Re: Sylver explains that increasing shareholder value does not apply to increasing the price of the stock
17 BY MR. MONTAL:
18 Q. Mr. Sylver, you filed an affidavit in this case in support
19 of the current application for preliminary injunctive relief
20 against the Depository Trust Company, correct?
21 A. Correct.
22 Q. And in that affidavit and specifically I'm referring to
23 paragraph 22 of your affidavit which is dated November 9th,
24 you say: If the stock is allowed to remain in Canada and the
25 DTC system that allows the, quote, shorters, close quote, to
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1 illegally short the stock of Amazon Natural Treasures which
2 deflates the price of the stock, not allowing the company to
3 fulfil and raise capital through means of a private placement,
4 if defendants are allowed to go too far and so far without the
5 court order, they may, they could force Amazon Natural
6 Treasures to a terminal short and effect put it out of
7 business.
8 Do you remember signing that?
9 A. Yes.
10 Q. And so what this lawsuit is about to some extent is
11 shorting of Amazon stock and the price of Amazon stock,
12 correct?
13 A. Incorrect.
14 Q. Is your affidavit incorrect or is your testimony today
15 incorrect?
16 A. The result of what Andy Mann did --
17 Q. Can you please answer my question?
18 THE COURT: If you'll focus on the question and
19 respond to it.
20 THE WITNESS: Okay.
21 BY MR. MONTAL:
22 Q. Is your affidavit, the statement in your affidavit
23 correct?
24 A. Correct.
25 Q. I'd like to show you what we have marked for
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1 identification purposes as exhibit 39 and 40.
2 MR. MONTAL: And those, your Honor, are Amazon press
3 releases. Exhibit 39 from June 10, 1998. And exhibit 40 from
4 June 16, 1998.
5 BY MR. MONTAL:
6 Q. Do you remember Amazon issuing those press releases,
7 Mr. Sylver?
8 A. Yes.
9 Q. If I can direct your attention to the top line of exhibit
10 39 which is AZNT, which I believe is the symbol of Amazon
11 Natural Treasures?
12 A. Correct.
13 Q. Announces measures to increase stockholders' value.
14 That's the title of the press release?
15 A. Yes.
16 Q. And then the press release continues on as advising that
17 the first of a series of strategic events is for the company
18 to, among other things, officially cancel 440,000 free trading
19 shares that are in DTC. And I'm -- that's a quote from the
20 text of the press release -- do you see that?
21 A. Correct.
22 Q. And the line below that is that, quote, the company will
23 have 4 million shares removed from the DTC. Do you see that?
24 A. Yes, I do.
25 Q. And that's part of the Amazon press release of June 10,
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1 correct?
2 A. Correct.
3 Q. Okay. So this is about reducing the number of available
4 shares that are Out there in order to increase the price of
5 the stock, correct?
6 A. Incorrect.
7 Q. Isn't that exactly what this document says when it says
8 that you want to increase shareholder value?
9 A. By removing the illegal shares out of the DTC.
10 Q. Okay. So it's because they're illegal shares, that's
11 going to increase the price of the stock?
12 A. It's not going to increase the price of the stock. It's
13 going to remove them out of the DTC.
14 Q. Well, wait a second, Mr. Sylver, because the title the
15 press release says that this is a measure to increase
16 stockholder value. And isn't that because you were going to
17 reduce the number of available shares that are out there? And
18 this fact if you turn to exhibit 40 you explain it in exact,
19 almost exactly those words.
20 At the bottom of the first page of exhibit 40 you say, as a
21 result of the above the free trading float along with the rule
22 144 legend stock will be cleaned up to the point where only
23 legitimate certificates will be transferred and a dividend
24 enacted.
25 And then it goes on to say on the next page, secondly, when
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1 all of the free trading stock leaves the DTC -- and that means
2 that you're reducing the number of available shares that are
3 out there on the market -- the stock brokers that are short
4 due to the illegal selling of stock in which they do not have
5 possession of will be forced to go to the market and buy back
6 all their shorts only to find that once the legitimate stock
7 owners remove all of their stock from the DTC in order to: A,
8 be able to trade their stock under the new CUSIF number and
9 symbol letters; B, to take advantage of stock dividends, the
10 shorters will find themselves in a most precarious situation
11 for what are they going to do when the brokers who purchased
12 their short sells request physical delivery of the
13 certificates?
14 For you see the shorting brokers do not have the stock.
15 Therefore they must go back to the market to buy back their
16 shorts, only to find that there will be no stock available in
17 the time allowed by law for the shorting brokers to deliver
18 real certificates to the requesting brokers. Close quote.
19 And so that is exactly what these press releases are
20 saying, aren't they? That you're reducing the number of
21 available shares that are out on the market, whether they're
22 legal or illegal in order to increase shareholders' value?
23 A. Correct.
24 Q. And that's why according to your affidavit, the present
25 injunction that's in place that's maintaining the status quo
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1 is insufficient, correct?
2 A. Correct.
3 Q. So this is really all about a price of the stock?
4 A. Incorrect.
5 Q. Well, these press releases deal with the price of the
6 stock, correct?
7 A. They deal with stockholders' value.
8 Q. Do they deal with the price of the stock?
9 A. Nowhere is mentioned price of stock. Stockholders' value.
10 Q. They deal with stockholder value, correct?
11 Q. Right. And they deal with reducing the number of
12 available shares for shorters to be able to cover, correct?
13 A. They deal with reducing number of common stock from 53
14 million 1 hundred and --
15 Q. No, I didn't ask -- I did not ask for the specifics. I
16 asked whether they deal with the idea that the number of
17 shares that are available on the market will be reduced so
18 that shorters will not have the ability to cover their trades,
19 correct?
20 A. That's also correct.
21 Q. Okay. And so the fewer number of available shares, the
22 more difficult it will be for the shorters to cover, correct?
23 A. Correct.
24 Q. And the price will go up, correct?
25 A. Not necessarily.
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1 Q. Not necessarily. But that's essentially the message
2 that's being conveyed in these press releases, correct?
3 A. NO.
4 THE COURT: But that's a general rule of supply and
5 demand, isn't it?
6 THE WITNESS: It is. It is. But in this case here,
7 we retired the stock, our personal stock to build
8 stockholders' equity because then the individual person would
9 have more of a stake in the company and would get dividends
10 when the company makes a profit. That's why we retired all of
11 our stock, the 53 million, for preferred stock voting only.
12 MR. MONTAL: Your Honor, this litigation is not about
13 the 53 million preferred stock that's referred to.
14 THE COURT: As far as I know it's not.
15 MR. MONTAL: It's strictly about the other shares
16 that are mentioned in this --
17 THE COURT: Well, it might have a collateral impact
18 that at some time the Court would take cognizance of, but not
19 at this moment.
20 MR. MONTAL: And the focus of this is the 4 million
21 shares that are in the DTC that Mr. Sylver and Amazon threaten
22 on June 10 and June 16 to remove from the flow.
23 THE COURT: I understand. Let's move on.
- Jeff |
