Interesting balance sheet. As of 2007, only $1.3M in loans and other short-term liabilities, but an additional $37M in "additional paid-in capital" offset by "developmental costs." This latter term is undefined. However, below that, there is only $6.6M accounted for in R&D. What are the other $30M in "development costs"? There is no accounting for any specific development and paid-in costs. Further, there is no further note of any other loans being due as liabilities. Overall, these "financial records" flunk first year accounting.
I can see why the receiver has made no announcements. It is ever more likely that he will have to admit that there can be no good accounting of company finances because of incompetence and possibly fraud. This will put him in the position of having to unilaterally decide just whom is owed what. The August 2011 "settlement" is equally problematic, as is the 2008 "settlement." I don't envy this guy his job. The CLYW BOD apparently intentionally let the bookkeeping lapse to hide who knows what. And it makes all the more reprehensible that CLYW allowed itself to be given a judgment of $117M to be paid to Daic. This businesses was a scam from the very beginning, with the sole goal of stealing the patents. And we were taken in.
Further -- if you can stand to read it -- the following additional notes make for sickening reading.
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Subsequent Events
On November 18, 2007, the Board of Directors appointed Ms. Cheryl L. Dotson to the Board of Directors.
On December 3, 2007, pursuant to the Board’s resolution to terminate Mr. Turrini passed in November, the Registrant's Board of Directors appointed George Schilling as interim president and chief executive officer to have him in place for continuity. Mr. Schilling previously served as the Registrant's president and chief executive officer of the Registrant from December 2004 through August 2005.
On December 6, 2007, the Registrant's board of directors terminated Mr. Cristian Turrini as the Registrant’s chief executive officer and president. The termination was the result of an internal investigation, with the assistance of outside counsel, that disclosed that Mr. Turrini breached the terms of his employment agreement and breached his fiduciary duty to the Registrant by, among other things, authorizing the issuance of shares without board approval to two entities, Baxter Technologies and Voice to Phone. The issuance of the shares to the two entities was without the approval of and in direct contravention of the directives of the Registrant’s Board of Directors. Our auditors have been informed of the reasons for the termination.
On or about March 1, 2007, Calypso entered into an Executive Employment Agreement with Turrini (the “Agreement”) pursuant to which Turrini was appointed as Calypso’s CEO and President, having previously served as Vice President, and earlier served as executive assistant to the General Counsel. The Agreement provided, among other things, that Turrini could not: act in any way that would be detrimental to Calypso; commit any act that constituted a conflict of interest; and authorize the issuance of any shares without the prior approval of the Board of Directors. Notwithstanding the express terms of his Agreement, Turrini materially breached the Agreement by the following acts, among others:
(i) on or about May 15, 2007, without Board authorization or knowledge, Turrini caused Calypso to enter into a Patent Purchase Agreement with Voice to Phone (the “Patent Agreement”), which provided that Voice to Phone assign to Calypso its interest in the Patents in consideration for Calypso issuing 5,000,000 shares of Calypso common stock . Calypso’s Board never authorized and had no prior knowledge that Turrini caused Calypso to enter into the Patent Agreement. In addition, we believe that Turrini and Michael Brennan are control shareholders of Voice to Phone and that Turrini organized Voice to Phone in order to divert assets from Calypso to Turrini and Brennan to the detriment of Calypso.
(ii) Without the knowledge of the Calypso Board, Turrini, acting on behalf of Voice to Phone, acquired the Patents from Baxter Technologies PTE LTD (“Baxter”) in consideration for issuing Baxter 1,000,000 shares of Calypso common stock and paying Baxter $75,000. On or about April 30, 2007, Baxter assigned the Patents to Voice to Phone. Turrini, acting on behalf of Voice to Phone, then assigned the Patents to Calypso for 5,000,000 shares of Calypso common stock, all without Board of Directors’ knowledge or approval.
(iii) On August 31, 2007, in furtherance of the scheme involving the Patent Agreement, Turrini, without Board authorization or knowledge, improperly authorized and directed Calypso’s transfer agent, Continental Stock Transfer & Trust Company (“Continental”) to issue 1,200,000 shares of common stock to Baxter and 2,800,000 shares to Voice to Phone. In order to induce Continental to issue the 4,000,000 shares, Turrini provided Continental with a document containing the forged signature of Cheryl L. Dotson, Calypso’s CFO.
(iv) On or about November 15, 2007, Calypso learned that Turrini had personally profited from the assignment of the Patents to Calypso. On November 16, 2007, Calypso’s Board passed a resolution authorizing Ms. Dotson, its CFO, to close Calypso’s account at Bank of America, on which both Turrini and Mr. John Dalton were signatories, and to open a new account at Bank of America, with Ms. Dotson the CFO, as the sole signatory.
