News:
Spectrum Signal Processing Inc
SSY
Shares issued 10,247,092
1999-01-18 close $5.8
Monday Jan 18 1999
SEC TAB MOUNTS
by Brent Mudry
Spectrum Signal Processing has filed suit for $255,400 and unspecified other
damages stemming from its $8-million purchase last spring of Alex Computer
Systems of Ithaca, New York, a wholly owned subsidiary of Alex Informatics of
Montreal. In a statement of claim filed Friday in the Supreme Court of British
Columbia, Spectrum names 91594 Delaware, formerly known as Alex Computer
Systems, and Alex Informatics. Spectrum claims that under a Mar. 20, 1998,
asset purchase agreement, it agreed to buy Alex Computer for $7-million in
Spectrum shares, $961,000 cash and $200,000 worth of warrants to buy
Spectrum shares. Under the agreement, Spectrum agreed to file a registration
statement with the United States Securities and Exchange Commission regarding
the shares and warrants, and pay a maximum of $19,000 for the related legal and
accounting costs.
Lawyer Nigel Kent of Clark Wilson notes that Spectrum filed the registration
statement with the SEC on June 30, 1998. "Since that date, Spectrum has
incurred and continues to incur substantial legal and accounting fees in respect of
the SEC dealings with the registration statement," states the lawyer. The suit notes
the excess SEC-related tab reached $200,209 by Oct. 31, 1998, but the
defendants have failed to reimburse the amount. In the two months ended Dec.
31, 1998, Spectrum faced further bills of $32,105 from KPMG for accounting
fees, and $15,000 (U.S.) from Fulbright & Jaworski for legal fees. The suit
reveals the SEC review is not yet complete. "The dealings with the SEC
respecting the registration statement are ongoing and additional accounting and
legal fees will continue to be incurred," states Mr. Kent.
The suit also cites the defendants for alleged undisclosed stock options. Spectrum
claims that in the purchase agreement, no stock option commitments were made.
The suit notes that Spectrum later found out that the defendants initially promised
to pay cash to their employees for the stock options, then promised to pay by
assigning some of the Spectrum share purchase warrants. Spectrum claims the
employees, all of whom it hired, are discontent because the defendants have yet to
honour the payment deals. The third problem in the suit relates to royalty
agreements with RPA Electronics Design LLC. Spectrum notes that during its due
diligence, it found out that some of Alex's intellectual property had been
developed by and was owned by RPA, and Alex subsquently agreed to pay RPA
all royalties owing. The suit claims Alex reneged on paying the RPA royalties.
Spectrum claims it had no idea that Spectrum initially promised to pay cash to
RPA, and later promised to pay the royalties by assigning some of the Spectrum
share purchase warrants to RPA. Statements of defence have not yet been filed.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
Later:Rick
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