Please sell me your shares
Litigation
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On August 3, 1998, Mercacorp, Inc. filed an action in the U. S.
District Court for the Eastern District of New York against the
Company, the President and Chief Executive Officer of the Company, Wall
& Broad Equities, Inc., a "purported investment banking establishment"
and Isaac Weinhouse, the principal of such purported investment banking
establishment, asserting violations of Section 10(b) of the Securities
and Exchange Act of 1934 and common law fraud in connection with the
alleged issuance of false press releases, misrepresentations and
omissions by all of the defendants on which the plaintiff allegedly
relied in purchasing the Company's Common Stock. The action seeks both
actual and punitive monetary damages from the Company in the amounts of
$5 million and $50 million, respectively. On November 11, 1998, the
plaintiff dismissed the action, with prejudice, and the parties agreed
to a release of all claims. In connection with the dismissal and
release of claims the Company issued the plaintiff two separate
warrants to purchase Common Stock. Under the first warrant, the
plaintiff is entitled to purchase up to 750,000 shares of Common Stock
at an exercise price of $4.00 per share, the closing bid price on
8
November 10, 1998, and under the second warrant, the plaintiff is
entitled to purchase up to 750,000 shares of Common Stock at an
exercise price of $5.00 per share. Both of the warrants contain certain
prohibitions against assignment and transfer to third parties as well
as other terms and conditions. No provision has been made in the
condensed consolidated financial statements with respect to this matter
as of September 30, 1998.
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