Stockpatrol.com CMKM Diamonds, Inc. - The Spin We're In
Investigative Reports
February 22 2005
Times change, and so do expectations. Where we once expected candor, we now settle for spin. Politicians are the worst and most obvious transgressors, sending out acolytes to place the proper spin on statements that should require no interpretation. The corporate world has not escaped this trap either; companies are constantly striving to place their performance in the best possible light. The glass is always half full, even if it is fatally cracked.
A recent proclamation from CMKM Diamonds, Inc. (Pink Sheets: CMKX) gives new meaning to the notion of spin. On February 17, 2005, CMKM issued a press release announcing “the reinstatement of its reporting status under the Securities Exchange Act of 1934 through the filing of an amended Form 15.”
It was an interesting interpretation of a potentially troublesome situation that began on July 22, 2003, when CMKM (then known as Casavant Mining Kimberlite International, Inc.) filed a Form 15 purportedly terminating its registration under the Securities Exchange Act. At the time, the Company maintained that it had approximately 300 shareholders of record – a key factor since Rule 12g-4(a)(1)(i) of the Securities Exchange Act provides that issuers with fewer than 300 shareholders are not required to file periodic public reports, including Form 10-Q quarterly financial reports, Form 10-K annual reports, and Forms 8-K reporting material events.
Issuers with less than 500 shareholders whose assets have not exceeded $10 million on the last day of each of the issuer's three most recent fiscal years are also exempted from these reporting requirements. The last Form 10-K filed by the Company (as Cybermark International, Inc.) reported assets totaling $373 at the end of 2001. The last Form 10-Q filed by the Company, for the quarter ended September 30, 2002, indicated that the assets had decreased to $344. To put a positive spin on that number, at least it was all cash.
Once the Form 15 was filed in July 2002, the Company fell silent – at least as far as it came to filing public reports with the SEC. Since then CMKM has doled out information through press releases highlighting its purported plans and projects. These announcements, which placed a decidedly positive spin on the Company’s activities despite the absence of financial details or credible supporting information, were ably assisted by promoters and denizens of Internet message boards who devoutly espoused the party line.
There was, however, a flaw in this approach. The Form 15 was inaccurate; CMKM should have been filing public reports all along. On February 17, 2005, more than eighteen months after the original Form 15 was filed, CMKM filed an Amended Form 15 revoking the original filing because “[a]s of the date of the Original Filing Casavant Mining Kimberlite International, Inc. had approximately 698 stockholders of record, thereby making the use of Form 15 inapplicable.”
And if the Form 15 was inaccurate, the February 17th press release was, at best, incomplete when it cheerfully declared that the Company’s reporting status had been reinstated. Technically speaking, that reporting status had never effectively been suspended or terminated in the first place.
This latest turn of events presents a new problem for CMKM. The Company acknowledges that it will now have to prepare “a substantial number of filings, including financial statement audits…to bring CMKX current in its reporting obligations.” Here again, that is only part of the story. The Securities and Exchange Act of 1934 requires the Company to file those reports within 60 days after the “withdrawal or denial” of the Form 15. Consequently, CMKM is now on a short leash.
The Company says that it will be assisted in those efforts by Stoecklein Law Group, which has supplanted the Company’s former securities counsel, Roger Glenn of the law firm Edwards & Angell. Earlier CMKM press releases had suggested that Mr. Glenn was actively involved in the Company’s efforts to become “fully reporting,” causing some CMKM fans to cite his presence as a sign that the Company was credible.
Those who are hoping for further clarification of the Company’s plans will have to wait patiently for another press release reflecting the CMKM spin, or the next public filing – CMKM has asked shareholders and investors to “refrain from contacting the company or Stoecklein Law Group to allow them to focus on completing the task at hand.”
Sixty days and counting. Tick tock.
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