IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
SECURITIES AND EXCHANGE COMMISSION, )
)
Plaintiff, )
)
v. ) Case No. CIV-00-1375-R
)
BROADBAND WIRELESS INTERNATIONAL )
CORPORATION, a Nevada Corporation; )
BROADCOM WIRELESS COMMUNICATIONS )
CORPORATION, an Oklahoma Corporation; )
IVAN W. WEBB, and )
DONALD L. KNIGHT, )
)
Defendants, )
)
and )
)
BLACK GIANT RESOURCES CORPORATION, )
an Oklahoma Corporation; )
BROADBAND WIRELESS COMMUNICATIONS )
CORPORATION, an Oklahoma Corporation; )
MEDSCAN TECHNOLOGIES, INC., an Oklahoma )
Corporation; and )
KIMBERLY KNIGHT, )
)
Relief Defendants. )
PRELIMINARY REPORT OF TEMPORARY RECEIVER
Peter B. Bradford, Temporary Receiver, was appointed by this Court
on August 11, 2000, pursuant to this Court's Order of that date and was
directed to take the actions described in the Order with respect to
Defendants Broadband Wireless International Corporation, Broadcom
Wireless Communications Corporation, and Relief Defendants Black Giant
Resources Corporation, Broadband Wireless Communications Corporation
and Medscan Technologies, Inc.
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FINANCIAL INFORMATION
The 10-KSB Securities filing filed with the SEC by Broadband
Wireless ("BBAN") on July 21, 2000, reported assets of $974,699.00 and
liabilities of $899,652.00, with a net worth of $75,047.00 as of March
31, 2000. Based on the Temporary Receiver's ("TR") current
investigation, the assets are actually as follows: Cash: 19,444.62; oil
and gas properties: $10,000.00, and certain unresolved claims.
Liabilities shown in the 10KSB total $899,652.00. However, the
debentures issued by the company in February of 2000, may be eliminated
pursuant to a potential settlement with third parties in a pending
lawsuit, leaving liabilities of $149,652.00.
The approximate net worth of BBAN as of the date of this report is
minus $120,208.00. TR is filing with the report an application to pay
creditors and the Temporary Receiver and counsel.
BUSINESS ACTIVITIES OF BBAN
BBAN has no business operations or activities and apparently has
had none in 2000. It receives a monthly check for its less than 1%
interest in a producing oil and gas well in Texas. Attached is a
report of Charles Puckett of D. R. Payne and Associates concerning his
investigation of the oil and gas properties owned by BBAN. He
concludes that the oil properties have a current value of less than
$10,000.00.
Certain shareholders of the company have given the company
Promissory Notes in connection with the purchase of shares which remain
unpaid. This Court has approved, and the TR has commenced actions
against three shareholders to recover in excess of $250,000.00 on
unpaid Promissory Notes. The outcome of those actions is unpredictable
at this time.
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SHAREHOLDER STATUS
BBAN is a public company which stock is traded on the NASDQ
Bulletin Board. Since the filing of this action, the shares have
actively traded in a range of 10 cents to 25 cents per share. The
closing price on September 14, 2000, was .1850 per share. There are
97,206,537 million shares of stock outstanding of BBAN. It is
estimated that approximately 42 million of these shares were obtained
without adequate consideration or obtained illegally. TR has requested
that a number of those shareholders provide proof of their
consideration for their stock. BBAN is a Nevada corporation. Nevada
law permits the cancellation of stock under certain circumstances. If
stock wrongfully obtained is canceled, the remaining shareholders of
BBAN would be protected from dilution should BBAN become an active
business in the future.
As described in the 10KSB filed with the SEC, certain former
officers, directors and 10% stockholders may have liability to BBAN
under Sec. 16(b) of the Exchange Act for "short swing" trading in the
stock of BBAN. TR is continuing to investigate this issue and
anticipates seeking the Court's approval to file lawsuits against a
number of such persons for recovery of all "short swing" profits.
