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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT of 1934
Release No. 46388 / August 21, 2002

ADMINISTRATIVE PROCEEDING
File No. 3-10869


In the Matter of

NorthStar Network, Inc.,

Respondent.


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ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS, MAKING FINDINGS AND REVOKING THE REGISTRATION OF THE COMMON STOCK OF NORTHSTAR NETWORK, INC. PURSUANT TO SECTION 12(j) OF THE SECURITIES EXCHANGE ACT OF 1934

I.

The Commission deems it appropriate and for the protection of investors that proceedings be, and hereby are, instituted pursuant to Section 12(j) of the Securities Exchange Act of 1934 ("Exchange Act") against NorthStar Network, Inc. ("NorthStar"), a corporation whose stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act, to determine whether it is necessary and appropriate for the protection of investors to revoke the registration of NorthStar's common stock for its failure to comply with Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 13a-1 and 13a-13 thereunder.

II.

In anticipation of these administrative proceedings, NorthStar has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purposes of this proceeding and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except those contained in Section III A. below, and the jurisdiction of the Commission over it and over the subject matter of these proceedings, which are admitted, NorthStar consents to the issuance of this Order Instituting Administrative Proceedings, Making Findings and Revoking The Registration of Common Stock of NorthStar Network, Inc. Pursuant to Section 12(j) of the Securities Exchange Act of 1934 ("Order").

III.

On the basis of this Order and NorthStar's Offer, the Commission finds1 that:

  1. NorthStar's common stock has been registered pursuant to Section 12(g) of the Exchange Act since January 28, 2000, when its Form 10-SB registration statement, filed with the Commission on November 29, 1999, became effective [File No. 0-30400].

  2. From October 1999 through June 2000, NorthStar, failed to comply with Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, in connection with the purchase and sale of NorthStar common stock by, directly or indirectly, employing devices, schemes and artifices to defraud; making untrue statements of material fact or omitting to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and engaging in acts, practices or courses of business which operated or would have operated as a fraud or deceit upon purchasers of NorthStar common stock, as follows:

    1. NorthStar made false and misleading statements and omitted to state material facts to investors, in an unregistered offering of its common stock concerning, among other things:

      1. NorthStar's financial condition and business prospects, including, specifically, multi-million dollar contracts NorthStar claimed to have with publicly traded telecommunications companies;

      2. NorthStar's purported ownership and means to manufacture and distribute patent-pending technology that had a reasonable revenue expectation of $100 million in 18 months; and

      3. NorthStar's use of the funds generated by its unregistered stock sales, specifically, that some of these funds would be misappropriated by officers of the company for personal use.

    2. NorthStar's Form 10-SB registration statement filed with the Commission included the following material misrepresentations and omissions:

      1. That none of NorthStar's officers and directors had received compensation from the company in 1999, in the form of cash or stock, and were not expected to do so for the remainder of 1999, when, in fact, the president of the company had already received cash compensation from the company at the time of the filing. Further, between the filing date and the effective date of the registration statement, NorthStar issued a total of approximately 1.7 million shares of its common stock to two of its officers.

      2. That the company "had not had any sales of it unregistered securities for (sic) its common stock during the past two years," when, in fact, NorthStar had already sold approximately 200,000 shares of common stock at the time the filing was made and sold an additional 900,000 shares as of the effective date of the registration statement.

      3. The registration statement failed to disclose the ongoing securities offering and the proceeds received therefrom, which rendered the Management's Discussion and Analysis of Financial Condition materially misleading, in that Item 2 of Form 10-SB requires disclosure of the information required by Item 303 of Regulation S-B, which mandates the disclosure of the expected sources of funds for capital expenditures and any significant elements of income that do not arise from the small business issuer's continuing operations.

  3. Since the filing of the Form 10-SB in November of 1999, NorthStar has failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder by failing to file any quarterly or annual reports with the Commission.

  4. NorthStar has failed to comply with Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act by failing to maintain accurate books and records and failing to maintain an adequate system of internal accounting controls.

  5. As a result of the above, NorthStar failed to comply with Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 13a-1 and 13a-13 thereunder.

IV.

Section 12(j) of the Exchange Act provides as follows:

The Commission is authorized, by order, as it deems necessary or appropriate for the protection of investors to deny, to suspend the effective date of, to suspend for a period not exceeding twelve months, or to revoke the registration of a security, if the Commission finds, on the record after notice and opportunity for hearing, that the issuer of such security has failed to comply with any provision of this title or the rules and regulations thereunder. No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked pursuant to the preceding sentence.

In view of the foregoing, it is necessary and appropriate for the protection of investors to revoke the registration of the common stock of NorthStar pursuant to Section 12(j) of the Exchange Act.

ACCORDINGLY, IT IS ORDERED that the registration of the common stock of NorthStar Network, Inc. be, and it hereby is, revoked pursuant to Section 12(j) of the Exchange Act.

By the Commission.

Jonathan G. Katz
Secretary

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1 The findings herein are made pursuant to NorthStar's Offer of Settlement and are not binding on any other person or entity named as a respondent in this or any other proceeding.


http://www.sec.gov/litigation/admin/34-46388.htm


Modified: 08/21/2002