40. Streamedia was organized by Rupp and Essary as a limited liability company in New Jersey in September 1998. In December of 1998 the company was reorganized as a corporation in the State of Delaware under the name Streamedia Communications, Inc.
41. For the twelve months ended December 31, 1999, the Company had no revenue and a loss of $3.8 million.
INFLATED IPO VALUATION
42. Thus, at the time of the IPO, the Company had no revenue, no customers, no user base, no proprietary technology, no intellectual property (with the exception of 2 intended trademarks that have since been abandoned), no networks, no system or ability to deliver products or services, no technical competence, no offered products or services and less than 10 employees. The two founders, Rupp and Essary, together with others had paid on average less than 16 cents per share for the Company’s stock less than a year earlier, yet the Company and the Underwriter Defendants assigned a per share price of $8.50 in the IPO - implying a market value of more than $38.0 million to the Company.