PhillyPA65
17 years ago
SEC INVESTIGATION UNDERWAY - BE CAREFUL - IT'S PAYBACK TIME
**** January 5, 2006 - 8/K Filing by AXM Pharma
http://www.sec.gov/Archives/edgar/data/1113643/000112178106000004/axmexhibit99one.htm
January 5, 2006--AXM Pharma, Inc. (Amex: AXJ) (“AXM”), a manufacturer of proprietary and generic pharmaceutical and nutraceutical products for the Chinese and other Asian markets, announced today that it has received notification from The Securities and Exchange Commission (“SEC”) that it has commenced a formal investigation to determine if AXM Pharma, Inc., and unnamed persons formerly and currently associated with the Company, violated the federal securities laws. Pursuant to a Formal Order of Investigation issued on December 8, 2005 and made available to the Company on December 29, 2005, the SEC staff is seeking to determine if SEC filings and press releases issued by AXM, including for the period from April 2005 through October 2005, contained false and misleading statements of material fact regarding the Company’s revenues, expenses, earnings and losses. In addition, the SEC staff is investigating, among other things, whether or not, for the relevant time period, AXM failed to keep required books and records, failed to devise and maintain sufficient internal accounting controls, falsified books and records and made false and misleading statements to its independent accountants.
The Company has received a subpoena to produce documents in connection with the investigation. Based upon the subpoena, AXM believes that the investigation relates in significant part to the matters which caused the Company to restate its financial statements for the period ended June 30, 2005. On October 31, 2005, AXM announced that it was restating its second quarter results due to new management’s determination that the Company had improperly recognized approximately $2.8 million of revenues related to the distribution of Sunkist-branded products in Hong Kong, China and Taiwan.
"We welcome the SEC investigation as we believe it is important to determine and address why revenues were improperly recognized in the second quarter by the previous management team,” said Weishi Wang, Chairman and CEO of AXM Pharma.
AXM intends to cooperate fully with the SEC staff in connection with the investigation. At this time, it is not possible to predict the outcome of the investigation nor is it possible to assess its impact on the Company.
*** January 26, 2007 - 8/K Filing by AXM Pharma
http://www.sec.gov/Archives/edgar/data/1113643/000112178107000028/axm8k12607.htm
"On January 22, 2007, AXM Pharma, Inc. (“AXM” or the “Company”) was notified by the staff (“Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) that the Staff intends to seek authority to institute a civil injunctive action or cease and desist proceeding against the Company pursuant to Section 17(a) of the Securities Act of 1933, as amended, and Sections 10(b), 13(a) and 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The notification lists a range of potential remedies which might be sought, including the possibility of revocation of the registration of the Company’s securities under Section 12(j) of the Exchange Act. The notification relates to the Commission investigation previously disclosed by the Company in January 2006. The Company is considering its response to the notification."
Kodiak1
17 years ago
This purchase is what I find VERY INTERESTING.
If Party B believes the stock, after dilution of 4 million more shares is really worth $1.25, it would make sense that these individuals would buy all the outstanding stock (float) if they could for 30 cents or less. That is, if they really believe in the transaction they made in selling out to AXM.
If they believe what they are doing, for the time being they can contact me and have my 120,000 share tomorrow for $1.20, a discount of 5 cents. :):) Otherwise I will just sit back and watch this one, for it is like one big mystery. I just hope the ending is that everyone lived wealthy and happy ever after. :):)
I wonder what those individuals who gave up their collateral on the factory for their loans are also thinking. Either our Madaam CEO has power of persuation beyond the human natural, or there are also some Chinese believers in this company. I just hope that they were not on the wrong drugs. :):)
Was the grant a gift? She did a good job in getting those funds also. I would like to meet this lady someday, for she seems to be not just good, but real good.
Party A: AXM Pharma (Shenyang), Inc.
Party B: Beijing Yuhuatang Biological Sci-Tech Development Co., Ltd
On the basis of complementing advantages for each other, mutual
benefit and mutual development, Party A and Party B, through friendly negotiation, reached the following agreement on acquisition restructure and technology transfer:
1. Both parties confirm that the entire fixed assets and technology value of Party B is worth RMB 45,000,000 (the actual assessed value is RMB 59,830,000).
