H Quotient, Inc. (fka HQNT)

[Sonyboy]

Chinditone, it was pretty impressive how you lead the charge against Sec 10 when he claimed that the Nathans paid Bingaman hush money to shut him up. You rightfully saw that he was making a claim that he could not back up with public records and you and the others were all over him like antibodies on a bacteria. So I know you and others will respond if someone makes false charges against DC.

Funny though, neither you nor any of the other Longs have responded to evidence that Doug knowingly inflated the value of the SGD trade credits on the last quarterly report he filed, and then he tried to bury evidence that he filed a misleading report by getting Our-Street's PR about its complaint pulled. Maybe you are more in the mood to respond, now that the Rao Court seems to be questioning Doug's integrity. So I am reposting my evidence that Doug filed a fraudulant quarterly report, just to give you one more chance to refute my evidence.

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I have posted this a couple of times and neither you, nor any of the other HQNT supporters have rebutted it. I guess there is no rebuttal to this evidence that shows that Doug is a liar. I will post it again just so you have another chance to rebut it. Now, please tell us why you continue to believe that all of Doug's claims are the Gospel Truth.

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Step right up, boys and girls. Gather round and make yourself at home. We have a special treat for you, ladies and gents. To celebrate the one-year Anniversary of Doug’s announcement of his plans to hire a CFO to help get the financials filed in a timely manner, I present to you, what may be the smoking gun. As you recall, Doug reported $2.6 million in “Prepaid expenses” as assets on the balance sheet when he filed his 10QSB on November 20, 2003. This represented 20% of the company’s assets on September 30, 2003. The 2002 Annual Report identified these prepaid expenses as trade credits from SGD International. Unfortunately for HQNT, if Doug ever files another report again, he will have to write the SGD trade credits off as worthless because SGD International went out of business.. Two questions about the SGD trade credits need to be asked:

1) Were they worthless in November 2003 when Doug filed his report?
2) Did Doug know they were worthless when he filed the report?

If the answer to the first question is “Yes”, then we must question Doug’s competency. If the answer to the second question is “Yes”, then Doug is a fraud.

I believe I have evidence that Doug did indeed lie and knowingly exaggerated the value of the trade credits when he filed his 2003 Annual Report. If any of the pro-HQNT people can point out flaws in my logic or if they provide solid evidence that I am mistaken, then I will gladly retract my claim.



Read this PR:

http://www.findarticles.com/p/articles/mi_m0EIN/is_2003_Sept_9/ai_107494113

H-Quotient, Inc., Thwarts Shorts
Business Wire, Sept 9, 2003

VIENNA, Va.--(BUSINESS WIRE)--Sept. 9, 2003
The stockholders of H-Quotient, Inc., (OTC Bulletin Board:HQNT) have again been subjected to a manipulative press release by an entity purporting to have filed claims about the company. The press release has now been retracted by the disseminating press organization.
The entity issuing the information sells advance notice of their intentions for $2,400 per year, which is clearly designed as a scheme to illegally profit from providing short sellers with prior notice of false and deceptive press releases intentionally designed to damage the stock prices of legitimate companies.
President and CEO Douglas A. Cohn said, "Short-seller desperation is both significant and positive, because a large short position provides an equally large pool of potential buyers. This is so because short sellers have sold stock they do not own, hoping that the stock price will decline. At some point, they must cover the short by buying the stock. If this occurs at higher prices, the short seller loses money. The fear of such losses occasionally drives some short sellers to extreme and even illegal activity, because unlike buyers of stock, short sellers face unlimited losses. H-Quotient's profitable financial results, declaration of a quarterly dividend and the near elimination of debt are causing extreme consternation for short sellers."

Doug was really thumping his chest about getting some short seller to retract a press release stating that he had filed a complaint about the company. Though Doug doesn't
mention Miles or Our-Street by name, that was obviously who he is referring to.

Now, look at this PR, also dated September 9, 2003 published by Our-Street.

http://www.findarticles.com/p/articles/mi_go1633/is_200309/ai_n9140072

Our-Street.com files revised complaint with SEC against H-Quotient, Inc.

M2 PRESSWIRE-9 September 2003-Our-Street.com: Our-Street.com files revised complaint with SEC against H-Quotient, Inc.(C)1994-2003 M2 COMMUNICATIONS LTD
RDATE:09092003
Vienna, VA -- Our-Street.com, an Internet-based, public company watchdog, announced today that it has filed a second complaint with the SEC against H-Quotient, Inc ...
You will have to pay about $10 to see the rest of the article. I tried to find it in the usual archives (CBS Marketwatch, Findarticles) but I don’t think you can get a free copy anywhere. It looks like this news release has been pulled. It is obvious that this is the release that Doug was bragging about getting pulled when he talked about thwarting shorts . It looks like the article disappeared from most of the net, but it didn’t disappear as completely as Doug had hoped. I urge those of you who are interested to pay the $10 to download the story and view it for yourself.
As you can imagine, the article published by Our-Street gave a URL where you could see a copy of the complaint that they filed with the SEC.


Now, look at the Our-Street site and examine the complaint that they filed on Sept. 8, 2003 with the SEC:

http://www.our-street.com/SEC_letter.htm

IMPORTANT NOTICE: THIS COMPLAINT WAS PREPARED BY OUR-STREET.COM AND SUBMITTED TO THE SEC

THIS IS ONLY A COMPLAINT FILED WITH THE SEC.

