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

To: StockDung who wrote (95747)	1/25/2007 9:23:38 PM
From: scion	Read Replies (3) \| Respond to of 122087

PEGASUS STIRS CRITICSM THE NASSAU GUARDIAN January 25, 2007 By KEESHA BETHELL & VERNON CLEMENT JONES, Guardian Business Reporter keesha@nasguard.com & vernon@nasguard.com thenassauguardian.com PEGASUS STIRS CRITICSM A project slated to employ as many as 280 people in struggling Grand Bahama, is attracting criticism from Americans charging the wireless company's precipitous drop on the US stock exchange suggests it may fail. Pegasus Wireless Corporation, according to Bloomberg reports, was sitting at 75 cents per share at the close of trading yesterday. That's quite a fall from its 52 week high on May 5, 2006, when it traded at just over $18 a share - a decline of more than $17 in nine months. The company has in fact decided to quit operating in the United States and move lock, stock and barrel to The Bahamas, specifically, Freeport, a community struggling with an economic slowdown. A beaming Prime Minister Perry Christie made the announcement late last year to Bahamians as a potential manufacturing boon for Grand Bahama. Yesterday, however, The Nassau Guardian received a series of calls from Americans representing themselves as investors in the company and concerned about its plans for the island and the likelihood of their fruition. "I just want you all to know about what's gone on with this company," said one, who refused to give his name. "This is serious business." Part of that serious business included a class action suit against the company - filed last fall - alleging that Pegasus failed to disclose a series of related party transactions and the manner in which principals purchased more than $26 million in Pegasus stock. A law firm initiating the suit alleged Pegasus withheld pertinent information involving Knabb's history with penny stock companies with suspicious trading patterns. The parties bringing the suit failed to meet the January deadline, nullifying the case, said Knabb. Knabb said he is furious with what he calls a renewed attempt to blacken the company's name and drive it into bankruptcy. It's the latest wave in a persistent case of what Wall Street calls naked shorting, a predatory and illegal practice by investment players who target a high performing stock attempting to drive down its value in order to take profit. Knabb alleges that fraudsters are behind the rapid drop in his stock's value. He argues that in May 2005, they sold 9 million shares of Pegasus stock at $18 a share - stock they never in fact owned. In doing so, they created an artificial panic, he said, effectively driving the stock down to its lowest price of 61 cents a share. At that point, he said, they would still have had to pay capital gains tax. But rather than do that, as part of their scheme, they sought to hurt the company's reputation in an effort to drive it into insolvency. Thereby avoiding paying capital gains tax. "If they never have to buy back the stock," said Knabb, "they never have to file the gain as a capital gain. "It becomes a free transaction netting them over $150 million," he said. The scheme was well-documented in business magazines Forbes and Barron's. Not everyone is satisfied, however with that version of history. One Bahamian analyst argues that there may be more to the story given just how far Pegasus' share value has fallen. Also of concern, he said, is the fact that in the span of a year Knabb moved the public company from Over The Counter trading to the NASDAQ, then back down to Over The Counter. "We left the NASDAQ because it wasn't doing anything about the naked shorting," said Knabb. Before he quit that exchange on October 27 - and before a stock split - it had fallen to $3.50. He later split the stock five ways which then gave the highest registered price of about $18 a share. "Our stock was absolutely manipulated," said Knabb. "The company has never been healthier. "There is a high disconnect between the stock value and the actual company performance." According to third quarter reports filed with the American Securities commission last year, Pegasus' revenues for the nine months ending September 30, 2006, were $75.5 million. The number represented an increase of 4,225% over the $1,788,000 of the same period of 2005. The exceptionally strong performance is based on the company's cutting edge technology not the least of which is video streaming allowing the wireless downloading of content from computer to television. "Cynalynx" in fact won PC Magazine's technical excellence award in December. Knabb said he has already addressed concerns offered by Bahamian officials about the company's "naked shorting". He is very excited about being in Freeport, preparing to take possession of a next month of 20,000 square foot factory off the Queen's Highway directly across from the Yamaha boat dealership. The CEO hopes to employ some 280 locals in the manufacturing and shipping of his wireless product to Asia and the United States. Calls to the Prime Minister's office and the Ministry of Financial Services and Investments were not returned yesterday. thenassauguardian.com