ANALYSIS OF THE THOMAS HEYSEK ASSOCIATES LLC JUNE 18, 2003 LETTER
infectechstockholders.com
Line 1 In what state is "THOMAS HEYSEK ASSOCIATES LLC" chartered as a limited liability company? Who are the "associates" listed in line 1.
Line 5 Who is the Infectech Shareholder that this report was prepared for? If this report was "independent" why was the president of Infectech "cc-ed" on it?
Line 9 The letter is dated June 18, 2003 . When was Mr. Heysek engaged to provide this letter?
Line 11 Who is the "we" referred to? What are these alleged person's names, addresses, telephone numbers, fax numbers, email addresses, so that they can be contacted for information about this letter? Are they paid employees of Mr. Heysek and his LLC or are they independent contractors? What are their qualifications to co-author this letter?
Line 12 What are Infectech's products in the pipeline? How much revenue has Infectech earned from sales of these products in the pipeline? How have these products in the pipeline be manufactured, marketed, distributed, advertised, or otherwise promoted?
Line 13 What are those proprietary distributor arrangements referred to and with whom do they exist. If they are proprietary, how did Mr. Heysek and his "associates" become aware of this proprietary information without receiving it directly from company insiders in order to prepare a report for a single stockholder. Why was this information provided to Mr. Heysek for the benefit of a single stockholder without being disclosed to all of the stockholders of Infectech and the general trading public? Mr. Heysek's letter was dated June 18, 2003 and was received according to Dr. Felder's Fax stamp no later than June 20, 2003 and was not put into public record until June 23, 2003 after approximately 4 Infectech stock trading days had passed. How long did Mr. Heysek and the stockholder who engaged him have this proprietary information that was denied to Infectech stockholders and the general trading public? Did this disclosure to Mr. Heysek, for the benefit of a single stockholder constitute a violation of 17 C.F.R. §
240.10b-5 which reads in pertinent part:
Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
Line 14 states: "in our professional opinion, as forensic and investigatory analysts"; who are the other professionals that the "our" refers to? What are their "professional" qualifications? What is a forensic and investigatory analyst? What governmental or professional authority recognizes this title? What professional education and continuing education requirements are necessary to obtain and maintain this title? What examination procedure is necessary to obtain this title? Has this title been recognized under judicial notice by any court of competent jurisdiction? Has Mr. Heysek ever testified or presented expert or "professional" opinions as a "forensic and investigatory analyst" for any court?
Lines 19-20 states: "in order to implement the Business Plan"; the term business plan is capitalized as a proper noun referring to it specifically rather than generically. How did Mr. Heysek and his "associates" become aware of the Business Plan without receiving it directly from company insiders in order to prepare a report for a single stockholder. Why was this information provided to Mr. Heysek for the benefit of a single stockholder without being disclosed to all of the stockholders of Infectech and the general trading public? Mr. Heysek's letter was dated June 18, 2003 and was received according to Dr. Felder's Fax stamp no later than June 20, 2003 and was not put into public record until June 23, 2003 , after approximately 4 Infectech stock trading days had passed. How long did Mr. Heysek and the stockholder who engaged him have this proprietary information that was denied to Infectech stockholders and the general trading public? Did this disclosure to Mr. Heysek, for the benefit of a single stockholder constitute a violation of 17 C.F.R. § 240.10b-5 which reads in pertinent part:
Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
Lines 31-32 state: "As you know, there is a corporate insider petition to liquidate the company." On what does Mr. Heysek base his information that the creditor's petition for collection of amounts that the creditors claim to be properly owed is by "corporate insiders?" Did the stockholder for whom this letter was prepared inform Mr. Heysek that the petitioners were "corporate insiders?" Was Mr. Heysek aware that two of the petitioners had formally resigned all "corporate insider" positions from Infectech nearly two months before the petition was filed and no longer hold any type of "corporate insider" positions. nor do they have any control or influence over the operations, policies, procedures, or activities of Infectech?
infectech.com
PETITIONER’S EXHIBIT 2
Was Mr. Heysek aware that one of the petitioners, Dr.Paul Tanner, was never a "corporate insider" at any time nor did he hold any "corporate insider" position with Infectech either before or after the petition was filed? Can Mr. Heysek produce any filing by Infectech with the Securities and Exchange Commission that lists Dr. Tanner as having been named to have held a position that would classify him as a "corporate insider?" Is Mr. Heysek aware that if he has improperly named Dr. Tanner as a "corporate insider" without any reliable proof that such a statement was in fact true that such written statements could be found by a court of competent jurisdiction to be maliciously libelous without regard for the truth of such statements?
