topsecret10 (< 20)

7 Comments – Post Your Own

#1) On February 21, 2010 at 11:52 PM, topsecret10 (< 20) wrote:

COMMISSION ANNOUNCEMENTS Temporary Suspension of Trading in the Securities of Electronic Game Card, Inc.

The U.S. Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act), of trading in the securities of Electronic Game Card, Inc. (EGMI), of Irvine, California, at 9:30 a.m. on Feb. 19, 2010, and terminating at 11:59 p.m. on March 4, 2010.

The Commission temporarily suspended trading in the securities of EGMI because of questions that have been raised about the accuracy of assertions by EGMI, and by others, in financial disclosures to investors concerning, among other things, the company's assets.

The Commission cautions brokers-dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.

Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to EGMI's securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.

Any broker, dealer or other person who has any information which may relate to this matter should contact Bruce Karpati, Co-Chief - Asset Management Unit (212-336-0104); Gwen Licardo, branch chief (212-336-0126); or Steve Larson, staff attorney (212-336-0142) of the New York Regional Office of the Securities and Exchange Commission. (Rel. 34-61544)   {SEC News Digest}  

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#2) On February 22, 2010 at 12:55 AM, bluebare (31.57) wrote:

This is a very valuable heads-up for EGMI followers, tops.  Thanks for posting.

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#3) On February 22, 2010 at 1:15 AM, topsecret10 (< 20) wrote:

  Your welcome bluebare....    TS

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#4) On February 24, 2010 at 7:28 PM, topsecret10 (< 20) wrote:

 Update ...   Electronic Game Card, Inc. Postpones February 25, 2010 Conference Call

IRVINE, Calif. and LONDON, Feb. 24 /PRNewswire-FirstCall/ -- Electronic Game Card, Inc. ("EGC") (OTC Bulletin Board: EGMI), today announced that it has postponed its call scheduled for February 25, 2010 at 10:00 a.m. (ET) due to the suspension of trading of its common shares.  The Company is working diligently with its independent auditor to address the situation and will update investors as soon as possible.  

About Electronic Game Card, Inc.

Electronic Game Card, Inc., (OTC Bulletin Board: EGMI), develops, produces and markets innovative games to the casinos and lottery, toys and games, education, and promotional industry worldwide.  The Company's lead product is the EGC Electronic GameCard™, a unique credit card-sized pocket game combining patent and patent-pending proprietary technology of interactive capability with "instant win" excitement.  The "EGC Electronic GameCard™" can be programmed to suit a variety of gaming and promotion applications.

For further information please visit www.electronicgamecard.com

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#5) On February 24, 2010 at 8:47 PM, topsecret10 (< 20) wrote:

Update...  

Item 4.02   Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Audit Report.

(b)  On February 12, 2009, Mendoza Berger and Company, LLP (“M&B”), the independent auditors for Electronic Game Card, Inc. (“EGCI”), informed the EGCI Board of Directors that it had withdrawn its audit opinions for EGCI’s financial statements for the years ended December 31, 2006, 2007 and 2008.

M&B advised EGCI that it had become aware of irregularities in the audit confirmation of a bank account represented to M&B as having been held by Electronic Game Card (UK) Limited (“EGC Ltd”), a wholly owned subsidiary of EGCI that conducts its European operations.  Based upon M&B’s investigation and inability to confirm the balances in the account, M&B concluded that its prior audits could no longer be relied upon and that it was withdrawing its audit opinions related to EGCI’s financial statements for the years ended December 31, 2006, 2007 and 2008 as of February 12, 2010.

Kevin Donovan, the Chief Executive Officer of ECCI,  has discussed all matters described above with M&B, and has provided a copy of this Form 8-K to M&B.

