|To: Capitalizer who started this subject||5/22/2002 7:09:47 PM|
|8K is out, summary here|
We believe that without generating any revenues from our operations, the $10,000,000 gross proceeds we received upon closing of the transactions contemplated by the Purchase Agreement with Innovations is sufficient to fund our operations for the next 12 months. There can be no assurance, however, that we will not need additional financing within the next twelve months and we will not be able
to operate longer than twelve months without increased operating revenues and/or additional financing.
YOU WILL SUFFER DILUTION IN THE FUTURE UPON ISSUANCE OF OUR COMMON STOCK
In connection with our closing under the Purchase Agreement, we issued to Innovations a senior secured convertible note in the principal amount of $2,727,273. The principal amount of the senior secured note will be convertible into 52,870,757 shares of Ashton common stock.
We also have recently granted HK Weaver Group Limited an option to purchase up to 2 million shares of our common stock, and warrants to purchase 9 million shares of our common stock to RGC International Investors, LDC. The future public sale of our common stock by Innovations and other
stockholders that may control large blocks of our common stock, and the conversion of our derivative securities and public sale of the common stock underlying these derivative securities, could dilute our common stock and depress its market value. These factors could also make it more difficult for us to raise funds through future offerings of common stock.
THE RISK OF DILUTION MAY CAUSE THIRD PARTIES TO ENGAGE IN SHORT SALES OF OUR COMMON STOCK
By increasing the number of shares offered for sale, material amounts of short selling could further contribute to progressive price declines in our common stock. The perceived risk of dilution may cause our stockholders to sell their shares, which would contribute to a downward movement in the stock price of our common stock. Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage third parties to engage in short sales of our common stock. These factors could also make it more difficult for us to raise funds at an acceptable or stable stock price through future offerings of common stock.
WE MAY BE SUBJECT TO CLAIMS THAT COULD SERIOUSLY HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION
We may be subject to claims as a result of one or more of the matters described below. Any of these matters could give rise to claims or litigation that could subject us to liability for damages. We have limited liquidity and financial resources to satisfy any such claims. Moreover, any lawsuits, regardless of their merits, could be time-consuming, require us to incur significant legal expenses and divert management time and attention.
o Following the sale of shares of our common stock by certain selling stockholders pursuant to an effective registration statement, we became aware that the financial statements included in the registration statement did not satisfy the requirements of Regulation S-X. Because the registration statement incorporated by reference our Annual Report on Form 10-K for the year ended March 31, 2000, rather than for the year ended March 31, 2001, as it should have, the registration statement did not meet the applicable form requirements of a registration statement on Form S-2. Thus, claims may be made that the prospectus did not meet the requirements of, and that the sale of the shares was not properly registered pursuant to, the Securities Act of 1933. If such claims are upheld, then the sale of the shares of common stock by these selling stockholders may have constituted a violation of the Securities Act of 1933. In this case, the purchasers of the common stock from the selling stockholders could have the right, for a period of one year from the dates of their respective purchases, to recover (i) the purchase price paid for their shares, plus interest, upon tender of their shares to us or (ii) their losses measured by the difference (plus interest) between their respective purchase prices and either the value of their shares at the time they sue us or, if they have sold their shares at a loss, the sale
price of their shares. Alternatively, the purchasers of the common stock could have a right to seek redress from the selling stockholders, in which case we may have third party liability to the selling stockholders. We believe that these refunds or damages could total up to approximately $2.1 million, plus interest, in the event the purchasers of the shares suffer a total loss of their investment during this period and seek refunds or damages.
o On April 26, 2002, we received a draft complaint from counsel to two shareholders of Universal Trading Technologies Corporation, or UTTC, one of our subsidiaries, that named as defendants Ashton, UTTC, Innovations and specified present and former directors of UTTC. The draft complaint purports to assert claims arising, among other things, from purported pledges by Ashton of UTTC's intellectual property and the creation of joint ventures that are claimed to have used UTTC's intellectual property, allegedly without compensation to UTTC or its shareholders. Among other claims, the draft complaint also purports to state claims for breach of fiduciary duty arising out of offers, which were not accepted, to acquire the shares of UTTC from these shareholders at a price that was allegedly too low. To our knowledge, the draft complaint has not yet been filed.