THE SEC WILL REVIEW THIS COMPLAINT BUT THERE IS NO ASSURANCE THE SEC WILL TAKE ANY ACTION IN RESPONSE TO THIS COMPLAINT

ANYONE CAN FILE COMPLAINTS WITH THE SEC BY SENDING THEM TO [e-mail] OR VISITING THEIR WEBSITE AT http://www.sec.gov/complaint/cf942sec9570.htm



Sent to: [e-mail]


We filed a well documented complaint in April 2003 against H-Quotient, Inc. The complaint included numerous issues with their accounting. We had hoped that our report and complaint would encourage you to proceed against them or that at the very least, their auditor, Aronson and Company would take a more professional look at their work and force H-Quotient to provide the proper disclosure and to adjust their assets to be more in compliance with GAAP.

Sadly, none of this occurred. As a result, we are concerned that some of the investing public are more convinced than ever that H-Quotient and their accountant are providing a fully compliant, honest and accurate set of books.

In order to shed some additional light on this matter, we have hired an independent CPA who is highly qualified and has been auditing public companies and submitting his audits to the SEC for 25 years. In all these years he has never had his audits called into serious question.

He has read the H Quotient filings and has provided us with his findings. As you will see, he has some serious problems with how H Quotient and Aronson have treated some of their assets. We are publishing them to our website at our-street.com and attach a copy of his findings herewith.

Additionally, we have discovered additional information about SGD International Corp, the company that issued the trade credits in question. This information is quite germane to the situation. You see, they are no longer in business. SGD International is now an inactive corporation according to NY state records NY Corp Records

Current Entity Name: SGD INTERNATIONAL CORP.
Initial DOS Filing Date: 09/19/1996
County: BRONX
Jurisdiction: NEW YORK
Entity Type: DOMESTIC BUSINESS CORPORATION
Current Entity Status: INACTIVE


Their website is also no longer up as you can plainly see.
Here is what it was the official SGD International web site. http://www.sgdusa.com/" target="_blank">http://web.archive.org/web/20020605134136/http://www.sgdusa.com/
Yet another possible site for SGD's products was located at
http://members.aol.com/sgdusa/menorah1.html but as you will see, this one too is no longer there. They were selling menorahs last time we visited it but we guess business wasn't so good.
Here is what it is now. http://www.sgdusa.com.

We find it very troubling that H Quotient is booking at full face value, trade credits issued by a defunct corporation. We respectfully request you forward these findings and this letter to your accounting division and take whatever steps you feel are appropriate to cause Aronson and H Quotient to be more compliant in their reporting. These kind of reporting abuses are causing unsuspecting investors to purchase H Quotient stock based upon what we consider to be fraudulent or at least materially false and misleading information and as such we believe they are violating Section 13a of the Exchange Act.

Respectfully,
Nick Tracy Enterprises, Ltd.

From: ENFORCEMENT <[e-mail]>
Subject: SEC Division of Enforcement Confirmation Reply
Date: Mon, 8 Sep 2003 11:06:48 -0400
To: "'[e-mail]'" <[e-mail]>


Dear Sir or Madam:

Thank you for your recent e-mail to the group electronic mailbox of the
Division of Enforcement at the United States Securities and Exchange
Commission in Washington, D.C. We appreciate your taking the time to write
to us. This automated response confirms that the Division of Enforcement
has received your e-mail.

We are always interested in hearing from members of the public, and you may
be assured that the matter you have raised is being given careful
consideration in view of the Commission's overall enforcement
responsibilities under the federal securities laws.



Notice that the complaint sent to the SEC on September 8, 2003 gives proof that SGD was out of business. There is proof that the trade credits were worthless on September 8. How could Cohn not have known that SGD was out of business after reading the complaint? How could he not have known that the trade credits were worthless? The only way he could not have known was if he had failed to read the Our-Street’s complaint. But he obviously had to have read Miles’ press release about the complaint in order to get the press release pulled. Do you really think he would have read the press release and not visited the Our-Street web site to see what was in the complaint that Miles had filed about him? The odds that he didn’t bother to read the complaint are the same as the odds that Paris Hilton will pay me a million dollars to go out with her on a date. And if he read the complaint he had to have known that the SGD was out of business.

Yet, despite his knowledge that SGD was out of business he filed a 10QSB with the SEC on November 20, 2003 claiming more than $2.6 million in Pre-Paid Expenses (SGD trade credits.)



SO, to sum it up:

Miles sent a complaint on Sept. 8 to the SEC spelling out that the trade credits were worthless because SGD was out of business. Miles released a PR on Sept. 9 inviting people to look at his complaint. Doug didn't want others to see the complaint so he
got Miles' press release pulled. I am speculating that he threatened to get his legal goons on the PR news service if they didn't pull the PR. And after he got them to withdraw the PR he issued his own PR bragging about how HQNT thwarted the shorts. And then he prepared the Sept. 30, 2003 balance sheet claiming $2.6 million in SGD trade credits.

Now, if anyone can provide evidence that I am mistaken in my facts or interpretation then I will print a retraction. And I don’t want to hear people crying about how Our-Street is dishonest. The fact is, Our-Street provided evidence from the New York State Corporate database that SGD was out of business. I invite you to visit the following site and type in “SGD International Corp” and see what you get.

http://appsext5.dos.state.ny.us/corp_public/corpsearch.entity_search_entry

The pumpers seem to think Our-Street is unreliable. Just for arguments sake, suppose they are right. The facts remain: Our-Street filed a complaint with the SEC saying that SGD International was out of business. Doug tried to keep the public from seeing the complaint before he filed his quarterly report. It is impossible to believe that Doug didn’t visit the New York State Corporate web site quoted by Our-Street just to see if they got their story right. And if he visited the corporate web site he would have had official evidence that they were out of business. And then Doug, knowing full well that SGD was out of business, filed the quarterly report claiming the trade credits were worth $2.6 million.

If any pro-HQNT poster can provide enough evidence and logic to prove me wrong I will admit my mistake and apologize to Doug for this claim.