An illegal posting of private atorney correspondance by a nay. I wonder how they received it?
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siliconinvestor.com
To: Riley G (11927 )
From: mawork1 Thursday, Oct 2 1997 5:48PM EST
Reply #11955 of 12558
Letter from Magellan's Lawyer to OVIS's Lawyer
Lawrence R. Moon
11024 North 28th Drive, Suite 200
Phoenix, Arizona 85029
Olympus Ventures, Inc. (the "Company")
Dear Mr. Moon:
I received your letter of August 29, 1997.
Although I have no obligation to respond to your letters, I feel impelled to do so. I know you are in an impossible position and have my sympathy.
Form S-8
A Form S-8 as a registration statement under the Securities Act of 1933. As you know, if the plan of distribution as set forth in the registration changes, a registration statement must be amended before use.
Your Stock Option Plan on file with the SEC provides for shares to be issued upon exercise of options. It does not provide for outright issuances of shares. The S-8 only registers the shares issuable pursuant to the plan. However, the March 1997 10-Q does not state that options were granted and exercised. It states that shares were issued for services, not for option exercises. The approximately 1.7 million shares issued were accordingly not issued under the plan and were therefore not issuable under the S-8. They are restricted securities. You doubtless gave an opinion to the transfer agent that they were duly registered, but you were wrong.
I understand that many of these shares were issued to persons in the financial public relations business. I draw your attention to public statements by the Commission where it states that such persons cannot receive securities under an S-8.
You are correct that the consent of Lazar, Levine and Company LLP (the auditor for the 1996 audit) was attached to the Form S-8. But, there is no consent of the firm(s) which audited 1995 and 1994.
In addition, Part II Item 4 of the S-8 (which requires a description of securities) was not complied with. The S-8 states that this was "not applicable". However, the Commission's instructions state "if the class of securities to be offered is not registered under Section 12 of the Exchange Act, set for the information required by Item 202 of Regulation S-K."
Olympus does not have a class of securities registered under Section 12 - it has never filed a Form 10 or Form 8-A and does not have a 1934 Act file number. Therefore your S-8 is invalid. The S-8 was not signed by the chief financial officer as required.
As to the 10-K:
1. If Gary Morgan were unaware of the identity of management he
should obtain a mirror, instead of stating in the 10-K that management had no information as to the identity of management.
2. Gary Morgan should obtain a copy of a shareholders list from the transfer agent, which would be highly useful in determining the identity of shareholders, instead of stating in the 10-K that management had no information about is share ownership. Possibly Mr. Morgan might remember how many shares he himself owns and disclose that in the 10-K.
3. The Company should include the reports of the auditor and the financial statements for fiscal 1994 and 1995 with the 10-K for 1995. If the financial statements were unavailable for 1994 and 1995 and the auditor, due to the state of the financial records, was unable to give an unqualified opinion for 1996 the Company would be ineligible to use Regulation D, Form S-8 and Category 2 of Regulation S until such time as the Company had three years of unqualified audits.
In summary, based in my experience with the staff of the Commission, I believe they would view the issuance of almost 1.7 million shares under Form S-8 to outside "consultants" by a company with 1.4 million shares outstanding as an abuse.
In addition, you have a company which has undergone a change of control in the past 12 months. There is no public disclosure as to who controls the Company, the experience of management, no audited results of operations, and the vast majority of shares were issued to unknown person for services. This looks exactly like the classic fraud cases brought recently by the Commission (Teletec, Sky Scientific) against management, promoters and brokers. The stock, as you say, is trading high on news of a "tentative, but lucrative" letter of intent on an acquisition for which no financial information has been provided.
As a fellow legal professional, I remind you of the Commission's view in the Carter-Johnson case that a lawyer for the issuer must "take affirmative steps in order to avoid the interference that he has been co-opted, willingly or unwillingly, into the scheme of non-disclosure," and not be "cast as a dupe or a shield for a wrongdoing client" in order to avoid prosecution under Rule 102(c).
Very truly yours,
Signature |