o Our publicly traded Warrants expired on May 2, 2002. Under the Warrant Agreement dated as of May 7, 1996 between Ashton and North American Transfer Co., as Warrant Agent, Ashton was required to notify the Warrant Agent and the registered holders of the Warrants of specified adjustments to the exercise price of the Warrants and shares deliverable upon exercise of the Warrants. We failed to provide the Warrant Agent or the registered holders of the Warrants with required notices of adjustments to the exercise price that resulted from multiple issuances or deemed issuances of shares of common stock below the then current market price (as defined in the Warrant Agreement).
o On May 20, 2002, Finova filed a motion to add Ashton as a defendant in the case Finova Capital Corporation v. OptiMark Technologies, Inc., OptiMark, Inc and OptiMark Holdings, Inc., Docket No.: HUD-L-3884-01, Superior Court of New Jersey--Hudson County. Finova asserts claims arising out of an equipment lease agreement pursuant to which Finova alleges that OptiMark Technologies, Inc (now known as OptiMark US Equities, Inc.) agreed to lease certain equipment from Finova. Finova has made claims in unspecified amounts exceeding $6 million (plus interest, late charges, litigation costs and expenses) for, among other things, fraudulent conveyance of certain assets comprised, at least in part, of the intellectual property and non-cash assets acquired by Ashton from Innovations pursuant to the Purchase Agreement. We cannot predict whether Finova will be successful in its motion to add Ashton as a defendant, nor can we predict the outcome of the litigation at this time. Pursuant to an indemnification agreement OptiMark US Equities, Inc. will indemnify Ashton from any claims relating to the alleged fraudulent conveyance. If Ashton becomes a defendant in this litigation, is found liable for damages and OptiMark US Equities, Inc. is unable to fulfill its obligations under the indemnification agreement, then such litigation could have a material adverse impact on our financial condition and results of operations.
Our principal stockholder, OptiMark Innovations Inc., owns 608,707,567 shares of our common stock and has rights to acquire an additional 52,870,757 upon conversion of a note. Innovations' holdings represent approximately 80% of our outstanding capital stock and the right to acquire another 7% of our outstanding common stock pursuant to the convertible note. As a result of Innovations' ownership interest in Ashton, Innovations is able to elect all of our directors and otherwise control our operations.
WE WILL BE DEPENDENT ON NEW AND EXISTING TRANSACTION PRODUCTS TO GENERATE REVENUES
Our future revenues will depend primarily on the volume of securities traded on our systems and generated by our transaction-related products. The success of these systems and products is heavily dependent upon their acceptance by broker-dealers, institutional investors and other market participants. Failure to obtain such acceptance could result in lower volumes and a lack of liquidity in these systems and products. While we continue to solicit customers to use our systems and products, there can be no assurance that we will attract a sufficient number of such customers.
We may receive a substantial portion of our order flow through electronic communications gateways, including a variety of computer-to-computer interfaces and the Internet. Our electronic brokerage services involve alternative forms of order execution. Accordingly, substantial marketing, sales efforts and strategic relationships may be necessary to educate and acquire prospective customers regarding our electronic brokerage services and products. There can be no assurance that our marketing, sales efforts and strategic initiatives will be successful in educating and attracting new customers.
We regard our products and the research and development that went into developing them as our property. Unauthorized third parties could copy or reverse engineer certain portions of our products or obtain or use information that we regard as proprietary. In addition, our trade secrets could become known to or be independently developed by our competitors. We rely primarily on a combination of trademark and trade secret protection, employee and third party confidentiality and non-disclosure agreements, license agreements, and other intellectual property protection methods to protect these property rights. However, we have not received any patent awards, nor have we filed for federal copyright protection relating to current product lines.
