SEC puts heat on incubator
Penny stock produced no sales, plenty of press releases
Chad Eric Watt Staff Writer
ORLANDO -- Over the last three years, technology incubator Innovative Holdings and Technologies Inc. has amassed a long list of partnerships and deals for its subsidiary firms.
One-time Indy 500 winner Eddie Cheever, the Indy Racing League itself, golfer Jim Colbert, aviation pioneer Dick Rutan and Fortune 250 firm Ashland Inc. all have agreed to work with the company's subsidiaries.
But while partners listed above and others confirm they made agreements with Innovative Holdings, they've had little activity tied to those deals.
In fact, some of the subsidiaries that led to the partnerships simply have evaporated.
The most substantial activity at Innovative Holdings has been its stock price. In the last 12 months, the penny stock has fluctuated wildly, from more than 30 cents a share to 2 cents a share.
In one short rally for the stock, nearly 4 million shares changed hands, apparently fueled by a mass e-mail from an entity called "#########.com."
Such jumps, combined with hyperbole in company press releases, has led the Securities and Exchange Commission to launch an investigation into Innovative Holdings.
As a rule, the SEC does not comment on investigation, but the company itself acknowledges the existence of an investigation in its most recent filings. Associates of the company also have been questioned by the SEC.
The company and its chief executive did not return calls or a fax seeking comment.
Many incarnations
The company now known as Innovative Holdings, and the chief executive behind the firm, Helmuth Wyzisk, have long histories in a number of industries.
The one common factor for both: Their operations always have been traded as penny stocks.
Innovative Holdings originally was known as Celesta Corp., a Colorado company established in 1987 to break into cable broadcasting.
That incarnation dissolved in 1990 after running up more than $1 million in debt, according to company filings.
Celesta Corp. resurfaced in the Orlando area in the early 1990s with Helmuth Wyzisk at the helm. In 1995, a Wyzisk operation called Celesta Financial Corp. announced a pair of deals to build low-income rental housing in exchange for millions of dollars in tax credits.
In December 1997, Wyzisk renamed Celesta Innovative Holdings and Technologies Inc.
At first, the renamed company focused on dot-coms and sports broadcasting, through subsidiaries BioCam Co. and Xtreme Telemetry Systems Inc.
In 1998, Innovative Holdings signed a deal to acquire BioCam, but terminated that deal later in the same year.
It was BioCam that signed a deal to work with the Indy Racing league, providing race fans and pit crews information such as the pulse rate of drivers and cockpit temperature as they raced.
BioCam in 1998 also inked a deal with race driver Eddie Cheever, who has a home in Orlando. Team Cheever Racing did not have any details on that relationship.
Xtreme Telemetry is one of the company's two existing subsidiaries. Its products began "alpha-beta testing" in late 1999, according to company filings, and remain under development.
It's this revolving door of subsidiaries that prompted Innovative Holdings' former investor relations firm to part ways 18 months ago: "They're having a focus problem," says Phil Flynn of Integritas Communications.
Plastics again
More recently, Innovative Holdings has delved into plastics, establishing a subsidiary called USTech Materials Corp.
USTech has licensed plastic formulas from Covington, Ky.-based Ashland Inc. twice. A deal the company put together last year fell apart. In July, USTech and Ashland signed a new licensing deal, an Ashland spokesman confirmed. He declines to discuss details of that arrangement.
Previously, Ashland had a similar licensing deal with a Toronto company called PEAR Technologies. Its president: Helmuth Wyzisk.
PEAR and USTech share other striking parallels.
Last week, an Innovative Holdings press release announced a deal with a plastics lab at Southwest Texas State University in San Marcos, Texas.
Two years ago, that same lab had done some work for PEAR Technologies.
"We actually had formulated some resins," says Joseph H. Koo, director of the lab.
Then, PEAR Technologies disappeared. Koo says he hasn't heard anything for a couple of years from that company.
That's because PEAR Technologies, which moved to Orlando in late 1999, essentially had ceased operations. In March 2000, the company was delisted from the over-the-counter stock bulletin board -- the same place Innovative Holdings is traded.
In picking up the licensing rights to PEAR plastics, Innovative Holdings is following in PEAR Technologies' footsteps.
It hasn't gotten as far yet.
Koo and his lab stand ready to make some sample batches for the subsidiary USTech or potential clients, if they pay up front, as a matter of university policy.
"Send us the check, we'll do the legwork," he says.
Pumping for pennies
But it's uncertain where Innovative Holdings would find the money. In more than three years in Orlando, the company never has produced operating revenue.
Innovative Holdings has made some money for Wyzisk, its president, chief executive officer and, until recently, sole board member.
In March, Wyzisk made $16,000 selling shares in his company. Last October, he brought in $27,100 by selling his stock.
Despite a lack of operating revenue, Innovative Holdings has produced reams of press releases touting potential deals, including ones that never materialized.
For instance, this past May, Innovative Holdings announced it had inked a letter of intent to acquire an Orlando Web page business.
According to that company, Personal Portals Online Inc., the two firms did have some discussions, but decided against any partnership or acquisition.
The announcement of the potential merger simply occurred while the two companies were in discussions, says William Mobley, founder of Personal Portals Online. "It wasn't in our interest to do that (issue press releases)," says Mobley. "It was something that was just done."
Indeed, in the last 21/2 years, Innovative Holdings, its subsidiaries and partners have issued 78 press releases announcing agreements in principal, interviews with Internet stock news services and the prospect of potential deals.
For a publicly traded penny stock, that's enough to generate interest from those looking to make a killing in the shallow end of the stock market pool.
After all, 10,000 shares of a penny stock bought at 2 cents each can turn a $200 investment into $800 when that stock climbs to 8 cents a share -- creating instant opportunities for investors looking to make a quick buck.
In June, Innovative Holdings' stock price did just that.
On June 8, Innovative Holdings saw its stock trade at an unprecedented volume.
The day before, a mass e-mail titled "Explosive Stock Alert at $0.02 !!!!" was sent out. It's not immediately known who sent the e-mail.
The sender of the message used Orlando Internet service provider MPInet to launch the message, according to an online anti-spam e-mail tracker.
The e-mail promised that Innovative Holdings would be profiled by "major newsletters" and that "huge volume and a strong increase in price" were expected.
The next day, more than 4 million shares changed hands, activity that helped propel the stock price from 2 cents to 8 cents.
Since then, the stock has settled to about a nickel a share. |