Lines 32-35 state: "Whether with or without merit does nor matter; what matters is that this petition exists at all.. .and the purpose of this communication is to inform you that the second requirement must be postponed indefinitely until that petition is definitively dismissed." Mr. Heysek's disregard for the "merit" of the petition and demand that the "that petition is definitively dismissed" shows an inherent lack of regard for due process of law and a self serving lack of independence in his analysis. This could be construed as this letter having been written for the sole purpose of supporting Infectech's motion to dismiss the involuntary bankruptcy case.
Lines 35-36 states: "Otherwise, no prudent investor will step forward to provide the capital needed to commercialize the Company." Mr. Heysek analysis of a prudent investor fails to take into account Infectech's total failure to comply with S.E.C. reporting requirements by filing its mandatory 10K and 10Q reports. Infectech has failed to file 11 consecutive mandatory reports with the S.E.C. Infectech has failed to file Form 15 which would relieve it from filing future (not past) S.E.C. reports. In line 48, Mr. Heysek states that he is a "specialist in ... identifying regulatory or compliance hurdles." The information that is discussed in this paragraph is readily available to the public through simple telephonic inquiry with S.E.C. officials and by checking Infectech's filings at
sec.gov
PETITIONER’S EXHIBIT 32
and yet Mr. Heysek, as a "specialist in ... identifying regulatory or compliance hurdles" was unaware, unable, or unwilling to make this analysis a part of his letter to an unnamed stockholder.
Lines 38-42 state: "Indeed, there has already been a measurably negative impact on Shareholder Value. On June 2, 2003 , Infectech had a market value of $3,240,000. By June 3rd, when the Corporate Insiders Petition became public information, Infectech’s value immediately began to decline---and continued, decreasing since June 3rd by 72% to the current $900,000 in Value (loss of $2,340,000)." Mr. Heysek fails to disclose to this unnamed stockholder that months before the petition was filed the company's stock reached an all time low of 4 cents per share which would value the company at a total of only $342,800. Additionally, before the petition for bankruptcy Infectech's stock was, for months leading up to the bankruptcy, consistently trading at between 10 and 20 cents per share which put its total value at between $857,000 and $1,714,000. The value of $3,240,000 that Mr. Heysek quotes would put the stock price at approximately 38 cents per share. A review of the day to day trading for Infectech since it became publicly trading on April 14, 1999 shows a pattern of trading where during many trading days, shares of Infectech's stock trades lower than the previous day's close followed near the end of the trading day with a single very small trade to close the stock price at or slightly above the previous day's closing price. This practice is sometimes termed "closing the market" and may be improper or illegal under 17 C.F.R. § 240.10b-5, which states:
Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not
misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
Mr. Heysek fails to mention this pattern of trading or its potential impact on a "prudent investor."
Lines 44-45 states: "(DETAILS TO BACK UP ALL OF THESE STATISTICS AVAILABLE). In light of the above analysis, Mr. Heysek is cordially invited to provide this "detail" to the other stockholders the general trading public, as well as the Securities and Exchange Commission.
Line 50 states: "engaged by a shareholder (who has numerous independent NON-Infectech investments). What are these "numerous NON-Infectech investments" and why are they relevant to this letter? If the letter was written specifically for an "independent" stockholder, why did Mr. Heysek feel compelled to put in his letter to this "independent" stockholder that he/she held these "numerous NON-Infectech investments?" Would a "forensic and investigatory analyst(s)" who is writing a letter directly to a single "non insider" stockholder need to mention this information and highlight it in ALL CAPITAL LETTERS? Or, was this letter written for the sole purpose of supporting the claims of Infectech and its management in a legal proceeding? Mr. Heysek is again invited to respond and explain.
Lines 53-54 state: "1Development Stage status refers to a company that has yet to generate revenues. At that point when revenues are generated, howsoever small, a company sheds its Development Stage status" in reference to line 15 which states: "Development-Stage status, as defined by the Securities & Exchange Commission1" Mr. Heysek, as a "specialist in ... identifying regulatory or compliance hurdles" may wish to refine his definition of a "development stage company" by referring to Definition of Terms Used in Regulation S-X (17 CFR Part 210), Reg. § 210.1-02., which states:
(h) Development stage company. A company shall be considered to be in the development stage if it is devoting substantially all of its efforts to establishing a new business and either of the following conditions exists:
(1) Planned principal operations have not commenced.
(2) Planned principal operations have commenced, but there has been no significant revenue therefrom.
sec.gov
PETITIONER’S EXHIBIT 33
By Mr. Heysek's definition, Infectech would no longer be a development stage company because it reported to have tens of thousands of dollars of revenue, according to its last 10Q report which was filed with the S.E.C. on April 10, 2001 for the quarter and nine months ended Sept. 30, 2000 . Unfortunately, Infectech has not reported any further sales activity since then. It has stated in its pleadings before the bankruptcy court that it is unable to make regular payments to its creditors because of a lack of, among other things, any revenue. |