Our products compete with other electronic trading systems, including Instinet Corporation's crossing network, Investment Technology Group Inc.'s POSIT system, Bloomberg, L.P.'s Bloomberg Professional and Bloomberg Tradebook, Liquidnet, and other companies that develop proprietary electronic trading systems. Our electronic trade execution services also compete with services offered by leading brokerage firms offering various forms of volume-weighted average price trade execution. We also compete with various national, regional and foreign securities exchanges for trade execution services.
Many of our competitors have substantially greater financial, research, development, sales, marketing and other resources than we do and many of their products have substantial operating histories. While we believe our products offer certain competitive advantages, our ability to maintain these advantages will require continued investment in the development of our products, and additional marketing and customer support activities. We may not have sufficient resources to continue to make this investment, while our competitors may continue to devote significantly more resources to competing services. Nor can we be sure our products will adequately address all the competitive criteria in a manner that results in a competitive advantage.
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|To: mmmary who wrote (4415)||7/15/2002 12:25:13 PM|
|THOMSON KERNAGHAN & CO. LTD.– TIME TO GIDDY-UP AND GO|
“Giddy-up. Let’s get going,” is how former Thomson Kernaghan Chairman Mark Valentine used to exhort his trading team. Now Valentine is gone, banished by the brokerage firm on June 13th, and later suspended by Canada’s Ontario Securities Commission (OTC). See Not Exactly Valentine’s Day and On the Mark.
Thomson Kernaghan & Co. Ltd. isn’t far behind. The brokerage firm that helped finance Infotopia, Inc. (Pink Sheets: IFTA), Joshua Tree Construction, Inc. (OTCBB: JTRE) and a lengthy list of other over-the-counter companies, was suspended by the Investment Dealers Association of Canada (IDA) on July 11th and placed under bankruptcy protection one day later.
The IDA suspended Thomson Kernaghan after discovering that the firm, which had run out of capital, no longer had sufficient cash “to ensure that securities transactions could be completed promptly and effectively.” Spurred on by this discovery, on July 12th the Canadian Investor Protection Fund obtained an order from the Ontario Superior Court appointing Ernst & Young as trustee in bankruptcy for Thomson Kernaghan.
These latest events began to unfold as Thomson Kernaghan was winding down operations and transferring customer accounts to other firms. The firm’s demise followed charges by the OTC that Valentine had created “a culture of conflict and non-compliance” at the brokerage through a series of complicated investments.
Valentine, whose questionable activities allegedly included his involvement in so-called “death spiral” financing for struggling companies, was initially suspended from trading securities on June 18th. That suspension now has been extended until January 31, 2003. Until then, he is barred from trading any securities, except for stocks listed on the New York Stock Exchange and the Toronto Stock Exchange that he trades for his own account. That means he can’t dabble in NASDAQ and Over-The-Counter stocks, which have been the focus of his questionable activities. (7/15/2002)
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|To: StockDung who wrote (4416)||7/15/2002 12:43:36 PM|
|Valentine and ASTN|
He was a director of uttc a division of ashton
He was in charge of ATG Canada
He supplied the death spiral financing to ashton which killed the stock price
His funds were invested in Ashton. They pulled out right before he initiated the death spiral. Calp II, TK Holdings, and I think Sovereign and Dominican.
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|To: Capitalizer who started this subject||7/30/2002 12:47:14 PM|
|The money's in the math|
OptiMark teams with Ashton in new strategy
Peter Key Staff Writer
Ashton Technology Group Inc. has big dreams of making big money by offering cheap, anonymous trades for institutional stock investors.
Ashton can do so, it says, thanks to a mathematical formula it now owns as part of a cash and intellectual property investment totaling about $30 million.
The investment was made by OptiMark Innovations Inc., a partially owned subsidiary of Jersey City, N.J.-based OptiMark Holdings Inc.
Both Ashton and OptiMark once had their own big dreams.
Ashton invested in Internet-based technology for the financial industry in the hope that some of the technology would prove, if not revolutionary, highly lucrative.
