Deliberately Misleading and Untrue Public Statements:
Examining the numerous press releases issued by TMRT indicates a pattern of deceit.
Just days after being created and merging with a publicly traded shell, On January 19, 1999, TMRT issued this gem, available for your review here:
Exhibit 6
"2TheMart.com Inc. Completes Acquisition Of CD Rom Yearbook Inc. and is in Position for Direct Competition With eBay
IRVINE, Calif.--(BUSINESS WIRE)--Jan. 19, 1999--2TheMart.com Inc. (the
'company'), approved for trading on the NASD Electronic Bulletin Board (trading symbol 'TMRT'), Tuesday announced that it has completed a merger with CD Rom Yearbook Inc. (formerly OTC BB: CDRH).
2TheMart.com's business strategy will be to launch its E-commerce and person to person trading community Auction Web site. The site, which is currently in final development, will provide a dynamic person to person auction environment, in direct competition to that established by eBay.com (Nasdaq:EBAY - news), and other online auctions such as those of Onsale Inc. (NASDAQ:ONSL - news); Excite Inc. (NASDAQ:XCIT - news); Ubid Inc. (NASDAQ:UBID - news); and Egghead Software (NASDAQ:EGGS - news), with enhanced features for the users of the site. The site, which is expected to be active by the second quarter 1999, is intended to be one of the largest and preeminent on-line auction sites on the Web."
To achieve this result, the company has retained the services of leading Web design and architecture consultants to design and construct the unique 2TheMart.com site??????
In their very first press release TMRT is intentionally misleading the public. The Form 10 reveals that the web site was not under development at all, (certainly not "final development") until they signed an agreement with IBM (whereby IBM would design and build the site for a fee, if TMRT bought over $7 million worth of IBM hardware).
Could this one press release have been a fluke?
Maybe they just did not know better. The second TMRT press release is no better: Just one day later, on January 20, 1999, TMRT issues this press release:
Exhibit 7
2TheMart.com Inc. Finalizes $3.2 Million Funding in Preparation for Competition With eBay as an Internet Auction Site
IRVINE, Calif.--(BUSINESS WIRE)--Jan. 20, 1999--2TheMart.com Inc.(Nasdaq:TMRT - news; the 'company') Wednesday announced that it has received $1.7 million in cash and commitments for an additional $1.5 million from the sale of shares pursuant to a private placement. The funds will be utilized to fund 2TheMart.com's business plan, acquisitions, strategic alliances and working capital.
2TheMart.com's business strategy is to launch its E-commerce and person-to-person trading community Auction Website. The site, which is currently in final development....The site, which is expected to be active by the second quarter 1999, is intended to be one of the largest and pre-eminent online auction sites on the Web. To achieve this result, the company has retained the services of leading Web design and architecture consultants to design and construct the unique 2TheMart.com site."
Clearly, these statements are untrue. We have seen that 2TheMart did not even contract to begin work on its site until 2/3 of the way through the 2nd quarter. The form 10 indicates that it would take about 6 months to build the site.
TMRT had not, at this point, retained the services of "leading Web design and architecture consultants to design and construct the unique 2TheMart.com site."
There are still some mysteries here, to whom did TMRT sell the stock to, and for what price per share? Based on the Form 10, this was probably the Reg 506 placement which was done at a price of $1 per share. At this time, January 20, 1999, according to Bloomberg, the closing market price of the stock was $21.50. This means the investors in this round received a discount of over 95% to market. TMRT's all-time, intra-day, high also came on January 20, 1999, at $50 per share.
TMRT's third press release came only 2 days after release number 2, you can read it here:
Exhibit 8
This curious press release states that the company has secured funding for the final development of its new, state-of-the-art, E-commerce and auction website, which it expects to launch in the second quarter of 1999. At a 95% discount to market, there is little doubt that they were able to secure funding! More importantly, the same lies are present in this press release. The company could not have expected to launch its site in the second quarter, when nobody was hired yet to actually build it. This release also mentions something about the investors in this round. According to TMRT, including some found in the Forbes 400.
Based upon research performed by the Truthseeker and members of his Truth brigade, the only Forbes 400 list individual associated with TMRT is a 73 year old wealthy individual by the name of Raymond Park of Cleveland Ohio, whose family, through a company called Net Investments Inc., owns 9.83% of TMRT.
Raymond Park Family(5) 2,372,500 9.83%
Park is a billionaire businessman who sits on the Board of Directors of the Cleveland Indians baseball team. You can read more about Park here:
Exhibit 9
Shortly after this press release, Dominic Magliarditi, using the screen name Nicmags (nicmags@aol.com and nicmags@2themart.com) posts this beauty on Silicon Investor.