EGCI intends to determine the adjustments necessary to reissue its prior financial statements, and file amended Annual Reports on Form 10-K for the years ended December 31, 2006, December 31, 2007 and December 31, 2008, and amended Quarterly Report on Form 10-Q for the periods ended March 31, 2009, June 30, 2009 and September 30, 2009 as soon as practicable

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#6) On February 24, 2010 at 9:08 PM, topsecret10 (< 20) wrote:

26 Comments » Dennis says: February 21, 2010 at 11:28 am

Ian
Thanks for the update. I posted a comment on your previous article but dont see it published. I just wanted you to know that I am a fan or yours and DO NOT blame you for the potential loss those who invested based on your DD would inccur. We all have an obligation to ourselves to do our own DD before investing. That said, like to ask you, looking back now, if you think there were red flags/signs that you now think should have prompted you to do more DD on this company? I am just trying to see if we could learn something from this. Questions have been raised on messageboard about one of their revenue streams, a manufacturer in CA who apparently ran the business from a personal condo address, which is now on the foreclosure market. Lee Cole also seems to have had a very questionable past. The very high volume selling that took place weeks prior to this also seems to have signaled “someone with inside info knows something bad”….Your thoughts Ian?
Also, I agree with you that if the CASH is the issue, then there could be a favorable outcome. However, do you agree that there seems to be more than the cash issue, given the questions about the manufacturer. Smells like SPNG …
Lastly, what makes you beleive/guess the company might hold the CC? Arent companies prohibitted from making public comments about on going SEC investigations? THanks for your thoughts on these comments in advance. Dennis

iancassel says: February 21, 2010 at 11:48 am

Dennis:

It’s is one of those 1:1,000,000 events that no one could have done enough due diligence to figure out. Point being even the analysts that cover the stock (that do more DD then I could ever do) were steam rolled by this. I wouldn’t exactly compare it to SPNG as that company had many real obvious redflags (ie the share structure). The stocks been dropping for a while but thats because of the continual management failures to get a new cfo/directors etc. Anyway, I could write all day about conspiracy theories and who knew what and the bottom line is no one knows until we all know. The only thing shareholders can hope for is the auditor changes his verdict. I agree with you, I wouldn’t be surprised to see the CC canceled. I asked IR on Friday and they said they were still doing it.

IC

William R Weakley says: February 21, 2010 at 12:35 pm

If IR thinks that the CC is still on, perhaps that is an indication that they plan to have the issue resolved by then. NOT that I am counting on that, but I am sure the CC would go alot better if they had solutions in hand vs stilling working on it.

Thanks for the post

iancassel says: February 21, 2010 at 12:54 pm

I agree William. No reason to have the cc if this isnt cleared up by then.

IC

Steve Dorff says: February 21, 2010 at 1:45 pm

Hello Ian,

I second the positive comments from Dennis about you and your efforts. While we hope for the best EGMI outcome possible we can learn from this debacle:
1) When the CFO went away I should have too. Major officers leaving, particularly CFOs is bad news.
2) I like your views on less diversification but as I believe you have said we can never put all our eggs in one basket. Thankfully EGMI never was more than 3% of my portfolio mostly because I have been anticipating a market decline of 15% or more. I have been wrong about this but it saved me from heavy EGMI exposure.
3) Delays in reports is also a bad thing. I held thru this warning sign despite #1 above. Not smart.
I am not expecting better than very bad news.
On a positive note I saw a redbox the other day.
Hoping for the best – Steve

iancassel says: February 21, 2010 at 1:57 pm

Steve:

Good to hear from you. Yes, that was probably the sign to exit. Ironic how the CFO left over lack of d&o insurance. If things go down badly they are going to need it.

Yeah, I’m looking fwd to my little redbox (gaxc) and a couple others making up for this loss Thats one company I don’t worry about ie: management.

be well,

IC

Fletcher says: February 21, 2010 at 2:33 pm

Ian or others, I’ve heard the Poken deal is a bust and that Poken confirmed they were no longer in partnership or under contract with EGMI… not that I was ever that big of a Poken fan, but do you know if this is true? If it is, I fear it’s just another sign of a corrupt company. News like that should be made public immediately, not left to chat rooms for discovery!

Lastly, any new stock names on your radar?

Thanks-

Fletcher

Steve W from Ford says: February 21, 2010 at 3:04 pm

I looked deeper at their “investments” after this all blew up. Most of the $8MM shown on their Balance Sheet is made up of Prize Mobile and it’s subsidiary Xogo along with Rosario technologies.

Prize Mobile seems to have only one employee and no revenues. They sold a significant portion of the company at their IPO for $200K pounds so it is unclear to me how EGMI could have over $3.2MM “invested” here. Rosario Technology does not come up in any search I’ve tried.

