http://www.thechildrensinternetinc.com/documents/CITC-NR-020509.pdf The Children’s Internet Announces the Filing of Three Provisional Patent Applications for its Unique and Proprietary Internet Security Technology that Secures Against Inappropriate Web Content for Children.
The Children’s Internet Announces U.S. District Court Decision, Settlement of State Lawsuit, Resignation of CEO and Board, Appointment of New CEO and Board, Proposed Annual Shareholder Meeting, And New Corporate Headquarters Gold River, Calif. ––– December 17, 2008 The Children’s Internet, Inc. (OTC BB:CITC.OB-News) announced today that on October 23, 2008, Judge Claudia Wilken signed her ruling in the Securities and Exchange Commission’s (SEC) case against The Children’s Internet, Inc. (TCI), among others. In her ruling, Judge Wilken decided not to impose any monetary penalties or fines against TCI. In particular, the SEC sought disgorgement penalties against TCI for $3,475,044. However, the Court in ruling against disgorgement concluded that, “While some of these funds could potentially be subject to disgorgement, ordering disgorgement against TCI would not benefit the corporation’s shareholders, who are the victims of the Hamedanis’ unlawful conduct.” In addition, the Court ordered that all TCI shares owned by the Hamedanis’ must be disgorged and deposited into an escrow account with the ultimate disposition of those shares to be determined by the TCI Board. Specifically, the Court concluded that “[o]rdering disgorgement only against the Hamedanis’ individually and divesting them of their interest in TCI and TDN (Two Dog Net, Inc.) is the most appropriate remedy under the circumstances. This approach will allow TCI shareholders the best hope of realizing a return on their investment.” Richard J. Lewis III, recently appointed Acting CEO of TCI, stated that “We could not be more delighted with the Court’s ruling. The Court clearly decided to punish the wrongdoers and not the company and its innocent shareholders. We fought long and hard for this ruling and now, we can focus again on business and the future.” Settlement of Lawsuit, Resignation of TCI CEO and Board, Appointment of New CEO and Board On October 23, 2008, The Children’s Internet Holding Company, LLC (TCI Holding), made demand on the TCI Board to set an annual shareholder meeting. When the TCI Board refused to set a date for the annual TCI shareholder meeting, on October 24, 2008, TCI Holding caused a lawsuit to be filed against TCI and each of its Board Members in the First Judicial District Court of the State of Nevada in and for Carson City, Nevada, Case Number 08 OC 00367 1B. The lawsuit asked the Court for A Petition and Application for Order Compelling Shareholder Meeting and Order to Show Cause and/or Writ of Mandamus to Compel Shareholder Meeting. On October 29, 2008, TCI and TCI Holding agreed to settle the lawsuit by entering into a binding Control Agreement under which Tyler Wheeler resigned as Chief Executive Officer (CEO) of TCI and Richard J. Lewis III was appointed as the Acting CEO. Due to the vacancy that existed because of Sholeh Hamedani’s resignation from the Board on October 23, 2008, Mr. Lewis was also appointed as director and acting Chairman of TCI to fill that vacancy. In addition to Ms. Hamedani’s resignation, all other TCI Directors (Jamshid Ghosseiri, Roger Campos and Tyler Wheeler) submitted their irrevocable resignation as well. Commenting on the lawsuit and subsequent settlement, Mr. Lewis stated, “In light of Judge Wilken’s ruling, to allow the same officers and directors to maintain control over the day-to-day operations of TCI seemed like the ultimate definition of insanity; yet, that is exactly what was occurring. The lawsuit forced the issue and resulted in the immediate resignation of TCI’s CEO and all of its Board Members, who were Hamedani nominees.” Filing of 14f-1 and Scheduling of Annual Shareholder Meeting As a result of the settlement and the appointment of new TCI officers and directors, on November 6, 2008, TCI filed a 14f-1 with the SEC and caused the 14f-1 to be mailed to each TCI stockholder of record to inform each stockholder about the terms of the Control Agreement, and in particular, about the appointment of Mr. Lewis as the Acting CEO and Chairman, and the appointment of Ronald Bender and Richard Kwiecinski to the Board to fill the vacancies created by the Wheeler, Ghosseiri and Campos resignations. To learn more about Mr. Lewis, Mr. Bender and Mr. Kwiecinski, please go to TCI’s website at www.thechildrensinternetinc.com. On November 16, 2008, the new Board met for the first time and one of its first orders of business was to call for an annual TCI shareholder meeting to be held during the second week of January, 2009. At this meeting, in addition to other matters, a new slate of Directors will be nominated and voted on by the TCI shareholders. This will be the first ever annual shareholder meeting held by TCI. New Corporate Headquarters As part of new management taking over the day-to-day operations of TCI, on December 8, 2008, the company commenced moving its headquarters from the Bay area to Sacramento County. The move was completed on December 15, 2008. TCI’s new corporate address is 2377 Gold Meadow Way, Suite 100, Gold River, CA, 95670. TCI’s new telephone and fax numbers are T: 916.631.1987 and F: 916.631.1515, respectively. About The Children’s Internet, Inc.: The Children's Internet, Inc., http://www.thechildrensinternetinc.com is the exclusive marketer and distributor of The Children's Internet® membership based service created just for kids. The Children's Internet is the most comprehensive, secure Internet service and "educational super portal" for children, pre-school to junior high, providing them with SAFE, real time access to millions of the best pre-selected, pre-approved educational and entertaining web pages accessed through a kid-friendly search engine.
Still working on resizing and uploading a few more images The annual shareholders will be announced as soon as the last court desision is official. Which would be in regard to the return of an additional
Richard J. Lewis III, CEO and Chairman of TCI stated that, “While the SEC was recently successful in having the United States District Court for the Northern District of California order the Hamedanis’ disgorged of over 14 million shares of TCI stock, new TCI management felt that there were still a substantial number of shares of TCI stock wrongly held by nominees of the Hamedanis’. We filed this lawsuit because we expect to prevail, and in so doing, we expect to have over 2 million more shares of TCI stock held by Nominees of the Hamedanis’ disgorged or canceled, including 1.4 million shares which as a result of the TRO, on March 19, 2009, were interpleaded by the online brokerage firm ShareBuilder Securities Corporation to the United States District Court for the Western District of Washington at Seattle.”
Mr. Lewis added that, “I felt we owed it to our shareholders and to the company’s bottom-line to prevent the Defendants from profiting from the sale of these shares and to get these shares back to TCI’s treasury, as if never issued.”
Regarding the Transfer of Shares, Richard J. Lewis III, Acting CEO of TCI stated that “The transfer of 14 plus million Shadrack shares to TCI so that TCI can return those shares to its treasury creates a win-win situation for TCI and its shareholders on several fronts. First, the transfer reduces TCI’s outstanding shares from 33.37 million to 19.37 million; or, in other words, it raises TCI’s market cap valuation by over 40%. That is a huge valuation increase. Second, the reduced outstanding share base and increased market cap valuation significantly enhances TCI’s ability to raise additional operating capital, while at the same time augments TCI’s corporate structure during its ongoing merger negotiations with The Children’s Internet Holding Company, LLC.”
Addressing filing of the Petition, Mr. Lewis stated, “The filing of the Petition is simply TCI following the approval procedure process for the disposal of the Shadrack Shares as set forth in the Court’s Final Judgment. We look forward to the Court’s approval.”
Having a lil trouble locating 1 file regarding that 2nd suit which would be the hold up to the announcment of the Annual shareholders meeting. It involves an additional block of aproxamatly 1.4 million shares to be returned to the treasury.
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