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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: jbIII who wrote (94974)	8/20/2006 12:02:46 PM
From: scion	Respond to of 122087

The principal parties are BIFS Technologies Corporation (BIFS) and Jasper Knabb (Knabb). BIFS alleged that Knabb had misrepresented his ownership of BeachAccess. secinfo.com ITEM 3. LEGAL PROCEEDINGS In December 2000, the former owner of the Myrtle Beach operation was terminated by the Company. Subsequently, the former owner notified the Company in writing of his intention to exercise the options on the remaining 12,000,000 shares of restricted stock. If exercised on the termination date, the stock options would be valued at $2,952,000. This amount is based on valuing the stock on the termination date using its averaged simple traded value over a defined period, less a 15% discount because of its restricted nature. On December 20, 2000, the Company instituted legal action to void the employment contract and issuance of the 12,000,000 option shares. This case was filed in South Carolina State Court, the Court of Common Pleas, Fifteenth Judicial Circuit. The proceeding began on December 20, 2000. The principal parties are BIFS Technologies Corporation (BIFS) and Jasper Knabb (Knabb). BIFS alleged that Knabb had misrepresented his ownership of BeachAccess. BIFS sought to rescind the employment contract and recover the salary and stock options paid to Knabb. The Lower Court found that BIFS was not required to continue Knabb's employment or pay for future payments under the employment contract, however, the Court refused to rescind the agreement as requested and allowed Knabb to keep the stock options paid and those contemplated under the employment contract and those negotiated in the sale of BeachAccess. This ruling was appealed to the South Carolina Court of Appeals in Columbia, South Carolina. The appeal, filed August 21, 2001, argues that since the Court found that Knabb's behavior was excessive enough to warrant the forfeiture of his employment, it was excess enough to warrant the loss of any stock or stock options paid and the agreement should have been rescinded. The relief sought is to have the stock certificates returned that were paid to Knabb.

To: jbIII who wrote (94974)	8/20/2006 5:48:28 PM
From: scion	Respond to of 122087

Pegasus Squeezes the Shorts By Brendan Mathews August 18, 2006 fool.com Management at Pegasus Wireless (Nasdaq: PGWC) has put shorts in a very awkward position. On Aug. 4, the company announced a special "property dividend," which amounts to a common stock purchase warrant at a strike price of $8 for every 10 shares of Pegasus Wireless common stock owned. The catch is that only registered shareholders are eligible to receive the warrant. Investors holding shares with their brokerage in the "Street Name" will not receive the warrants. Investors who wanted to receive the free warrant needed to call their broker and ensure that their shares were listed under the investor's name, not the brokerage's name. Why is management doing this? Probably because once shares are put in the name of the individual investor, those shares cannot be lent out to short sellers. The effect is that the pool of shares to borrow for short selling will approach zero, and if a brokerage has already lent out shares, there's a good chance those shares will need to be recalled, forcing short sellers to cover at market prices. Over five million shares have been sold short, and the average daily trading volume is under 500,000. The deadline for brokers to report beneficial shareholders to Pegasus' transfer agent is Aug. 28. Assuming that all investors sign up to receive their free warrants, all those shorts will need to be covered in less than seven trading days. This stock is primed for a short squeeze! To add fuel to the fire, the company put out a press release quoting CEO Jasper Knabb: "We at Pegasus fully intend to assist our shareholders in holding any broker/dealer that does not comply with the dividend rule liable for failure to deliver the warrants." In other words, Knabb is making it abundantly clear to brokers that if they don't get Pegasus shares away from the shorts, there may be legal action. I must credit the management team for this brilliant and inventive ploy to boost the stock. I've never heard of another company doing this -- not even Overstock.com (Nasdaq: OSTK), which is famously engaged in a battle with naked shorts. Although I still believe that the stock of Pegasus is overvalued and overhyped based on the fundamental value of the business, I wouldn't want to have a short position at this point. For further Foolishness: A Short Course on Short Squeezes Pegasus Flies Too High Pegasus' Broken Wings fool.com

To: jbIII who wrote (94974)	8/20/2006 5:53:33 PM
From: scion	Read Replies (1) \| Respond to of 122087

Jay Knabb describes the results as "thrilling" and says his company achieved "many important milestones." But despite Knabb's enthusiasm and his tendency to purchase company stock, I'm not convinced. Pegasus Flies Too High By Brendan Mathews July 27, 2006 fool.com Pegasus Wireless (Nasdaq: PGWC) reported its second-quarter earnings with a press release titled "Company Demonstrates Extraordinary Growth With Record-High Revenue." In the release, CEO Jay Knabb describes the results as "thrilling" and says his company achieved "many important milestones." But despite Knabb's enthusiasm and his tendency to purchase company stock, I'm not convinced. None of the events of this past quarter, now matter how remarkable Pegasus says they are, have changed my original opinion of this company. The problem is that the market capitalization is based on speculation and momentum trading rather than on the fundamental value of the business. Quite simply, the company did not earn enough this quarter to justify its current market capitalization of more than $500 million. Revenue increased 10% to $25.4 million, and net income rose 8% to $247,863. That works out to about a penny per share in earnings, which isn't much of a payout for a stock trading at around $7 per share. Pegasus bulls will say the earnings don't matter because the company has such a bright future. They will cite newly announced products such as wirelesscables, a gadget that makes a home-entertainment system wireless, and WiJet.e, a wireless-multimedia device. But do the bulls have any reason to believe these products will sell? Common sense says it will take more than a few nifty features to sell wireless-networking equipment, especially with the company competing against such established players as Netgear (Nasdaq: NTGR) and Cisco (Nasdaq: CSCO). I would like to see the company earn a few million dollars in a quarter before I believe the story that management is telling. Bulls also often cite insider purchases as a reason to load up on Pegasus stock. Knabb has been a frequent and consistent purchaser of company stock, and the second quarter was no exception. According to Yahoo! Finance, he purchased stock on the open market five times at prices ranging from $8.81 to $17.25. June 28 was a particularly noteworthy day -- he purchased 1.25 million shares at $8 per share and exercised stock options for 1.2 million shares at $0.325 per share. I cannot fathom Knabb's motivation for sinking so much money into his own stock, especially at the current prices. Perhaps his day-to-day work at Pegasus has reduced his objectivity and he is simply being overly optimistic. Whatever his reasons for buying, it is wrong to assume that he's purchasing shares based on unreleased information. After all, it would be patently illegal for him to do that. Regardless, I wouldn't advise blindly following his purchases. Instead, I'd focus on the company's performance. Pegasus has earned about half a million this year, which is peanuts for a company with a market capitalization of more than $500 million. Unless management can significantly grow earnings (i.e., by 10 times or more), I believe reality will eventually set in and this stock price will fall below $1 per share. For related Foolishness, see "Pegasus' Broken Wings." fool.com