OptiMark, for its part, developed an electronic trading system that it hoped would displace the specialists on the floor of the New York Stock Exchange.
Neither company realized its aspirations and both wound up in need of a turnaround, in OptiMark's case even though it received $340 million in venture capital.
OptiMark Holdings Inc., through OptiMark Inc. and that company's OptiMark Innovations subsidiary, now develops and sells technology used in exchanges. It also invests in businesses and forms partnerships that do so.
Ashton is now using an algorithm it got from OptiMark to perform trades for institutional investors that want to trade anonymously at the best price they can get on a given day. That's often something known in the industry as the VWAP, which stands for volume-weighted average price.
To calculate a stock's VWAP for a day, you first calculate the worth of all trades in the stock on that day, which consists of all the prices at which the stock traded multiplied by the number of shares traded at each price. You then divide that number by the total shares of the stock that traded during the day.
The result is considered to be a yardstick against which all trades of a stock on a given day can be measured. Sellers do well when they get a higher price than the VWAP; buyers do well when they get a lower price than the VWAP.
Beating the VWAP, however, is tough. Around 80 percent of institutional trading fails to do it, according to Elkins/McSherry LLC, a provider of trading-cost consulting services. That's why Ashton thinks it can make money by guaranteeing institutional investors the VWAP value for their trades.
From June through Sept. 11 last year, Ashton was performing VWAP trades for institutional investors through an arrangement with the Philadelphia Stock Exchange. But although its business grew over that time, it lacked the money and technology to become a big VWAP trader.
"We actually had to turn away customers because we weren't capitalized strongly enough," said Fred Weingard, Ashton's chief technology officer.
Ashton had other problems, too. The number of stocks in which it could trade was relatively small. And it tried to give customers the VWAP price by having traders place orders throughout the day. As a result, when its business tumbled after Sept. 11, Ashton couldn't recoup.
Now, in addition to cash and technology, the deal with OptiMark has brought Ashton a largely new management team. Weingard is a holdover, but acting Chief Executive Officer Robert Warshaw, Chief Operating Officer Trevor Price and Chief Financial Officer James Pak all helped turn around OptiMark.
Former Ashton CEO Fredric W. Rittereiser was bought out of his employment agreement for $150,000 in cash over a year and 4 million shares of Ashton stock.
The deal left OptiMark holding 80 percent of Ashton's stock, which now goes for around 25 cents per share. In addition to the intellectual property, OptiMark provided Ashton with $10 million in cash, around $7.3 million of which was an equity investment and the rest of which was a loan.
Ashton faces some well-known competition in the VWAP trading market, including Bloomberg Tradebook LLC, Investment Technology Group Inc. and Hull Trading Co., which is owned by The Goldman Sachs Group Inc.
But Warshaw thinks the technology and money that Ashton obtained from OptiMark will enable the company to succeed as a provider of VWAP trading services for the following reasons:
The trades it needs to make the VWAP now are calculated and executed by computers, not people, as was the case;
the trades are executed in small volumes throughout the day, so market watchers can't see whether a large block of stock is changing hands and don't know if its customers are buying, selling or holding;
the number of stocks in which it can offer VWAP trades has increased to include the S&P 500, the Russell 1000 and the Nasdaq 100;
it can take orders in half-hour increments from 9:30 a.m. to 2 p.m., instead of just at 9:30 a.m, and;
it now can make money by charging 2.25 cents per traded share, down from 3 to 5 cents.
Warshaw also thinks OptiMark and Ashton are a good fit.
"Both companies," he said, "were technology companies who were looking for a market for their technology."
Now, he said, they have a market and they think they can use their technology to succeed in it.
Peter Key can be reached at firstname.lastname@example.org.
