Not a shake folks.. look at this just off Bloomberg...
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Hitsgalore.com Omitted Founder's Link to Fraud in SEC Filing
Hitsgalore.com Omitted Founder's Link to Fraud in SEC Filing
Rancho Cucamonga, California, May 11 (Bloomberg) -- Hitsgalore.com Inc., an Internet company
whose market value soared from $53 million to $1 billion in three months, hasn't disclosed its founder
was accused of cheating customers last year at a previous job.
The founder, Dorian Reed, and two co-defendants were ordered by a federal judge in Baltimore last
month to pay $613,110 to 100 customers of Internet Business Broadcasting, an Internet advertising
company that failed last year.
The Federal Trade Commission accused Reed and IBB of sending junk e-mails, called ''spam,''
touting a 100 percent annual return on investments of $5,000 to $7,500 in its Internet advertising
banners. It described Reed as IBB's ''principal telemarketer.'' He and the co-defendants were
ordered not to make false and deceptive statements in the future. ''We alleged they were lying to
investors about how much money they could make,'' said FTC attorney Mona Sedky Spivack. The
judgment against the three was entered after the defendants failed to appear for trial.
Hitsgalore.com was founded in July, four months after the FTC sued Reed. It's based a few blocks
from IBB's former headquarters in Rancho Cucamonga, California, 60 miles east of Los Angeles.
Reed became chief technology officer of Hitsgalore.com and Steve Bradford, a business associate
not involved with IBB, became president. Both are directors, too. On Feb. 11, it went public by
merging with Systems Communications Inc., a publicly traded shell company.
In the merger agreement, Hitsgalore.com said there were no suits or governmental investigations
against any of its officers, directors or employees. It didn't disclose the FTC's case against Reed in
filings with the Securities and Exchange Commission.
Selling Concept
Reed refused to be interviewed when asked for comment. Bradford said Reed developed the
concept for Hitsgalore.com, which is similar to that of IBB.
Hitsgalore.com claims on its web site that for $99, customers can ''make money sponsoring free
lifetime banner placements.'' ''We do most all the selling'' and there's ''no limit on your income for
doing nothing more than being a sponsor,'' Hitsgalore.com says. ''Why not become a proactive
sponsor and make a killing.''
The company said in unaudited financial statements that 1998 revenue was less than $10,000. In
the first quarter of 1999, it had revenue of $463,880 and earnings of $289,494.87.
Yesterday, Hitsgalore.com stock gained 4 5/8 to 20 1/8 on trading of 945,600 shares. At the time of
the merger, the shares were worth $1.05 each, giving the company a market worth of $53 million. Its
49.7 million shares are now worth $1 billion.
Hitsgalore.com said yesterday an organization called the Life Foundation Trust is boosting its stake in
the company with a $100 million investment at more than a 50 percent premium to its market price.
Shares Soar
Hitsgalore.com shares soared to 20 1/8 after it said the trust agreed in principle to buy 4 million
restricted shares at $25 apiece. It said it previously bought 2 million shares at $5. The shares fell 5/8
to 19 1/2 in early trading today.
Bradford, Hitsgalore.com's president, said the trust has assets of more than $1 billion and is based in
Arizona. He refused to say where. ''They don't want to be inundated with lots of calls from little
companies looking for funding,'' he said.
Bradford said he didn't know if the trust is a tax-exempt organization. He said it engages in
''educational, medical and biblical projects'' and that it was attracted to Hitsgalore.com because of its
Internet search engine that screens out pornographic sites.
Bradford said he declined Reed's invitation to join him at IBB last year. ''I was aware of IBB,'' he said.
''The FTC has raised some questions about some practices they had.'' Bradford said it was Reed
who eventually shut IBB.
Bradford said he owns 4.25 million Hitsgaolore.com shares, with Reed owning a larger stake.
NYSE/AMEX delayed 20 min. NASDAQ delayed 15 min. |