2. Party A will furnish 4,500,000 shares of its Parent company-AXM Pharma (US), Inc. to Party B at the price of $ 1.25 per share by the integral number of which is equivalent to RMB 45,000,000. Therewith, Party B is entitled to own the share rights calculated in US dollars equivalent to RMB 45,000,000 of Party A. Thus, Party B becomes a wholly owned subsidiary of Party A. Meanwhile, Party A will pay RMB 1,000,000 in cash to Party B. Party A will own the State Fund for Technology Innovation obtained by Party B’s application.
Kodiak1
17 years ago
Companies 'go dark' to cut compliance costs
By JAN NORMAN
The Orange County Register
Anacomp in San Diego has been publicly traded since the 1970s. But later this month, the data-services provider will "go dark."
In January, Anacomp deregistered its shares with the Securities and Exchange Commission.
The process of deregistering is called "going dark," because afterward the company no longer has to disclose much financial information.
Technically, the shares can still be bought and sold. They're listed on the "pink sheets," the National Quotation Bureau's list of daily quotes for companies not listed on any stock exchange.
Anacomp estimates the move will save the money-losing technology firm $3.2 million over the next two years, primarily in costs for complying with the Sarbanes-Oxley Act, which tightened accounting standards in response to the Enron and WorldCom scandals.
Since that regulatory law passed in 2002, hundreds of publicly traded companies, including several in Orange County, have taken this step, which is simpler and cheaper than buying out shareholders and going private. Hundreds more could soon follow, says attorney Thomas Magill, partner at Gibson, Dunn & Crutcher LLP in Irvine, who assisted Anacomp in going dark.
Proponents say that going dark saves qualified companies money and their executives time.
Opponents of the practice say that it leaves investors holding shares that are harder to sell - and have significantly lower prices.
If opponents have their way, the SEC will tighten the criteria for going dark to prevent many companies that are now eligible from taking this step. The SEC is considering a petition by Stephen Nelson, a White Plains, N.Y., lawyer who represents institutional investors who seek to restrict this practice. The petition says some companies avoid public disclosure of their finances by going dark "under circumstances suggesting manipulation of the capital markets."
Relatively few public companies can go dark. To qualify, they can have no more than 300 holders of record, a figure that is far below what most public companies have. Holders of record, which are different from shareholders, include brokerage firms that hold shares on behalf of hundreds of shareholders.
Companies with fewer than 500 record holders and less than $10 million in assets are also eligible.
Magill says the companies mostly likely to benefit from going dark have a handful of shareholders who own most of the company, have no analyst following, have relatively little trading activity and don't intend to sell more stock.
Among the Orange County companies that have gone dark since Sarbanes-Oxley passed are:
OnCURE Medical Corp., Newport Beach owner of 12 radiation cancer-treatment centers, in 2003. Its share price went from around $15 in mid-2003 to between 15 cents and $1.20 recently.
Procom Technology, a data storage manufacturer in Irvine, also in 2003. Its shares have risen from less than $1 to around $1.80 in recent days.
Troy Group Inc., a Santa Ana check-printing equipment maker, filed on Feb. 3 to go dark. The company had recently ended a contentious bid to take the company private.
All three made statements at the time of filing similar to that of OnCURE: "The company incurs significant accounting, legal and administrative costs that are associated with the SEC's reporting requirements. We believe that these cost savings will have a positive impact on the company's results of operations."
That can be a powerful incentive.
"Boards of directors have to look at the $1 million cost of complying with Sarbanes-Oxley - and that's for a small company," Magill says. "There goes substantially all of their earnings, and shareholders get nothing other than a report of compliance."
In Anacomp's case, most of its savings will be in audit costs it would have to pay to comply with SEC reporting requirements, especially for Sarbanes-Oxley, says Chief Financial Officer Linster Fox. Other savings are for consultants, executives' and directors' liability insurance, attorneys and two employees whose sole jobs were SEC compliance.
