UNITED STATES OF AMERICA
In the Matter of
iBIZ Technology Corp.,
ORDER INSTITUTING PUBLIC
The Securities and Exchange Commission ("Commission") deems it appropriate to institute public cease-and-desist proceedings against iBIZ Technology Corp. ("iBIZ") pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of these administrative proceedings, iBIZ has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings herein, except that it admits jurisdiction of the Commission over it and over the matters set forth herein, iBIZ has consented to the entry of the findings and the imposition of the cease-and-desist order ("Order") as set forth below.
On the basis of this Order and the Offer submitted by iBIZ, the Commission finds that:
A. iBIZ is a Florida corporation with operations in Phoenix, Arizona. iBIZ is in the business of designing, manufacturing, and distributing desktop notebook computers and various other specialty computer products. iBIZ files reports with the Commission pursuant to Section 13 of the Exchange Act and reports on Forms 10-KSB and 10-QSB. At all times relevant, iBIZ's common stock was quoted on the OTC Bulletin Board (a service of The NASDAQ Stock Market, Inc.).
B. In January 1999, iBIZ's public relations firm hired Michael A. Furr, a purported analyst, to produce a report recommending iBIZ securities which would be posted on his website and to promote iBIZ through emails and on his radio program. Furr requested and received from iBIZ's public relations firm 200,000 shares of iBIZ common stock as compensation for preparing the reports. In February and June 1999, Furr published two favorable research reports on iBIZ containing false revenue and stock price projections.
C. The projections in both the February and June reports were false and without a reasonable basis. The projections were unattainable because iBIZ did not have adequate production capacity to realize the projections. In fact, iBIZ's president does not believe the projections could have been met. The projections were not attainable because the company was operating under a working capital deficit. Moreover, iBIZ was also operating under a going concern opinion at the time the reports were published. Finally, the reports failed to disclose the capital investment needed to meet the projections.
D. From February 1999 through June 1999, iBIZ referenced Furr's false reports in 17 press releases which appeared on iBIZ's website and which were also posted on two Internet news websites. These press releases contained a direct hyperlink to Furr's reports, which were located on Furr's website through January 2000. As late as February 2000, iBIZ maintained press releases on its website which referenced Furr's reports.
E. In a February 19, 1999 iBIZ press release, Furr's report was characterized as "independent" of the Company. The press release statement was false because iBIZ's investor relations firm paid Furr 200,000 shares of iBIZ common stock as compensation for preparing the reports.
F. The false financial projections which appeared on the Internet contributed to a rise in the trading volume of iBIZ's common stock as well as price rises between $.37 and $.51 per share.
G. Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, prohibit persons from, directly or indirectly, in connection with the purchase or sale of securities by use of any means or instrumentality of interstate commerce or of the mails, employing any device, scheme or artifice to defraud; making any untrue statement of a material fact or omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the sellers and purchasers of iBIZ securities. iBIZ violated these provisions of the Exchange Act by posting on iBIZ's website press releases containing hyperlinks to analyst reports with false revenue and stock price projections for iBIZ and issuing a press release characterizing a paid analyst as an independent analyst.
In view of the foregoing, the Commission deems it appropriate to accept the Offer submitted by iBIZ.
Accordingly, IT IS ORDERED that, pursuant to Section 21C of the Exchange Act:
iBIZ cease and desist from committing or causing any violations and any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
By the Commission.
Jonathan G. Katz
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