Forever,
"since they are illegal won't they have to be removed? or bought back off the market?"
Well there is a 63M dollar question....
From the filing under the heading
"Historical Non-Compliance with the Investment Company Act of 1940"
"Since electing to be regulated as a BDC, the Company has engaged in multiple transactions that either violated or potentially violated the Investment Company Act of 1940. Some of these violations have been corrected; however, some violations are either irreversible or else would be cost prohibitive to correct. The following violations have been noted
The Company previously issued Series C preferred stock which contained provisions that violated Sections 18 and 61 of the 1940 Act. During 2006, the Company reverse split the preferred stock in tandem with a reverse split of the common stock; however, the stock remains in violation of Section 61 of the Act by virtue of its conversion feature and Section 18 by virtue of its voting rights. When originally issued, the Company believed that the Preferred securities issued were fully compliant with the 1940 Act. The Company has attempted unsuccessfully to restructure the Preferred Stock in a manner that would be compliant with the 1940 Act.
§
The Company previously issued convertible debentures that were in violation of Section 61 of the 1940 Act in that the debentures were convertible at rates less than fair market on the date of grant and were issued without shareholder approval. The Company believed that the nature and features of the convertible debentures were such that the instruments would not be governed by Section 61; however, the Commission subsequently determined that Section 61 did apply and that the debentures did not comply.
§
The 1940 Act requires that companies filing there under be fully reporting and current with all filing requirements of the Securities Act of 1934. The Company is delinquent in filing its annual and quarterly financial statements, resulting in a violation of the 1940 Act. Management is working with the Company’s independent auditors to prepare and file all necessary periodic reports to bring the Company current with its filing requirements. The Company anticipates making all such financial statement filings before February 28, 2007.
§
The 1940 Act requires that BDC’s invest in eligible portfolio companies as a predicate for conducting business as a BDC. Between June 30, 2006 and December 31, 2006, the Company disposed of all of its portfolio assets and is now effectively without operations. In December 2006, the Company executed a letter of intent with Aero Exhaust, Inc., a privately-held company, the effect of which will result in Aero becoming the successor issuer to the Company. The Company believes that consummating this transaction while still reporting under the 1940 Act would create additional 1940 Act violations. On January 12, 2007, the Company executed a definitive agreement with Aero Exhaust, Inc. which calls for a share exchange of common stock between the Company and Aero Exhaust, Inc. Under the terms of the definitive agreement, the Company can exchange up to 95% of its total capital stock for up to 100% of the total capital stock of Aero Exhaust, Inc. The specific share amounts will be determined at closing, which is anticipated to take place once the Company is current with its financial statement filings and Aero Exhaust, Inc. has completed an audit of its historical financial statements, presently anticipated for the second quarter of 2007.
§
The Company has at various time since electing to become a BDC failed to either maintain a surety bond as required by the Act, engage a Chief Compliance Officer, maintain a board of directors that is majority independent, and failed to implement all necessary internal controls to ensure ongoing compliance with the Act. While not presently in violation on these matters, the Company has previously committed each of these violations, the result of which could expose the Company to enforcement action by the Commission."
There is nothing in the filing I can see that says the shares in escrow will just be given back although that may well be the case. We dont really know yet do we??
Also and STILL the filing says that there are 780M shares in escrow. It does NOT say that 843M are in escrow. IMO IMO IMO
Anyway, and as always....time will tell.....
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