Item 5 Legal proceedings. The EKNL SCAM , more dirt! On March 20, 2012, a complaint was filed in the Chancery Court of the State of Delaware by Capital Path Securities, LLC, a brokerage firm, and Legent Clearing LLC, a securities clearing firm, against the Company, its officers and directors, its former Chief Financial Officer Casey Bruyns, its transfer agent, as well as John Formicola, an individual who at one time (but not currently) was an affiliate of the issuer. The plaintiffs allege that Mr. Formicola inappropriately ordered the cancellation of 5,000,000 shares of the issuer’s free-trading common stock which were held by Mr. Formicola in “street name”, i.e. the shares were placed on account with Clearing Path. The plaintiffs further allege that the Company and its transfer agent inappropriately executed Mr. Formicola’s cancellation order for those 5,000,000 shares, even though the transfer agent was never presented with the physical stock certificate representing such shares, as the shares continued to be held in street name through Mr. Formicola’s account with Capital Path. The plaintiffs further allege that Mr. Formicola, after the transfer agent “cancelled” all 5,000,000 of Mr. Formicola’s shares held on account with Capital Path, placed a sell order with Capital Path for nearly 3 million of such “cancelled” shares, which Capital Path executed. In summary, the plaintiffs alleged that Formicola exchanged his public shares in the Company for private shares in the spun off subsidiary, and that knowing this, intentionally traded those same public shares on the open market. The plaintiffs are seeking relief in the form of the issuer re-issuing such cancelled-then-sold shares, as well as attorneys fees and other unspecified damages. An expedited trial was held in the State of Delaware Court of Chancery on April 4, 2012, after which the Court adjudicated in the plaintiffs favor insofar as it ordered the nearly 3 million shares in dispute to be re-issued by the issuer, an order the Court confirmed on April 17 after an appeal by the Company, which was concerned whether it would be appropriate for it to re-issue the shares, and whether issuing them on a free-trading basis would be compliant with securities laws and rules. However, pursuant to the Court Order, the issuer re-issued the nearly 3 million shares, as requested by the complainants. The other aspects of the case, including possible damages, have yet to go to trial. But should the defendants, which includes the issuer, lose at trial on these other aspects of the case, the issuer may be subject to substantial, but as yet undetermined, plaintiff attorney fees and other potential damages. http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=89971
Market Data 
Markets 
AI
