"This is a bright new day for Spectrum Holdings," said Darryl K. Horne, the company's President and Chief Executive Officer. "When I became CEO of Spectrum Holdings this past June, several legal clouds were hanging over the company, and our new management team and our Board of Directors have worked hard to clear them away."
The SEC inquiry, which began in April 2004, focused on certain trading and promotional activity by an outside consultant related to the market for Spectrum Holdings stock. Throughout the inquiry, the company cooperated fully with the SEC. In its letter dated November 17, 2005, the SEC Division of Enforcement said, "This investigation has been terminated, and no enforcement action has been recommended to the Commission."
"We also were able to find a 'silver lining' in this dark cloud," Mr. Horne said. "We used this experience working with the SEC to strengthen our internal controls and corporate governance. Our customers, our shareholders, and our employees are all winners in this."
In an unrelated action, a resolution of a legal complaint filed by Todd Augenbaum against Robert Genovese, Endeavor Capital Group, LLC, and BG Capital Group, Ltd. has been agreed to by all parties. The July 2004 complaint sought to recover "short-swing profits" alleged to have been unlawfully obtained by Mr. Genovese and his affiliated companies in violation of Section 16(b) of the Securities Exchange Act of 1934. The transactions involved the sale of Spectrum Holdings stock. Spectrum Holdings was named as a nominal defendant in the action, but had no liability for the asserted claims. The Stipulation and Agreement of Compromise, Settlement and Release agreed to by the parties is subject to court approval.
Under the agreements among the parties, the defendants will deliver 1,000,000 shares of Spectrum Holdings common stock to the company within six months following court approval. Also among the agreed terms is a "standstill" arrangement that restricts Mr. Genovese's and BG Capital's involvement with Spectrum Holdings until December 31, 2008. Without written approval of Spectrum Holdings' Board of Directors, during that period Mr. Genovese and BG Capital may not acquire any Spectrum Holdings securities; attempt to influence the voting of shareholders in company matters; issue any press releases, make published statements, or publicly disclose any proposals concerning Spectrum Holdings; or attempt to control the management, Board of Directors, or policies of Spectrum Holdings.
Spectrum Holdings has also reached an agreement with Donal R. Myrick, a former President and CEO of the company. In August 2004, Mr. Myrick filed a complaint against the company for alleged breach of employment contracts and damages associated with a delayed stock sale. The dispute was submitted to mediation in October 2005, and the two parties have now agreed to the terms of the settlement and the dismissal of all claims in this action.
Mr. Horne said, "With these issues behind us, we can focus even more intently on the integration of the Spectrum family of companies and moving forward using our new platform for growth. I expect 2006 to be an exciting year for Spectrum Holdings."
About Spectrum Sciences & Software Holdings Corp.
Spectrum Sciences & Software Holdings Corp. is a technology and technical engineering solutions company focused on three primary target markets--national security, energy & environment, and transportation--with an emphasis on homeland security. The company's business offerings encompass management services, procurement, manufacturing, science and engineering, and information technology.
The company currently has more than 350 employees within its family of subsidiaries, which include Horne Engineering Services - http://www.horne.com -, Spectrum Sciences & Software, Inc. - http://www.specsci.com -, M&M Engineering - http://www.mmeng.net -, and Coast Engine and Equipment Company (CEECO).
More information about Spectrum Sciences & Software Holdings Corp. can be found at http://www.spectrumholdingscorp.com.
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, risks set forth in documents filed by the company from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by, or on behalf of, the Company, are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.