HIGH HOPES? Ants Software Says SEC May Sue for Fraud, Needs Cash
Burlingame, California, March 23 (Bloomberg) -- Ants Software Inc. said it was warned by the Securities and Exchange Commission that the agency may sue the software developer for securities fraud, according to a regulatory filing.
The Burlingame, California-based company, which says it has found a way to speed up data processing, also said it has enough cash to continue operations through August. Ants, which said it expects no revenue in 2001, had $2.6 million of cash on Dec. 31.
The company also said it fired its outside auditor, Farber & Hass LP, on March 15. Ants made the disclosures in its annual 10-K report, filed yesterday.
Francis Ruotolo, chief executive, in an interview today, said he isn't sure if the company can raise the cash it needs. ``That remains to be seen,'' he said. ``That's the challenge.''
Ants fell 47 cents to $3.44. That values its 14.6 million shares at about $50 million. Last year, they reached $41.38.
Ants said the SEC's contemplated action covers four areas of alleged wrongdoing:
In January, 2000, Donald Hutton, the company's largest shareholder and former chairman, falsely identified himself as a certified public accountant in an SEC filing. That prompted the resignation of Jaak Olesk, the company's outside auditor. Ants said the filing was a mistake. That month, the company moved its headquarters from Hutton's Santa Barbara home to Burlingame.
SEC Filings
Also that month, Ants said that Dr. Peter Patton was a member of its board of directors. Patton has since denied joining the board. Ants said it still believes Patton served on its board.
Ants didn't file quarterly and annual reports with the SEC for more than a decade, between 1988 and 1999. The company, founded in 1979, said it didn't think they were required.
The company also never disclosed an unsuccessful effort by a creditor in 1996 to force Ants into involuntary bankruptcy.
``The staff of the SEC invited us to provide a submission explaining why the contemplated action should not be brought and we intend to do so,'' Ants said in its filing.
In May, Ants said the Nasdaq National Market rejected its listing application, citing its financial condition, the ongoing Securities and Exchange Commission investigation of trading in its shares and the resignation of Olesk as auditor.
Mar/23/2001 17:27 ET
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