Hitsgalore.com Asserts Recent Class Action Lawsuits Based On False And
Misleading Bloomberg Report
Business Wire - June 16, 1999 13:57
RANCHO CUCAMONGA, Calif.--(BUSINESS WIRE)--June 16, 1999-- Hitsgalore.com, Inc. (OTC BB:HITT) today
stated that the recent class action lawsuits filed against the Company in the United States District Court for the Central District
of California are "without merit" and appear to be based upon certain "false and misleading" statements contained in a May
11th Bloomberg article written by David Evans, entitled "Hitsgalore.com Omitted Founder's Link to Fraud in SEC Filing."
"We are aware of three lawsuits filed against Hitsgalore.com in the past few weeks that allege violations of the federal
securities laws and that request class action treatment, " says Steve Bradford, CEO of the Company. "Although we believe
that these lawsuits are entirely without merit, we wouldn't be surprised if there were others similarly based on the
misinformation contained in Mr. Evans' story, " Mr. Bradford said.
"Often times, what you see in the situation where a publicly-traded company's stock price drops significantly after the release
of a negative news article about the company is that several different lawsuits are filed by various class action attorneys within
days of the story, which lawsuits are based solely upon the assumption that the statements and inferences made in the news
release are truthful and accurate," explained Carl F. Schoeppl, the Boca Raton, Florida attorney hired by Hitsgalore.com to
defend the recently-filed lawsuits against the Company and to pursue litigation against certain Internet posters for defamatory
statements made on electronic bulletin boards on the Internet. Hitsgalore.com issued a press release on June 14th announcing
the filing of a $20 million lawsuit against such Internet posters. Mr. Schoeppl further stated that: "Unfortunately, in many
instances the news article allegedly reporting negative information about a company and which spurs the filing of class action
lawsuits is itself based on false and misleading information. That appears to be the situation here."
"The Company is aware of the filing of three putative class actions, of all which have been filed in the District Court for the
Central District of California: (1) Thomas O'Malley v. Hitsgalore, Inc., et al., filed on or about May 13, 1999; (2) John Gilpin
v. Hitsgalore.com, Inc., filed on or about May 14, 1999; and (3) Norman Skopp v. Hitsgalore.com, Inc., filed on or about
June 11, 1999," Carl Schoeppl stated. "A review of these Complaints reveals that they appear to be essentially based upon
the same legal theories and factual misconceptions," said Mr. Schoeppl.
According to Mr. Schoeppl: "The suits claim that the Defendants made false and misleading statements in SEC filings and
press releases. A letter that appears to have been sent to potential class plaintiffs by the law firm of Weiss & Yourman,
attorneys in the Gilpin lawsuit, describes the suit as follows: 'Specifically, the complaint alleges that, contrary to their public
representations, defendants knew and failed to disclose that its founder, Dorian Reed, along with two other individuals, had
been ordered to pay over $600,000 to 100 customers for "false claims made by Internet Business Broadcasting, a failed
online advertising company they worked for."' The Gilpin Complaint alleges that 'the truth regarding the FTC case against
founder Reed was finally revealed to the public' in the May 11th Bloomberg article written by Mr. Evans."
"On May 11, 1999, a news article apparently written by David Evans appeared on the Bloomberg website entitled:
'Hitsgalore.com Omitted Founder's Link to Fraud in SEC Filing.' As the title of the news release suggests, Mr. Evans' story
creates the impression that Hitsgalore.com intentionally and improperly failed to disclose in certain filings with the United States
Securities and Exchange Commission that one of Hitsgalore.com's founders, Mr. Dorian Reed, had been accused by the
Federal Trade Commission of making false and deceptive statements to customers of Internet Business Broadcasting, an entity
with which Mr. Reed had been previously associated," said Daniel J. Becka, Senior Counsel to Schoeppl & Burke, P.A., Mr.
Schoeppl's securities litigation firm. "We believe, however, that Mr. Evans' suggestion of improper conduct is itself based on
certain misleading statements, as will be shown relatively early in the class action lawsuits that appear to be based upon the
same negative implications as contained in the May 11th story," Mr. Becka added.
The May 11th Bloomberg story stated that Hitsgalore.com "didn't disclose the FTC's case against Reed in filings with the
[SEC]." "The 'filings' referred to in the story are the Current Report on Form 8-K filed by Systems Communications, Inc. on
February 16, 1999, which reported that Systems Communications had entered into a Reorganization and Merger Agreement
with Hitsgalore.com, a Nevada corporation, on February 11, 1999, and the Merger Agreement attached to the Form 8-K as
an exhibit," explained Mr. Becka. Pursuant to the Merger Agreement, the Nevada corporation was merged into Systems
Communications, a Florida corporation, with the surviving entity (the Florida corporation) being renamed Hitsgalore.com. "The
statement that Mr. Evans implies is false in his May 11th story is actually a representation and warranty made in the Merger
Agreement by the Nevada corporation to Systems Communications that "there is no claim, legal action, suit, arbitration,
governmental investigation, or other legal or administrative proceeding, nor any order, decree or judgment in progress, pending
or in effect or to Hitsgalore.com's knowledge threatened, against or relating to Hitsgalore.com, its directors, officers or
employees...," Mr. Becka said.
"Although Dorian Reed was appointed as a director of Hitsgalore.com on Mach 31, 1999, after the merger with Systems
Communications was completed, Mr. Reed was not an officer, director or employee of the Company in February 1999, when
the Form 8-K and the Merger Agreement were filed," stated Steve Bradford. "Any statements made by Mr. Evans or anyone
else implying that Hitsgalore.com lied about or intentionally failed to omit the FTC's civil action against Dorian Reed in SEC
filings, press releases or other public statements are simply false," Mr. Bradford declared. "We believe that the Company will
be successful in proving the falsity of the claims that Hitsgalore.com somehow violated the federal securities laws, both through
the defense of the class action lawsuits as well as the successful prosecution of the Company's recently-filed defamation suit
against the individuals who published and republished these false and negative statements on the Internet bulletin boards,"
stated Mr. Bradford.
If you have any information which you believe would be helpful to the Company in investigating and/or prosecuting these
matters, please contact Carl F. Schoeppl, Esq., or Daniel J. Becka, Esq., at Schoeppl & Burke, P.A., the Company's
litigation counsel, 4800 North Federal Highway, Suite 210-A, Boca Raton, Florida 33431-5176, Telephone: (561)
394-8301, Facsimile: (561) 393-6541, and E-Mail: Schoeppl@aol.com.
CONTACT: Schoeppl & Burke, P.A., Boca Raton, Fla.
Attorneys for Hitsgalore.com, Inc.
Carl F. Schoeppl, Esq.
Daniel J. Becka, Esq.
561/394-8301
Schoeppl@aol.com
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