How much do you know about these “investments”? I recall a while ago you mentioning something about how they would be monetized in the near future and I see it came up during a recent CC.

Any idea what the scoop is on what appears to be a potentially significantly overvalued item?

skip davidson says: February 21, 2010 at 3:07 pm

This is what I think I know, or believe at this moment to be true. There is a account which holds funds of EGMI’s in Europe, and that bank was acquired. When the auditor went to confirm the funds he did not find the account, because the bank had changed names. Don’t know how smart this auditor is, but supposedly all of the correct info will be given to the auditor on Monday-Tuesday and I hope he then reinstates his confirmation of funds, and in turn EGMI gives all of this stuff to the SEC and business goes on. In that time frame, I look for management to be changed, I hope the CEO get his ass kicked along with another director, as they do not care about their shareholders and deserves to be fired. Their actions have been criminal in my opinion, that is in the way they treat shareholders.

The chap in London that is responsible for ALL of the business takes over, and brings in new directors, a shareholder representative, a new CFO, adds new business and business goes on in the way we originally thought for the most part.

One of the things that no one has been taking into consideration is the fact that Lord Steinberg, deceased, was buying stock for the last year and a half, and was the largest shareholder, and had access to the books and bank accounts, why would he buy the stock continually if he was not satisfied about the financial info?

What has happened here has never happened to my knowledge in 46 years, and is all the blame of two chaps in the company and one other director.

Dennis says: February 21, 2010 at 3:27 pm

Ian
Thanks a lot for your response. All we can do now is to wait and see what comes out in the next few weeks.

Now, as “Stave W from ford” points out (like many others who have done a few googles and are now finding out more bad things about these investments also), if it indeed turns out to be the case that these invesntments were bogus/overstated, then there is a serious credibility issue for the analysts that cover the stock (I forgot if it is ROTH or MERRIMAN?). For analysts who cover stocks for a living to not have done some research on the entities that EGMI invests in and find what we are now finding, would reflect poorly on them.

With GAXC having an earnings call coming up soon, I might have to hope for the best and try to make some money back I have also been curiously interested in this company NEIK…However, after what happend here (EGMI), I am affraid to hold any over-the-counter stock overnight now

Cole says: February 21, 2010 at 3:40 pm

“There is a account which holds funds of EGMI’s in Europe, and that bank was acquired. When the auditor went to confirm the funds he did not find the account, because the bank had changed names.”

Skip, is this something you actually know to have happened, or is it pure speculation?

And, Ian, I’d like to echo some of the sentiments others have expressed here, and say I think it’s pretty disgusting some of the disparaging comments I’ve seen made about you, and Stockgod as well, on other boards lately. We all make our own decisions, and chose ourselves to buy into this stock.

iancassel says: February 21, 2010 at 3:41 pm

Dennis/Steve:

I wouldn’t waste too much time looking at it since we will all know at the same time. Everything will officially be deemed legit or not before this starts trading again. You can let your mind wonder until the cows come home but it really is a waste of energy since we can’t sell the stock anyway

Dennis: I wouldn’t get to negative on this whole experience. For me it just hones in my dd skill set even tighter. I love it that most people hate OTC stocks, because that in itself is the opportunity.

Skip: Thanks for posting. That is very interesting indeed. The saga continues….I hope

Dennis says: February 21, 2010 at 3:50 pm

Ian,
Thanks for the advise. You are right. No point wasting time now.
Good luck with your other investments.
Dennis

iancassel says: February 21, 2010 at 3:50 pm

Cole:

Thanks for the encouraging words. Like I said before in some of my educational blog write ups..this is a game of averages. You will win some, and unfortunately you will sometimes lose regardless of extensive DD. Thats why its important to have a selling strategy and stick to it. I don’t let the bashers get to me because they all have their agendas.

IC

Paul J says: February 22, 2010 at 12:53 pm

Ian,

This type of situation has occured to me once in the past(circa 1999). It was a company registered in Cyprus that sold used cars from Europe to Africa. Had a low PE and very good growth rates. As it turns out the company did not have some of its assets(ships)it claimed on its balance sheet. The stock symbol was ACLN.