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|To: Capitalizer who started this subject||8/15/2002 6:35:59 PM|
|Talking about Valentine here. Remember he had ASTN buy shares in jagfn then they got jnot shares then...|
15. U.S. v. Paul D. Lemmon and Mark Valentine, Case No.
On May 14, 2002, a federal grand jury returned an Indictment charging Paul D. Lemmon and Mark Valentine with one count of wire, mail and securities fraud conspiracy, in violation of 18 U.S.C. § 371, and two counts of securities fraud, in violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. Lemmon was the founder and Managing Director of Voyager Group, Ltd., a financial services company based in Bermuda. Valentine was the Chairman of Thomson Kernaghan & Co., a securities broker-dealer based in Toronto, Canada. Valentine is also alleged to have owned and controlled a majority of the stock of C-Me-Run, Inc. ("CMER"), SoftQuad Software Ltd. ("SXML"), and JagNotes.com, Inc. ("JNOT"), three companies the stock of which was publicly traded on the over-the-counter market. The Indictment charges that Lemmon and Valentine conspired to sell CMER, SXML and JNOT stock to the Fund for a total of $29.4 million in return for their payment of an undisclosed kickback of $7.8 million to the FBI UCA and others. In addition, the Indictment charges that Lemon and Valentine were to cause securities brokers to receive undisclosed kickbacks in return for their helping to manipulate the market prices of CMER, SXML and JNOT stock by selling the stock to their unsuspecting clients. If convicted, the maximum, statutory term of imprisonment is 5 years for conspiracy to commit wire/mail/securities fraud, wire fraud, and mail fraud, respectively, and 10 years for securities fraud.
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|To: mmmary who wrote (4419)||8/19/2002 3:48:45 PM|
|MARK VALENTINE: GO DIRECTLY TO JAIL|
The long-arm of the FBI has reached out and grabbed Mark Valentine. Valentine was arrested at the Frankfurt, Germany airport on August 14th; the result of a two-year investigation by U.S. and Canadian law enforcement agencies.
The arrest marks the latest dark chapter for Valentine, whose securities license recently was suspended by the Ontario Securities Commission (OSC). The OSC is examining Valentine’s conduct while serving as Chairman of Canadian brokerage house, See Thomson Kernaghan & Co. Ltd.– Not Exactly Valentine’s Day; and Thomson Kernaghan & Co. Ltd. – Time To Giddy Up and Go.
Stock Patrol started asking questions about those activities in January 2001, when we first noticed that Valentine’s firm, Thomson Kernaghan, had been receiving millions upon millions of shares of Infotopia, Inc. at a deep discount. Those shares were quickly registered, putting Thomson Kernaghan in a position to dump them while Infotopia was projecting profits that were largely illusory, and acquisitions that never came to pass. See Infotopia – Bye Bye Shares.
Now Valentine is facing the possibility of a lengthy jail term as was one of 58 defendants charged in the FBI’s sting operation - dubbed “Bermuda Short.” Other named defendants included stockbrokers, promoters and public companies.
Prosecutors say that the “corporate terrorists” participated in fraudulent schemes – set up by the FBI - involving the sale of $200 million in securities of twenty three publicly traded companies. According to the United States Attorneys Office, no members of the public lost money because the schemes were carefully controlled by the government.
The charges stemmed from two separate, but related, operations. In the first, an FBI agent posed as a trader for a fictitious foreign mutual fund. Using that guise he enticed corporate executives and stockbrokers to sell him large blocks of stock at above-market prices, resulting in huge profits for the sellers. In return, the sellers agreed to pay secret kickbacks to the agent.
In a second scheme, an FBI agent and a member of the Royal Canadian Mounted Police posed as members of a Columbian drug cartel who wanted to launder drug money. They convinced several of the defendants to launder a total of $1.4 million.
The charges against Valentine, and others (including Paul Lemon and Andrew Proctor, directors of Voyager Group, Inc, a Bermuda-based financial services firm) involved a scheme to dump shares of three OTC Bulletin Board companies that Valentine allegedly controlled: C-Me-Run Inc., SoftQuad Software Ltd. and JagNotes.
Authorities say that Valentine and Lemon conspired to sell $29.4 million worth of stock in those three companies through the FBI’s phony mutual fund trader, agreeing to pay kickbacks of $7.8 million to the trader, and his colleagues.
