Better have Dr. Phan check with the transfer agent and do a audited CHUMPS. BEFORE DR. PHAN CALLS ANOTHER INTERNET POSTER A COCKROACH HE SHOULD TAKE A HARD LONG LOOK IN THE MIRROR CHUMPS!!
TRUTHSEEKER THE MAN WHO SAW TOMORROWS HARTCOURTS PROPHECIES OF NOSTRADAMUS
CHEERS CHUMPS
ATLANTIC CENTRAL ENTERPRISES LTD filed this 10KSB on 04/03/1998.
tenkwizard.com
Management of Atlantic Central Enterprises Limited (the "Company")
discovered for the first time on December 12, 1997 that its former U.S.
counsel, Kevin J. Quinn of Santa Monica, California, fraudulently caused
960,000 newly issued and freely-tradable shares of the Company's common stock
to be issued to Mr. Quinn, his affiliate or to his brokerage account in
Vancouver, Canada, during the period from March 25, 1997 through July 31,
1997. This information was discovered by the Company in the course of
assembling data from the Company's transfer agent for the Company's audited
financial statements. As a result, records of the transfer agent indicate
there are currently 2,662,396 shares outstanding of the Company's common stock
including the 960,000 shares issued without consideration at Mr. Quinn's
fraudulent instructions and without the prior authorization or knowledge of
the Company's Board of Directors and management.
This discovery follows the termination in 1997 of Mr. Quinn's
relationship with the Company. Mr. Quinn acted as U.S. corporate and
securities counsel to the Company and its predecessor, Pharma Patch plc, from
1993 until approximately June 1997. The Company learned of an article in the
November 1997 issue of the California Bar Journal reporting that Kevin J.
November 1997 issue of the California Bar Journal reporting that Kevin J.
Quinn had been suspended from the practice of law in 1993 as a result of a
1992 felony conviction which was recently reduced to a misdemeanor for
embezzlement and that he was permanently disbarred by the California State Bar
in September 1997. Those facts had not been previously disclosed to any
officers or directors of Pharma Patch plc from the time of its inception in
1993 or to the management of Atlantic Central since its inception in 1996.
When confronted with these disclosures, recent correspondence from Mr.
Quinn to the Company's new counsel does not deny his 1992 conviction, his 1993
suspension from the practice of law or that he was disbarred in September
1997. The Company notes that notwithstanding his suspension from the practice
of law since 1993, Mr. Quinn continued through 1997 to be listed as a
practicing attorney in California by the Martindale-Hubbell Law Directory.
The Vancouver brokerage firm that is reported to have received all or
most of the fraudulently issued shares advised the Company on Friday December
12, 1997 that it currently has no position in the Company's securities. The
Company's transfer agent likewise has confirmed that none of the original
registered owners of the Company's common stock are currently listed as record
owners of the Company's common stock. This information leads the Company to
believe, at present, that the fraudulently issued securities all were sold for
Mr. Quinn's account, and the Company is continuing its investigation.
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The Company has demanded full restitution from Mr. Quinn of all legal
fees and expenses previously paid for Mr. Quinn's account and a restitution or
damages for the fraudulently issues shares. Commencing in December 1997, ACE
instituted litigation proceedings entitled Atlantic Central Enterprises
Limited vs. Kevin J. Quinn, et al in the United States District Court for the
Central District of California, Case No. 97-9420AAH (ANX), and in the Supreme
Court of British Columbia, Vancouver Registry No. C980037 (collectively the
"Quinn Litigation Proceedings"). In the Quinn Litigation Proceedings, the
Company seeks a judgement for compensatory damages in the amount of
approximately $750,000 in legal fees and costs paid by the Company to Mr.
Quinn during the period from 1993 to 1997 while he fraudulently represented
himself to be a licensed attorney, damages for the 960,000 fraudulently issued
shares of the Company's common stock, and other compensatory, punitive and
exemplary damages. The Company has assigned a value of $400,000 for the
960,000 shares fraudulently issued and will charge operations with the value
calculated using the market value on the dates the shares were issued. It is
the Company's intention to pursue legal action where it will seek the return
and cancellation of these 960,000 shares or other restitution equivalent to
the value of those shares. At hearings held in December 1997 and January
1998, orders of preliminary injunction were issued restraining the transfer of
assets from accounts with any financial institutions maintained by Mr. Quinn
and certain corporate entities controlled by Mr. Quinn. Pursuant to those
orders, approximately $220,000 of cash and securities in accounts maintained
by Mr. Quinn have been frozen. Mr. Quinn has filed responsive pleadings in
the Quinn Litigation Proceedings denying liability. Counsel for the Company,
based upon an ongoing investigation of documents and other information, has
expressed the opinion that the Company has meritorious causes of action
against Mr. Quinn. The ability of the Company to realize on any such
judgements, if successfully obtained, will be dependent upon the Company's
ability to locate and levy upon assets of Mr. Quinn.
