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To: Janice Shell who wrote (3327)	7/28/1999 11:34:00 PM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 3795

Let's check in on how BW's new "partner", HITT, is doing: Hitsgalore's Auditor Quits, Citing Founder's Past Rancho Cucamonga, California, July 28 (Bloomberg) -- Hitsgalore.com Inc.'s outside auditor quit less than five months after it was hired because the Internet advertising company didn't meet the firm's ''client acceptance criteria.'' Moore Stephens Lovelace P.A., of Orlando, Florida, hired on March 4, resigned in a letter dated July 19, said a filing by Hitsgalore with the Securities and Exchange Commission. The move followed the refusal on May 27 by the previous auditor, Ernst & Young LLP, to allow Hitsgalore to use its 1996 audit. It had cited the company's disclosure that Dorian Reed, chairman, chief technology officer and main shareholder, spent 10 months in federal prison for a 1992 wire fraud conviction. ''Among the things considered was what we learned about Mr. Reed's background,'' said Farlen Halikman, who was in charge of auditing Hitsgalore for Moore Stephens. He said the firm was also influenced by a May 11 news report that a U.S. judge, in a Federal Trade Commission suit, had ordered Reed and his wife Audrey to pay $613,110 to 100 customers they defrauded at another Internet company two years ago. Hitsgalore on June 4 asked the SEC for permission to withdraw its 1997 and 1998 reports because of Ernst & Young's refusal to allow the use of its 1996 audit. Moore Stephens Lovelace was asked to do a substitute 1996 audit. Ernst & Young had resigned on Feb. 20, 1998, as the auditor of Systems Communications Inc., a shell company with which Hitsgalore merged in July to become a public company. A Hitsgalore spokesman, Danny Gavin, declined to comment on Moore Stephens' departure. Online Business Hitsgalore operates an online search engine, gives away advertising and sells sponsorships of banner ads on the Internet. The company's shares fell 7/16 to 4 9/32. They're down 79 percent from a 1999 closing high of 20 1/8 on May 10, the day before Reed's involvement with the FTC suit was first reported. On July 23, Hitsgalore said revenue for the second quarter was about $1.2 million, triple the $391,000 reported for the first quarter. It didn't say how much came from the Life Foundation Trust, which committed to spending $10 million to buy up to 200 Web sites from Hitsgalore. 0- (STR) Jul/28/1999 13:08 EOS (STR) Jul/28/1999 13:08 197 Jul/28/1999 16:34 For more stories from Bloomberg News, click here. (C) Copyright 1999 Bloomberg L.P.