibly planning with three million floppy disks per month and why didn’t they source the disks elsewhere if there was a problem with Fan Energy’s production capability.
The answer is: SunnComm didn’t have any plans for floppy disks. It was just to add credibility to Fan Energy’s claim to being a floppy disk manufacturer. The only asset of note that Fan Energy had was this second hand floppy disk manufacturing machine and they'd valued it on their books at $4M.
SunnComm wanted to acquire a clean shell to back into because they knew they couldn’t ever file again with the SEC after the Will-Shown fiasco.
Fan Energy was the shell. But the only way they could explain to shareholders why they needed to acquire such a worthless company was to add to the pretence that the floppy disk manufacturing was in earnest (hence their commitment to use 3M per month).
This also added credibility to the $4M valuation of the floppy disk equipment, which represented 90% of Fan Energy’s assets.
They also stated in that PR:
SunnComm plans to develop an experimental CD and DVD manufacturing facility to integrate future optical media security and enhancement technologies.
That didn’t happen either and was never mentioned again.
But they did announce they would distribute the Fan Energy shares as a dividend to SunnComm shareholders:
PHOENIX, October 22, 2002 – SunnComm, Inc. (OTC: SUNX) President and Chief Executive Officer Peter H. Jacobs announced today that all eligible SunnComm shareholders will be receiving a new replacement SunnComm stock certificate and a property dividend in the form of Fan Energy, Inc. (OTCBB: FNEY) common stock, the distribution of which is subject to a registration statement being declared effective by the Securities and Exchange Commission (“SEC”). The record date for the property dividend has not been set.
That was two-and-a-half years ago and they haven’t been distributed either. That merger with Fan Energy never went ahead.
In the meantime, Fan Energy changed its name to Quiet Tiger and morphed into the so-called international marketer of digital content security products for the music and entertainment industry.
This re-incarnation of Quiet Tiger then entered into the marketing agreement with SunnComm that was discussed at length above. It also completely wrote off the value of the second hand floppy disk manufacturing equipment, which had been carried in its books for most of the time at $4M. It later changed its name to MediaMax Technology Corporation and it is planned that SunnComm and MediaMax Technology Corporation will merge and go forward as MediaMax Technology Corporation.
So when you hear the name MediaMax Technology Corporation, think of SunnComm International.
It may have a new name, but it's the same company that issued the press release on a $20M deal with Will-Shown Technology, a non-existent company.
It's the same company that issued a press release on a $4M deal with Dstage, Inc that resulted in actually no revenues to SunnComm and a promise of dividends to SunnComm shareholders that were never delivered.
It's the same company that told its shareholders it was going to merge with a floppy disk manufacturer that would product 5% of worldwide demand but never produced a single commercial disk.
It's the same company that said it would develop an experimental CD and DVD manufacturing facility but never did.
It's the same company that promised to distribute 96M shares in Quiet Tiger to its shareholders and then decided to keep the majority for themselves.
It's easy to see why SunnComm isn't a name they're proud of