Exhibit 10
Trader, I am the President of TMRT. I apologize for any failure to respond to your telephone messages, however, we believe that any and all phone messages have been responded to, most personally by me. I would welcome your future call.
As for some of your notes, please be advised that we are in the process of preparing our Form 10, which we hope to have completed in the next 4 weeks. As for an investor package, we will have that available after the Form 10 is completed. As for our press releases, we will continue to provide additional information about our company through our press releases. We are currently working diligently on completing our site for a Q2 launch. We welcome you and our other new shareholders to our company at such an exciting time.
Where should The Truthseeker begin with this public statement made by Magliarditi. He must have been aware that construction of TMRT's web site had not even begun yet. He also promised a Form 10 filing that did not appear until the end of August, not the beginning of March as he had promised.
See this press release, the fourth put out by the firm:
Exhibit 11
This press release talks about TMRT sub-leasing office space from a company in Irvine, CA, which was moving to a different space. Pretty ho-hum stuff, except, of course, the lie that TMRT's "web site which is currently in final development".
In PR number 5,
Exhibit 12
TMRT hires a low-level guy out of Cabletron (CS) and again lies about its website.
In PR number 6,
Exhibit 13
TMRT discusses its hiring of an ex-IBM employee named Mark Rosenberg. Surprisingly, TMRT leaves out the lies about "final development."
A week later, on May 18, 1999, TMRT announces that it has hired Exodus
(EXDS) a web hosting firm, to host and maintain its, still undeveloped, web site.
Exhibit 14 (did you notice that this message is posted in Caf‚ Society of the Prosperous Soul, for those keeping notes Prosperous Soul was the person to post the first message on Raging Bull board, on SI his name is "ilh1")
Considering that at this time TMRT's web site was a single screen saying "Coming Soon" and no contract to build the site was ever announced, it appeared odd that they were signing "deals" for things that did not, as of yet, exist.
One week after this, on May 25, 1999, The Truthseeker released his original report on TMRT, available at truthseekerreport.com On May 25, 1999 TMRT shares were $26.625
A week later, on June 3, 1999, Bloomberg news issued the following story:
Exhibit 15
2TheMart.com Has No Customers, $569 Mln Market Value This article is a must read!
Remember the Form 10, which Nicmags promised us in March, 1999. After the Bloomberg article came out, TMRT issued this press release on June 4, 1999.
Exhibit 16
2THEMART.COM, INC. ANNOUNCES THAT IT EXPECTS TO FILE ITS FORM 10
by June 9, 1999 Upon Completion of Its Audit by Deloitte & Touche, LLP
Of course, the real problem here is that according to a source, D&T were not working for TMRT. While investors were waiting for the June 9th filing of the Form 10, TMRT issues this press release, on June 4, as well:
Exhibit 16
2THEMART.COM, INC. ANNOUNCES THAT IBM IS BUILDING ITS E-COMMERCE Auction Site
This, and the revelation in the Form 10 that the IBM deal was not inked until late May, makes it hard to believe TMRT's earlier claims that their website was in "final development" and that they had hired people to build it back in January 1999.
Sure enough, June 9th passes without a filing at all, but on June 10, 1999,TMRT issues this terse press release, surely not a surprise to readers of The Truthseeker's first report on TMRT.
Exhibit 17
2THEMART.COM INC. ANNOUNCES THAT ITS COMMERCE SITE WILL LAUNCH Q4 1999
Of course it will, since they had not even started building it yet!
Now, back to that Form 10, where could it be? According to TMRT's public statement on June 4, 1999, Deliotte and Touche was finalizing the audit of the Company's financial statements which the Company expects to file by June 9,1999. finalizing an audit of its financial statements in preparation for an initial filing of documents with the Securities and Exchange Commission by June 9.
But, on July 15th, with no Form 10 in sight, Bloomberg news releases this story:
Exhibit 18
Deloitte Says It Ceased Work for 2TheMart; SEC Filing Still Due?..According to a Deloitte spokesman "They are not a client of the firm,"
No wonder there was no Form 10 filing by June 9th!
TMRT's current auditors express "significant doubt" about the company's ability to continue as a going concern, and Bloomberg news released this article, which sums up TMRT's current predicament very nicely:
Exhibit 19
2TheMart.com Plunges After Saying It Needs More Cash
2TheMart.com, which once had a market value of $1 billion with promises of a Web site to compete with established auction services like eBay.com, said in its first regulatory filing yesterday it had $2.1 million of cash remaining on June 30. It said it still owed International Business Machines Corp. $7.8 million of the $10.3 million cost of developing its site. |