The Company is also investigating potential claims against other third
parties that may have aided and abetted Mr. Quinn with respect to the one or
more of the causes of action asserted by the Company in the Quinn Litigation
Proceedings. In addition to Mr. Quinn and two entities believed to be under
his control, the Company's transfer agent has been named and served as a
defendant in the Quinn Litigation Proceedings. A motion to dismiss the
proceedings against the transfer agent was denied by the federal district
court in this case, and the transfer agent has filed an answer denying
liability. Based upon information obtained to date, it is Company's counsel's
opinion it is probable the Company has a meritorious cause of action against
the transfer agent.OFFSHORE SALES OF COMMON STOCK UNDER REGULATION S
During February 1996, Vista and ACE negotiated agreements for Vista to
obtain debt and equity financing from ACE's predecessor, Pharma Patch. In
connection with ACE's acquisition of a controlling interest in Vista, ACE in
March 1996 also acquired 900,000 shares of Vista common stock from third
parties in a transaction exempt from the registration requirements of the
United States securities laws for offshore transactions under Regulation S
promulgated under the Securities Act of 1993 ("Regulation S"). Three Vista
stockholders, including Therapeutic Patch Research N.V. (TPR"), Saliva
Research Limited ("SRL") and Westcliff Partners Inc. ("WPI"), exchanged a
total of 900,000 shares of Vista's outstanding common stock for a total of
450,000 newly issued securities of Pharma Patch in this privately - negotiated
transaction. No fees or commissions to third parties were paid in connection
with this exchange of securities. The Vista securities included in this
exchange had been acquired by TPR, SRL and WPI in December 1995 as a result of
prior transactions financing the operations of Vista through December 1995.
The Company has been advised that TPR, SRL and WPI are clients of Jac J. Lam,
a former director and chief executive officer of Vista.
From March 1996 to May 1996, ACE offered and sold 189,600 shares of its
common stock to 11 investors in an offshore private placement offering exempt
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from registration under Regulation S of the United States securities laws.
For each ACE share issued in this offering, investors paid a purchase price of
$5.00 per share in cash and surrendered 10 Pharma Patch Class C warrants for
cancellation. The Company received $948,000 in gross proceeds and cancelled
1,896,000 Pharma Patch Class C warrants (the number of warrants is stated
before giving effect to a subsequent 1-for-10 exchange of Pharma Patch shares
for ACE shares in their January 1997 reorganization) from the sale of 189,600
shares of the Company's common stock in the offshore private placement under
Regulation S. The Company incurred fees payable to a placement agent,
Multibreen B.V., in the aggregate amount of $94,800, resulting in net proceeds
to the Company of $853,200 for the shares sold in the Regulation S offering.
OTHER PRIVATE PLACEMENT OF COMMON STOCK
From March 1996 to May 1996, ACE offered and sold 25,400 shares of its
common stock to five investors in a private placement offering, primarily to
United States investors, exempt from registration under the U.S. Securities of
1933 for transactions not involving public offering. For each ACE share
issued in this offering, investors paid a purchase price $5.00 per share in
cash and surrendered 10 Pharma Patch Class C warrants for cancellation. The
Company received $127,000 in gross proceeds and cancelled 254,000 Pharma Patch
Class C warrants (the number of warrants is stated before giving effect to a
subsequent 1-for-10 exchange of Pharma Patch shares for ACE shares in their
January 1997 reorganization) from the sale of 25,400 shares of the Company's
common stock in this private placement. The Company incurred fees payable to
a placement agent, Multibreen B.V., in the aggregate amount of $25,400,
resulting in net proceeds to the Company of $101,600 for the shares sold in
this offering.OTHER SUBSEQUENT EVENTS
PROMISSORY NOTE - Vista has been negotiating with the holder of a 12%
promissory note for $300,000 who has verbally agreed to extend the maturity
date of the 12% promissory note. Definitive agreements for the 12% promissory
note extension are being prepared and management anticipates that they will be
executed by April 30, 1998.
SALE OF MARKETABLE SECURITIES - Between March 1, 1997 and July 3, 1997,
the Company sold 35,000 shares of TCPI common stock with net proceeds to the
Company of approximately $360,000. Between July 4, 1997 and December 31, 1997,
the Company sold an additional 180,050 shares of TCPI common stock with net
proceeds to the Company of approximately $1,316,000. Proceeds were utilized
for operations and to purchase additional investments through December 31,
1997. The sale of TCPI stock subsequent to March 1, 1997 resulted in a net
loss of approximately $1,000,000 for the Company. As of February 28, 1998,
the Company had 43,850 shares of TCPI.
FIRST AMERICAN AMO - In May 1997, Ace entered into an agreement to form
a new corporation, First American AMO ["AMO"], which is located in Palm
Harbor, Florida. Ace agreed to fund AMO up to $450,000 prior to separate
outside funding of AMO. Ace owns 83% of the issued and outstanding common
stock of AMO upon signing of this agreement. AMO is an automotive maintenance
organization that improves the efficiencies of fixing a car.
ASSET PURCHASE AGREEMENTS - In July 1997, Vista Southwest entered into
an asset purchase and lease assumption agreement whereby Vista Southwest
agreed to purchase certain equipment for a total purchase price of $411,860,
consisting of $50,000 in cash payments, $361,860 in a promissory note with
annual interest of 8%. The principal and interest on the note is due the
earlier of June 30, 1999 or 30 days following the close of an offering of
securities of Vista Southwest or Vista Technologies, Inc. with net proceeds of
not less than $2,000,000. The estimated fair value of the acquired equipment
is $120,000. Therefore, goodwill of approximately $292,000 was recorded on
this transaction. -39-
Also in July 1997, ICON Vision Centers, Inc., a wholly owned subsidiary
of the Company, entered into an asset purchase agreement to purchase certain
fixed assets and inventory for a total purchase price of $128,000, consisting
of $25,600 in cash and $102,400 in a non-interest bearing promissory note.
The note has monthly payments of $3,200 and will be paid in full by April 30,
2000. The estimated fair value of the inventory and fixed assets is
approximately $50,000. Therefore, goodwill of approximately $78,000 was
recorded on this transaction.
ADDITIONAL DEBT FINANCING - Subsequent to year end, ACE opened a margin
account with its broker and borrowed funds against its holdings of TCPI
shares. At February 28, 1998, there was no balance owing on the marginaccount. |