(v) On November 18, 2007, Turrini was advised by Calypso’s Board of Directors that Calypso had begun an internal investigation into his acts and omissions, including material breaches of his Employment Agreement. Turrini, at the same time, was expressly advised that he was no longer authorized to take any action on behalf of Calypso, as CEO or in any other capacity. Immediately after receiving this notice, Turrini, without Board authorization or knowledge, falsely represented to Bank of America that he was an authorized signatory on the newly opened BOA Account, and sought to withdraw funds from the BOA Account. In furtherance of this withdrawal attempt, Turrini submitted to Bank of America, a filing he made with the Florida Secretary of State, without authorization of Calypso’s Board, naming himself, and two others, as officers and/or directors of Calypso Wireless, Inc., a Florida corporation. This Florida corporation s a company separate and distinct from the Registrant, Calypso Wireless, Inc., a Delaware corporation that is a publicly traded reporting company, under the symbol CLYW. As a direct result of Turrini’s actions, Bank of America froze the newly opened BOA Account, and advised Calypso that it would not release the freeze on the BOA Account until it received a Court order directing it to do so. Further, Mr. Turrini opened an unauthorized bank account at Washington Mutual. The Registrant does not yet have access to the October bank statement details of the Bank America Account or the statements for the Washington Mutual account. The Registrant is is taking legal action to obtain these records.
(vi) On November 25, 2007, Calypso’s Board passed a resolution authorizing Turrini’s termination as CEO and President, for cause, for the reasons set forth above, among other reasons. By letter dated December 6, 2007, Calypso terminated Turrini as CEO and President.
On December 28, 2007, Calypso Wireless, Inc. filed a lawsuit in the 17th Judicial Circuit Court in Broward County, Florida on behalf of the Company and therefore its shareholders against Cristian Turrini , Michael Brennan and Voice to Phone, Inc. (collectively referred to as “Defendants”), seeking to obtain declaratory and injunctive relief arising out of Defendants’ fraud, breach of fiduciary duty and breach of contract. This action also seeks monetary damages in the amount of no less than $15,000,000 resulting from the actions of Defendants.
The Company valued the 4,000,000 shares at $0.17, the market price on September 4, 2007 (the date of issuance), as a $680,000 as an expense.
On January 3, 2008, Cristian Turrini, our former President and CEO, who had been terminated “for cause” on December 6, 2007, by Calypso’s board of directors on December 6, 2007, improperly filed a Preliminary Proxy Statement on Form Schedule 14A. The Turrini Preliminary Proxy Statement was not filed on the proper SEC form required for a non-management solicitation of proxies to elect a dissident slate of directors. The Turrini Proxy Statement misleadingly purported to be a filing furnished to our shareholders by and on behalf of Calypso and was signed by Turrini, as Calypso’s President and Chief Executive Officer. In fact, Mr. Turrini was no longer an officer or an employee of the Registrant on January 3, 2008 and Turrini lacked any legal authority to file a Proxy Statement on behalf of Calypso on Schedule 14A. The Registrant believes that the Proxy Statement filed by Cristian Turrini, as president, allegedly on behalf of Calypso, contains untrue statements of material facts and fails to state material facts necessary in order to make the statements made by Turrini, in the lights of the circumstances under which they were made, not misleading, as follows: (i) The Turrini Proxy Statement falsely states under Proposal 1 that the action by the board of directors in terminating Turrini by consent was not valid under Section 141 of the Delaware General Corporation Law because the “consent was only signed by two of the three board members”. In fact Section 141 provides that “the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors”. In addition, the consent was signed by all three directors. (ii) The Turrini Proxy Statement filed on January 3, 2008, fails to disclose the fact that Calypso filed a lawsuit on December 28, 2007, against Turrini, Michael Brennan and Voice to Phone, which action is related to Defendants’ fraud, breach of fiduciary duty and breach of contract as discussed more fully below. (iii) Under the subcaption “Costs of Proxy Solicitation”, the Turrini Proxy Statement falsely discloses that “we will bear the costs of solicitation …with the material being forwarded to the stockholders by the Company’s officers and other employees”. In fact, the solicitation is not by or on behalf of Calypso, nor are any of the Company’s officers or employees involved the Turrini solicitation.
In addition to the malfeasance of Turrini described above and as alleged in Calypso’s lawsuit against Turrini , he falsely represented to the SEC’s EDGAR Filer Support staff that he was a lawful officer of Calypso, after his termination and prior to his filing the Turrini Proxy Statement, in order to change Calypso’s EDGAR access codes so that only Turrini could make filings with the SEC, without authorization of Calypso’s Board. Calypso was delayed by more than one week in order for Calypso to secure new EDGAR access codes that were necessary for Calypso to file amendments to certain Exchange Act reports, file correspondence in response to a comment letter from the SEC’s Division of Corporation of Finance and file its Form 8-K disclosing much of the above facts regarding Turrini described above.
