Re: Homeland Integrated Security Systems, Inc. (HISS)
Greetings Fellow Shareholders,
As promised, I have been collecting information on shareholders who are willing to come forward and act as a group to see what can be done about HISS's lack of performance and subsequent reverse split action. As you all know... the stock was at rock-bottom $0.0001 per share prior to the split. Since the split, the stock has slid another 40% or so... damning our value to mere subs of sub pennies... representing the most absurd loss possible when it comes to stock investing.
Before we begin this journey, I wanted to take some time to tell you who I am and make my position very clear. I am a common shareholder in the company. My investment spans more than 13 months back and involves several blocks of the company's stock. I bought more in the sub-penny range only because they professed more than once that they had NO plans to conduct a reverse split. I am not affiliated with the company in any other way. I am not associated with any company that IS affiliated with the company in any way. I am acting on my own behalf. Nobody asked or directed me to do what I am doing.
My first and foremost desire is/was to see the company succeed in their endeavors, and to make a profit on my holding in the company. My second (and now primary) concern is to recoup some of my funds or improve drastically my holding in the company. It has been said on the message boards that any group action could bankrupt the company. I certainly don't wish to do that, however, if the company is unable to meet its obligations to shareholders via the traditional method of running an honest business... then whatever happens will be a direct consequence of that failure, NOT this action.
I am a full time CEO and entrepreneur. I manage a privately held company in the Entertainment sector. I am the co-founder of a company that owns and operates online radio stations and I am a minority shareholder in a publicly traded vineyard. My experience in stock investing only goes back a few years... but I have had some great successes and some fantastic failures from which I have learned tremendously.
There is a significant risk in investing in these small companies. My hope would be that you were advised of this prior to your investment in HISS. Regardless, though, they still have a responsibility to perform for their shareholders. They claim to be developing the products and generating "purchase orders" but where is the revenue, and why doesn't the stock move when they have good news? Having never toured their operation and not being on the "inside" I don't know for sure what they do and do not have, and I do not know what real value is created by the supposed sales they have generated. It was made known this week that they let their only sales person go. This can't be good!
I think that we need to approach this as a two-pronged problem. First... I do not think the company has been completely honest with its shareholders. Their delays on issuing the stock dividend in Evans Systems was one problem. They claimed, even after the patent application was dropped, that the CyberTracker was "patent pending." They eventually corrected this. I don't recall reading anywhere, though, WHY the application was dropped. Not having protection of the developed products is a concern. Sometime in 2006 it was stated that the company had plans for a stock buyback program. To the best of my knowledge, this never materialized. The company was subsidizing J. Ian Riley's computer / phone stores to the tune of about $100,000 per year. Why? And was there a tangible benefit to the company ( i.e. any return of funds or a profit share)?? Lastly it was printed more than once that there were no plans for a reverse split, that it was NOT being considered, etc. Then, out of NOWHERE, they did it. So that's prong one... pure dishonesty and market manipulation via improper conduct.
Second... the reverse split action will obliterate any and all value left in the holdings. Those of you who invested at .0001 thought you had nowhere to go but up -- until now. I've never seen a reverse split work... they always take a loss of 99.94% and turn it into 99.99953% and counting. Your $1.02 in value is now already $0.60 and crashing fast. What a total failure of the shareholders. Further, your interest in the company remains the same for NOW... all it takes is a few swift swipes of the pen for the Board of Directors to authorize additional shares, and your post-split holdings become that much more insignificant. I've seen this several times over... meanwhile, the principals may be holding special Class A shares with 100 to 1 voting powers and such, thus diluting YOUR voting ability, but not their own.
The action of doing a split is NOT illegal or improper in and of itself. The Securities and Exchange Commission's web site clearly states "A company's board of directors may declare a reverse stock split without shareholder approval. Although the SEC has authority over a broad range of corporate activity, state corporate law and a company's articles of incorporation and by-laws govern reverse stock splits. (See more at
http://www.sec.gov/answers/reversesplit.htm) However... please note that they were dishonest in effecting a reverse split after previously stating there was no intention to do so. Several shareholders made it clear prior to the split that any such action would be viewed extremely negatively by the holders. I personally wrote to the company on October 19th stating that very concern. Lastly, I think this action violates the fiduciary responsibilities they have to shareholders. To date, they've taken NO action to explain the split or what benefit the company (and thus the shareholders) have received by doing so. I have emailed the company twice since the split, and left multiple voicemail messages. All of my communications have been ignored. Several of you have reported experiencing the same disrespectful treatment. While we may not be able to protest the split itself... I think the way in which it was conducted and contrary to previous statements made by the company that it would NOT be doing so are basis.