Attorney fees for deregistering a company run about 10 percent to 25 percent of first-year savings, Moloney estimates.
Most of Anacomp's shareholders are sophisticated, institutional investors intending to maintain their investment a long time, says general counsel Paul Najar. By cutting its costs and focusing management's attention on running the company, the shareholder value can increase in many ways, including using the savings to buy other companies or sell the entire company at a higher price because of improved financials.
Not all shareholders of deregistering companies like the move. Wynnefield Capital, which owns stock in New York steel-bar maker Niagara Corp., recently placed an ad in The Deal, a magazine that focuses on mergers and acquisitions, claiming that shareholders had lost $100 million since its deregistration announcement. Shares had traded at $8.95 the day of the announcement Dec. 31, drifted as low as $7.40 on Feb. 14 and recovered, trading at $9 on March 31.
A study of 298 companies that deregistered with the SEC or delisted from one of the exchanges found that the average decline in share value was 10 percent.
"Shareholders are left holding a stock that has not only been delisted from a major exchange but about which little if any public information is produced and is inherently less liquid," said the report by Andras Marosi and Nadia Massoud at the University of Alberta.
Anacom's share price dropped to $17.28 from an average of $18.13 before the deregistration announcement, Najar says.
But share price alone is not a good measure of a good investment, says Magill's partner James Moloney, who used to work at the SEC. "I tell (directors and executives) to look at where they are going instead of looking at short-term (stock) price cuts."
Moloney and Magill say they get calls all the time from other companies seeking advice about going dark. They estimate 50 California companies, including well-known names like the Smart and Final wholesale grocery chain, may meet the criteria that would let them go dark, if they decided to.
"I argue that they're not really going dark," Magill says. "Anacomp, for example, will put its financials on its Web site."
Magill dismisses the notion that companies that go dark are dishonest while those listed on stock exchanges - and therefore subject to more public reporting - are honest.
"Does anyone want to argue, after WorldCom and Enron, that all public companies are honest? I don't think so."
Kodiak1
17 years ago
My theory .. first post but I do own a lot of shares of this for a long time.
It is possible that someone was short a lot of shares, and because of the annoucement (or before hand knowledge) rushed to cover, driving up the price.
Why would he cover? Because it is possible that AXM will go "dark" see my next post. In this case, he would not be able to cover easily, and in months or maybe a year they would come back to the market at substantially higher prices.
AXM can go dark because it meets the criteria, less than 200 share holders, etc. See my next email.
Fear of going under: Forget it. The 6 individuals who lent big bucks here even took changed their agreement to take the new factory off as collatral (sp), so that they can use the factory to obtain production money from banks.
Why would the newly acquired company settle for 4M AXM shares at $1.25 if it was going under? Makes no sense.
Even though I have way over 100 thousand shares, I would prefer they go dark and save tremendous costs and work to build this company. Come back in a year as a profit earning firm and trade for a few dollars ... the few dollars that individual probably saved by covering his short even up to .30 + .. my theory.
Read the next post about going dark, and you may understand the potential here in real life.
Kodiak1
jimmieh
17 years ago
Section 21C -- Cease-and-Desist Proceedings
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Authority of Commission
If the Commission finds, after notice and opportunity for hearing, that any person is violating, has violated, or is about to violate any provision of this title, or any rule or regulation thereunder, the Commission may publish its findings and enter an order requiring such person, and any other person that is, was, or would be a cause of the violation, due to an act or omission the person knew or should have known would contribute to such violation, to cease and desist from committing or causing such violation and any future violation of the same provision, rule, or regulation. Such order may, in addition to requiring a person to cease and desist from committing or causing a violation, require such person to comply, or to take steps to effect compliance, with such provision, rule, or regulation, upon such terms and conditions and within such time as the Commission may specify in such order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the Commission may specify, with such provision, rule, or regulation with respect to any security, any issuer, or any other person.
Hearing
The notice instituting proceedings pursuant to subsection (a) of this section shall fix a hearing date not earlier than 30 days nor later than 60 days after service of the notice unless an earlier or a later date is set by the Commission with the consent of any respondent so served.
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