RECEIVER ACTIVITIES
Since August 14, 2000, TR has been engaged nearly daily in
pursuing activities prescribed in this Court's Order of August 11,
2000. TR has engaged the law firm of Conner & Winters as his counsel.
They have been involved in litigation, reviewing business records and
securities research. TR has spent considerable time conferring with
counsel for the Securities and Exchange Commission in this action
concerning its activities. TR has obtained incomplete books and
records of BBAN and the other Defendant companies. A Bond of Receiver
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was filed and approved by this Court on August 14, 2000. A temporary
receivership checking account has been opened at MidFirst Bank,
Oklahoma City. The current balance is $23,255.83. No expenditures
have been made, nor other obligations incurred. Funds have been
transferred into the account from accounts of Co-Defendants and BBAN,
pursuant to the Temporary Restraining Order entered by this Court on
August 11, 2000.
With this Court's approval, BBAN and Broadcom have disclaimed any
interest in certain personal property purchased from Cisco Systems, but
never paid for. Cisco has relinquished any claim for delinquency
against BBAN or Broadcom. TR has obtained litigation files from BBAN's
former attorneys and those actions have been reviewed. Two actions by
shareholders are stayed, the action regarding the Cisco equipment has
been settled. Certain other actions brought by BBAN against a
"competitor" is in the process of being settled. TR will present an
application to approve that settlement within five (5) days. If that
settlement is approved it could generate several hundred thousand
dollars in cash to the Receivership.
In marshaling the assets, the TR has discovered the existence of
certain promissory notes ("Notes") in which BBAN is the payee. The
Notes were executed by the makers in connection with the makers'
election to exercise all or part of their options under BBAN's stock
option plan. Pursuant to said elections and the execution of the Notes
by the makers, BBAN issued shares of its common stock in the names of
the makers.
The following are Notes now in the possession of the TR:
_________
1 This account includes $19,442.62 transferred or deposited from
BBAN assets and $3,811.21 from other Receiver Defendants.
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(1) On or about April 26, 2000, two Notes were executed by
Peter Knollenberg totaling $170,000.00, one in the amount of
$120,000.00, and one in the amount of $50,000.00. In consideration of
the execution of the Notes, BBAN issued 650,000 shares of its common
stock in the name of Peter Knollenberg. The terms of the Notes
provided that payment of $170,000.00 was due May 24, 2000. As of this
date, no payment has been received. Pursuant to the terms of the
Notes, all sums are due plus interest at the rate of 6% per annum;
(2) On or about April 28, 2000, three Notes were executed by
William G. Newhouse, III, totaling $293,749.70, one in the amount of
$179,977.50, one in the amount of $57,522.20, and one in the amount of
$56,250.00. In consideration of the execution of the Notes, BBAN
issued 2,387,500 shares of its common stock in the name of William G.
Newhouse, III. The terms of the Notes provided that payment of
$293,749.70 was due within 28 days. As of this date, no payment has
been received. Pursuant to the terms of the Notes, all sums are due
plus interest at the rate of 6% per annum;
(3) On or about April 26, 2000, a Note was executed by
Curtis H. Wilson, Sr. in the amount of $100,000.00. In consideration
of the execution of the Note, BBAN issued 1,000,000 of its common stock
in the name of Curtis H. Wilson, Sr. The terms of the Note provided
that payment of the $100,000.00 was due May 24, 2000. As of this date,
no payment has been received. Pursuant to the terms of the Note, all
sums are due plus interest at the rate of 6% per annum;
(4) On or about April 26, 2000, two notes were executed by
Donald E. Dickson, totaling $170,000.00, one in the amount of
$120,000.00, and one in the amount of $50,000.00. In consideration of
the execution of the Notes, BBAN issued 650,000 of its common stock in
the name of Donald E. Dickson. The terms of the Notes provided that
payment of the $170,000.00 was due May 24, 2000. As of this date, no
payment has been received. Pursuant to the terms of the Notes, all
sums are due plus interest at the rate of 6% per annum.
On August 31, 2000, the TR filed an application for approval to
bring actions in federal and/or state court to collect payment on these
Notes or any other such Notes in existence of which the TR is able to
locate. This Court granted the TR leave to bring these actions on
August 31, 2000. The Court further approved the retention of Timothy
J. Bomhoff and Conner & Winters to be the attorneys for the TR and the
receivership entities in filing suit on these notes. Finally, the
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Court ordered that in the interest of economy and efficiency, all such
actions filed in the U.S. District Court for the Western District of
Oklahoma would be assigned to this Court, the Honorable David L.
Russell.