COURSE OF ACTION
Here is what I think each and every one of us should do RIGHT NOW:
File an individual complaint with the SEC about the management of the company and their apparent dishonesty. Individual complaints will be viewed by the SEC and in the appropriate quantity, may trigger a deeper review. Use the form linked to here:
https://tts.sec.gov/acts-ics/do/complaint and PLEASE NOTE... make SURE you check the box that says "Yes, send the form to the firm or company." This is important for two reasons... the SEC will only store (and NOT act) on the complaint if you do not check "yes" and this also means the complaints will be forwarded to the company. This should send a clear signal that we are very unhappy shareholders. A couple of hints about what you should include in the text box... be sure to indicate if you have contacted the company already, and what response you got (or no response). Make sure you indicated that the company had previously made it clear no reverse split was planned, then they did not announce or state a change in that position before enacting one. Lastly, be sure to indicate that you feel the company is not being operated in the best interest of the shareholders.
I think you should send an email to
info@hissusa.com and state your intention to take further action if they do not start taking steps to protect your investment in the company. Clearly, they're not operating for our benefit and it needs to be made clear it will not be tolerated beyond today. This is an important step towards future action. We should each be able to state that we tried to be in touch with the company for resolution - and when it doesn't come, we move forward with no additional steps or delays. I always like to place a deadline in such communications such as "I am requesting an answer within 48-hours of your receipt of this email."
Moving forward as a group:
Later this week, I will begin preparing a letter that should be signed on behalf of this entire group. This letter will outline our concerns about the company, their dishonesty, and our desire to be renumerated for our losses based on their improper practices (or inability to perform) etc. This letter will be sent to the Securities and Exchange Commission, the Attorney Generals Offices in both North Carolina and Florida (where the corp. was registered), and the Secretary of State for Florida. I will make sure that everyone has read the letter and agrees with the language before it is sent. I may also send the letter to MarketWire - the press release service, which may allow the letter to appear in various brokerage accounts under the symbol. This will again put the company on notice.
WHAT ARE OUR CHANCES?
The bottom line is that we may have a very slim chance of gaining anything from this. Perhaps the only benefit will be that we cause extreme heartburn and grief for the people who have taken our money. However... I have had two prior experiences with recouping from my losses with very small public companies. I am bound by non-disclosure agreements from telling you WHICH companies... but both ended nicely. Below is a brief outline of those two outcomes.
1) Company had a real service to offer and was generating more than $3 Million a month in revenue, yet was break-even all the time. The CEO (and several of his immediate family members) all received extremely generous salaries for working at the company, crazy bonuses, and they even paid for their daughter's Mercedes Benz lease with corporate funds as part of her compensation package. They created many of their ancillary products themselves then "licensed" them to the company for a share of all proceeds, so they had multiple streams of income from the company. Share value tanked, and every press release fell on deaf ears. There was no going back. Then they reversed... not once, but TWICE in 8 months. Talk about a slap in the face... they completely and literally wiped any and all holdings in the company. I was left with 2 or 3 shares worth NOTHING. After some very aggressive contact, the company agreed to cut me a check for 60% of my cost basis in the company. I should have held out for more, but was happy to walk away far less screwed than I had been before that.
2) Company was developing Internet services that nobody wanted or needed. CEO was making huge salary, traveling the world over on company funds. Promises to begin generating revenue always fell through. Acquisition of related company proved to be fruitless. Stock tanked to .0001 and stayed there. Then he announced plans to reverse. Had my attorney contact the company and after initially ignoring us entirely... a deal was reached. I received several million shares of common stock as settlement, plus 5,000 restricted shares and a check for 15% of my cost basis. This was far more creative, and they eventually did reverse, but I managed to sell some at .0003 before they did... so I clocked out at about 26% recouped and still hold the restricted shares in the POS to this day. Those didn't reverse.
Can we do this? I don't know... but that's what I am willing to try to do. Lets see if we can make something happen that provides SOME benefit for our money.
Lastly... who are WE? Currently... this group of shareholders is 12 people representing approx 70 million pre-split shares of stock in the company. Please tell anyone else you may know to step up... so that when we do speak, we speak as loudly as possible. Feel free to post on the boards and have anyone else who is out there email me at
hiscshareholders@gmail.com -- thanks!!
Many thanks for your time... I know this was a hefty read. Please feel free to hit me back with any questions, comments, or concerns.
Scott Thomas
HISU news 11/14/07
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