As it turns out, I read that Peter Lynch had also invested in the company and was bamboozled by the fraud. I guess even with very good access to info like a Peter Lynch, bad stuff happens. A class action suit was filed and 5-7 years later(don’t recall) some people got renumeration of about $.10/$.20 on the dollar on their losses.

Bruce says: February 22, 2010 at 3:40 pm

Ian, you wrote:

“It’s is one of those 1:1,000,000 events that no one could have done enough due diligence to figure out. Point being even the analysts that cover the stock (that do more DD then I could ever do) were steam rolled by this.”

Firstly, it would not be the first time that analysts were steam rolled by fraud, if that is what it turns out to be.

Second, I don’t see why the tons of shorts in this name were able to do the DD and figure out that things were not kosher, but you or the analysts could not figure it out.

Either, you and the analysts missed something that the shorts did not; or you and the analysts are correct and things will turn out ok for EGMI shareholders.

Regards,
Bruce

junewong says: February 23, 2010 at 3:10 am

I have never seen or heard about any management of a public company that is as incompetent as EGMI’s. To prove my point they can’t even get the date right on the 8k that may put us on the pink sheets. The amended 8k was filed today

alfred says: February 23, 2010 at 9:52 am

Ian, Bruce, junewong

People keep refering to shorts, The short intrest is and has been very low for the past year. The stock came a long way fast and with the absence of any info people took profits that got in early.
Besides the stock had a decent dead cat bounce the day before.

Junewong interms of other companies and fraud ! Can you say ENRON, and let no forget Merril Lynch and Henry Blodgett.

junewong says: February 23, 2010 at 4:45 pm

Alfred

Bet all those you named could at least get the date right or have enough sense to proofread it. Especially a SEC filing !!

Lindsay says: February 23, 2010 at 6:28 pm

This kind of stuff happens from time to time. Hopefully no one here at 40% or more of their portfolio in this one – and if there is wrongdoing may the guilty do jail time.

iancassel says: February 23, 2010 at 6:37 pm

Junewong:

This management team couldn’t walk and chew gum at the same time

IC

Cole says: February 23, 2010 at 8:42 pm

I really hope I’m not wrong, but for what ever reason, I have a strong feeling that it’s not going to be a matter of the company going completely kaput and everything zeroing out.

…. and I’m just gonna keeeeep on tellin myself that.

Chaz says: February 24, 2010 at 11:23 am

Ian,

I anticipate that EGMI will the conference call tomorrow morning and kicks the can down the road to the supposed 4Q report which I think is scheduled for 3/3. Is it then safe to assume these guys are hunkering down with attorneys and planning their escape route from SEC or other charges?

If so, then what? What happens when the trading suspension lifts? Does it automatically resume, transfer to the pink sheets, or is bankruptcy protection likely? What might your exit strategy be – take pennies on the dollar as soon as it resumes trading?

Please share your thoughts on some scenarios.

Thanks,
Chaz

alfred says: February 24, 2010 at 12:10 pm

If the problem is purely clerical they have a bit of an opportunity to right things some what;I don’t believe that is the case however, It would not surprise me if cash got shifted around a bit, i think we could survive that after some time. What really concerns me is the income statements, did they book significant bull shit and call them sales then were done. The auditors don’t seem to be indicating that, The one thing that concerns me is the business relationships and pending deals they have been building. Will they walk away? Strange how one day egc is showing off poken at sundance and the next day poken walks away. Any one try to contact Manatuck or Tricadia ?

iancassel says: February 24, 2010 at 12:49 pm

One thing that is overlooked is that if their was outright fraud the auditor would have resigned.

I highly doubt we will have a CC Thursday unless the auditor completes his work (which I doubt will happen that quickly).

IC

Dennis says: February 24, 2010 at 5:17 pm

So Ian,
We noticed you selling a few hundred shares today..Broker friends doing you a favor huh….hmmm whats going on there? jk..
I took the day off and got plenty of popcorn in preparation for tomorow’s CC

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#7) On March 05, 2010 at 12:43 AM, topsecret10 (< 20) wrote:

 Here Is a good scoop on the company....   http://ragingbull.quote.com/mboard/boards.cgi?board=EGMI&read=96

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