SEAVIEW TECHNOLOGIES A/K/A POWERLINX, Inc UPDATE: secfilings.nasdaq.com
POWERLINX INC SB-2 6/20/2006
WE ARE BEING INVESTIGATED BY THE SECURITIES & EXCHANGE COMMISSION
The Securities and Exchange Commission's Division of Enforcement began an investigation in January 2001 relating to the Company's financial results and common stock performance during 2000. As a result Richard McBride, former chairman, president and chief executive officer, resigned from all positions with the Company. Further, all executives involved with the allegations were replaced during 2001 and Mr. McBride passed away in October 2001. The Company has cooperated fully with the SEC, which included the testimony of former employees, Col. Larry Hoffman (retired), and Christy Mutlu. George Bernardich and current officers and employees Douglas Bauer, CFO, and J. R. Cox, former director, have also testified before the SEC.
On February 12, 2004, the SEC's Staff advised the Company, through its counsel, that they intend to recommend that the SEC bring a civil injunctive action against the Company and certain of its current and former officers and/or directors. As it relates to the Company, the Staff alleges that:
The Company violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13a-1, 13a-11, 13a-13, and 12b-20 thereunder, and is liable for civil penalties pursuant to Section 20(d) of the Securities Act and Section 21(d)(3)(A) of the Exchange Act. The SEC's Staff, in accordance with Rule 5(c) of the Commission's Rules of Informal and Other Procedures, 17 C.F.R. ss.202.5(c), afforded the Company the opportunity to make a "Wells Submission" regarding the Staff's intended recommendations. The Company retained its counsel to prepare such a Wells Submission on behalf of the Company, its officers, and employees, as it believed that there were meritorious factual, legal and policy reasons why the Staff's recommendation should not be followed by the Commission. The "Wells Submission" documents were prepared and submitted to the Staff near the end of March of 2004.
In June of 2004, counsel notified the Company that as a result of the Wells Submission, the staff may modify its recommendations to the Commission; however, the Company had no specific details as to what those modifications would be or whether they would be accepted by the commission. The Company, twice, in August and November of 2004, sent updated financial information to the Staff, at their request, but received no further correspondence regarding a proposed recommendation.
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If the Staff's original recommendation is accepted by the Commission and a civil injunctive action were to be subsequently filed against the Company, no decision has been made at this time as to whether the Company would vigorously defend that matter, or would seek to reach a negotiated settlement. The Staff has informally advised counsel of their belief that if they were successful in litigating this matter, a civil penalty in excess of $100,000 could be imposed against the Company. However, counsel believes that there are numerous mitigating factors which could cause this amount to be reduced, even if the Company's efforts to defend the suit were unsuccessful. Therefore it is impossible at this time to estimate the likelihood of an unfavorable outcome, or to estimate the amount of any such loss from this matter.
Before any final determination was made with regard to the aforementioned investigation, the Staff notified the Company that it wanted to review additional documentation. This request pertained to a purchase contract the Company entered with Universal General Corporation, LLC (UGC), on September 17, 2004 and the subsequent shipment of products to UGC on November 15, 2004. The Company has, through its counsel, fully cooperated with this additional request, and has provided the documents and financial information sought. In addition, certain current and former officers and employees have provided testimony and/or interviews to the Staff with regard to UGC. The Company has been advised by the Staff that the investigations of both items are complete, and the Company anticipates that the Commission will render a decision in this matter in the relatively near future. |