On September 8, 2000, the TR filed suit against Curtis H. Wilson,
Sr. and William G. Newhouse, III on their respective Notes. The TR is
currently waiting to file suit on the Notes of Donald Dickson to allow
the time period to run pursuant to a demand letter sent to Mr. Dickson
on September 12, 2000. The reason this demand letter was sent
subsequent to the earlier demand letters was that the Receiver did not
have the proper address for Mr. Dickson. However, Mr. Dickson's
current address has been identified, and a demand letter has been sent.
In regard to the Notes due and owing by Peter Knollenberg, Mr.
Knollenberg has retained counsel who has contacted the TR's attorney
requesting additional time to review the matter before a lawsuit is
filed to see if the matter can be resolved. If no resolution can be
made, the TR will file a lawsuit against Peter Knollenberg on said
Notes.
FUTURE ACTIVITIES OF THE RECEIVERSHIP
Discussions have been held by TR along with 10 to 15 shareholders
of BBAN and third parties concerning a possible combination of BBAN
with one or more other entities, which, if successful, would establish
business operations that could produce revenues and earnings for BBAN.
Those discussions are continuing and, with the assistance of an
informal group of responsible shareholders, could lead to a business
plan which the TR will present to the Court as soon as possible.
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TR intends to continue pursuing collection of unpaid notes from
shareholders and to pursue the recovery of funds unjustly obtained from
BBAN through the activities described in the Complaint herein.
THE OTHER ENTITIES
This report is focused on BBAN because it is the only public
company of the Defendants with true investor shareholders. None of the
other companies, Broadcom Wireless Communications Corporation and
Relief Defendants Black Giant Resources Corporation, Broadband Wireless
Communications Corporation and Medscan Technologies, Inc. have any
assets or operations and appear to have been created and used as
alleged by the SEC in its Complaint. Co-Defendant Don Knight has not
been interviewed because he failed to appear for a hearing on a motion
to revoke his probation in this Court on August 31, 2000. TR
understands that a bench warrant has been issued for his arrest, but to
date Mr. Knight has not been apprehended. TR has also been attempting
to obtain possession of a Lincoln Navigator automobile leased by
Co-Defendant Broadcom which was believed to have been operated by Don
Knight. That automobile was last known to be in Miami, Florida, and TR
is attempting to seize the vehicle and have it returned to the Receiver
or to Ford Motor Credit Corporation which is the record owner of the
vehicle. The Court entered an Order on September 13, 2000, permitting
seizure of the vehicle. Although the paid up lease value of the
vehicle is not a substantial asset, the seizure of the vehicle could
prevent additional liability to the Receivership companies if the
vehicle is damaged or abandoned in Florida. In addition, the seizure
of the vehicle could aid in the location of Donald Knight, who remains
at large.
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RECOMMENDATION
TR recommends that the Receivership continue until October 31,
2000, to permit the recovery of assets, consideration of business plans
and activities to cancel stock of BBAN. However, if no assets are
forth coming in the near future and/or no business plans emerge that TR
can recommend to the Court for approval, TR may request the Court to
dissolve the Receivership and transfer this matter to the Bankruptcy
Court with respect to some or all of the Receiver Defendants.
Dated this 15th day of September, 2000.
/s/ Peter B. Bradford
_______________________________________
PEER B. BRADFORD, OBA #1044
Conner & Winters, P.C.
One Leadership Square
211 N. Robinson, Ste. 1750
Oklahoma City, Oklahoma 73102
(405) 272-5711
(405) 232-2695 Facsimile
TEMPORARY RECEIVER FOR BROADBAND WIRELESS
INTERNATIONAL CORPORATION, ET AL.
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CERTIFICATE OF SERVICE
On this 15th day of September, 2000, a true and correct copy of
the above and foregoing document was mailed to the following counsel of
record:
Holly Barrett
Law Office of Holly Barrett
First National Center Bldg.
120 N. Robinson, Ste. 2500
Oklahoma City, Oklahoma 73102
Harold R. Loftin, Jr.
801 Cherry Street, Suite 1900
Fort Worth, Texas 76102
Richard Hewitt
104 Houston Street, Ste. D
Roanoke, Texas 76262
/s/ Peter B. Bradford
__________________________________
Peter B. Bradford
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