Infotopia investors already are familiar with JagNotes. Valentine and Thomson Kernaghan managed to steer funds toward JagNotes by arranging for Infotopia to purchase “airtime” for its infomercials on that Company’s marginally existent financial news network.
According to the criminal complaint, Valentine and other defendants also persuaded stockbrokers to manipulate stock prices by convincing their customers to buy securities. Those stockbrokers were promised kickbacks in return for their efforts.
U.S. officials intend to move forward with efforts to extradite Valentine. This time his trip is not likely to end at the Frankfurt airport. (8/19/2002)
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|To: Capitalizer who started this subject||9/18/2002 1:32:25 PM|
|10 to 1 TO 30 to 1 stock split approved, WOW|
The stockholders also approved Ashton's 2002 Stock Option Plan and authorized Ashton's board to consider and implement a reverse split of Ashton's common stock in a conversion ratio of 10-for-1 or 30-for-1, or in any ratio between.
PR out today
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|To: Capitalizer who started this subject||9/27/2002 5:22:59 PM|
|Ashton Technology Group Announces Key Accomplishments: Surpasses Operating Plan Expectations |
PHILADELPHIA, Sep 12, 2002 (BUSINESS WIRE) -- The Ashton Technology Group, Inc. (OTCBB:ASTN) today announced significant business developments since the company's finalization of its new business model last May.
"We are executing successfully against our business plan. The plan projects operating on a break-even basis in the second quarter of the company's fiscal year 2003 and our progress to date is encouraging," said Robert Warshaw, Ashton's acting CEO. "Since the strategic investment was completed on May 7, 2002, we have maintained the average revenue per share and average cost of trading built into our business plan and we are excited to announce that we are ahead of plan in revenue-related areas including, but not limited to, total volume and average monthly volume traded."
Warshaw added that Ashton has outpaced its business plan in other key areas, including sales, trading profitability, product enhancements, branding and technology.
Since May 7, 2002, Ashton's subsidiary, Croix Securities, has surpassed monthly volume projections in four consecutive months. Average order size, average monthly orders per customer, number of trading days and number of new accounts traded have all increased month over month. Since May 7, 2002, every trade accepted and executed by Croix Securities has been profitable--meaning commissions received have been greater than the combination of execution costs, clearing and settlement costs and fees paid to Ashton's liquidity providers.
In terms of branding, Ashton is ahead of schedule for the launch of its new identity, which will encompass all communications for both the parent company and its broker/dealer subsidiaries.
Also completed ahead of schedule was the successful integration and launch of the company's technology and trading algorithms--optimizing the allocation of orders to Ashton's liquidity sources and executing proprietary trades electronically.
Ashton has taken, and continues to take, a broad set of steps to reduce the operating expenses of the company. This has included employee reduction, substantive pay-cuts (averaging 10% at all levels of the company) and a restructuring of sales force compensation to be largely driven by trading volumes. The company continues to work with the Philadelphia Stock Exchange to determine the long-term viability of the eVWAP facility, which Ashton expects to resolve in the fourth quarter of 2002.
Finally, Ashton reaffirmed its plan to announce the hiring of a permanent CEO in the fourth quarter of fiscal 2002. "We are confident that we will identify and hire an executive who brings substantial customer relationships, proven broker-dealer experience and a vision of how technology will continue to revolutionize trade execution," added Trevor Price, President and COO of The Ashton Technology Group.
The Ashton Technology Group, Inc. is headquartered in Philadelphia with offices in New York and Chicago. Ashton and its subsidiaries provide electronic trading solutions to institutional investors and broker-dealers that reduce market impact and lower transaction costs, resulting in superior trading execution. Ashton trades under the symbol ASTN.OB.
CONTACT: Ashton Technology Group, Inc., Philadelphia Media Relations Paul Shapiro, 215/789-3320 email@example.com or Ashton Technology Group, Inc. Investor Relations Julian Willis, 215/789-3317 firstname.lastname@example.org
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