SPO Networks Inc (SPOI)

[Sparks100]

Additional Information on HLNT/NIR case:

In most cases in which a company lost a case related to the In
Pari Dilecto defense, the loss was because of one of the following
reasons.

1. The Plaintiff did not have standing. Many of the cases are where
the company has gone bankrupt, and the trustee files a complaint
on behalf of the company. The Courts have held that the trustee
does not have the standing to file a complaint, but that the
shareholders do.
2. The statute of limitations has expired. In some of the cases,
the company that files the complaint of fraud against the insiders
and third parties did not file the suit in time to meet the statute
limitations (2 years for security fraud, 6 years for fraud in general).
3. The company benefitted from the fraud in the short term. In such
cases, the value of the company was pumped and the company
benefitted from the rise in the price of the stock.

It should be noted that none of these conditions applies to the
HLNT Counter Claims suit. While NIR would like for the Court to
notice that HLNT benefitted from the acquistion of HHHI and HOSS,
and that therefore the Fraud should be excused, the action of the
Fraud is determined at the time it occurs, and not later on. At
the time of the Fraud, HLNT (SEVO) was damaged with the addition
of the differenes in the value of the two sets of Notes, with out
receiving adequate consideration for that assumption of the notes.
NIR cannot find itself excused for the later benefit that HLNT
gained with the purchase of HOSS and HHHI, nor does the later
refusal by HLNT to convert notes give NIR any defense to the fraud
that was committed.