Peter Tassiopoulos and Nova Growth

In 1996, Nova Growth Corp. (NGCO) was a shell company trading on the lowly Canadian Dealer Network, a defunct OTC market for unlisted securities. NGCO was taken over by Brian Hamm, and within weeks began issuing press releases announcing the acquisition of various gaming/casino projects owned by Andrzej Kepinski.   The stock soared from pennies to the $6 area in a matter of months, but the company never actually closed any acquisitions despite a series of upbeat PR’s, and returned to pennies within two years. Hamm and Kepinski suffered a major falling out, eventually ending up in a court case that spanned two decades. Here’s where it gets interesting: recent court documents reveal the central role that Sphere 3D CEO, Peter Tassiopoulos, played in this financial quagmire.

In summary, a judgement released last month covering hearings this spring show that Marco Durante (also involved with Koda Resources and Playandwin) and Tassiopoulos were promoters of Nova Growth and central figures in the dispute. Tassiopoulos “acted as market maker” (Paragraph 99), was issued options at $.15 and warrants at $.75 (101), and personally profited to the tune of at least $500,000 (102). He acted as the investor relations contact, traveled and conducted business on the company’s behalf (262, 266), and simultaneously sold shares into the whisper campaign of alleged casino developments (101, 276-281).

Court documents bring into question the testimony of Tassioupoulos.  Justice Newbould felt that his testimony was “…in large part reconstruction” (99), “suffered from overstatement” (103) and needed to be considered “with caution” (106).   Furthermore, in a classic Catch 22, the judge states that “If Mr. Tassiopoulos and Mr. Durante are to be believed, these trades were based on inside information which Mr. Tassiopoulos and Mr. Durante had to know was illegal.” (102)

Tassiopoulos’ role took a turn for the sinister as the Nova Growth dispute reached a crescendo: “Mr. Kepinski testified that on the day after his resignation letter, Mr. Tassiopoulos, Mr. Hamm and a burly man came to his office…(where they) went to the filing cabinet and took files and some boxes, including his personal documents such as tax returns and documents of A. Kepinski & Associates that he has not recovered. They also took privileged documents.” (301)

Justice Newbould’s entire ruling can be studied here.  It includes a full chronology of the case for more interested readers (including a brief appearance by Sphere 3D director, Jason Meretsky). Those concerned only with Tassiopoulos’ role will find 73 references to the Sphere 3D CEO.

 

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Co-Founder of Sphere 3D sells 300,000 shares

Following the standard stock promotion script we have observed countless times in the past, we can now add insider sales as an important reason for investors to be concerned about their die-hard commitment to Sphere 3d.  Based on filings, John Morelli, the co-founder, former CTO and director (he resigned on March 6) of Sphere 3D, has sold 300,000 shares.  More importantly, it is quite clear that there has been a violation of securities rules in the process.  Let’s start with the sales:

1) Sphere 3D’s listing document, from December 2012 gave Morelli’s stake in Sphere 3D at 1,528,571 shares.

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2) Morelli’s only insider filing since then was a September 16, 2013 statement that he had received 50,000 options as director compensation. (screenshot from sedi.ca)

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3) On Friday, May 30th, Sphere 3D filed irrevocable proxies (giving Sphere 3D the right to vote their shares in favor of the Overland Storage merger) for each member of its board of directors and Giovanni Morelli. It states that he owned 1,228,571, or 300,000 shares less.

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One wonders why the founder and technology “guru”, as he has been referred to by a certain stock tout letter, would be selling stock in this alleged transformational company.  In any event, his selling is a likely answer to a question we have had for some time: why have there been reported marker sellers in Sphere stock (a total of 162,300 starting on January 2, 2014 according to INK Research) with no follow-up insider sales reports?  There are no satisfactory answers to this question.  If indeed it was Morelli, then he broke securities laws by not reporting sales while he was still a director.  And if it wasn’t him, then exactly who was it, and why are those sales not being reported?  As the OSC website states:

What are the deadlines for filing an insider report?

A reporting insider is generally required to file an initial insider report within 10 calendar days of becoming a reporting insider. Any subsequent insider reports reflecting changes in their holdings must be filed within five calendar days. See here.

We think Sphere shareholders should be asking:

1)  Why did Morelli sell 300,000 shares?

2)  When did he sell those shares?

3)  He can now sell without reporting.  Was this the primary reason that the founding visionary left the board?

4)  If it wasn’t him selling, who was it, and why have there been no insider reports filed?

Questions (2) and (4) should be of interest to the regulators.

What is a Microvisor ANYway?

Sphere 3D described its Glassware 2.0 technology in its April 3, 2014 press release as follows:

“Glassware 2.0™ is a platform that was designed utilizing a proprietary microvisor and revolutionary topology to achieve application virtualization in the most demanding of circumstances. Utilized in conjunction with hypervisor-based virtualization deployments, it enables true end-to-end virtualization of physical infrastructure.”

And in its Annual MD&A:

“Over the last five years, Sphere 3D has designed a proprietary platform, namely Glassware 2.0™, for the delivery of applications from a server-based computing architecture. The Company has taken a unique approach in that it has built its technology platform without the use of a hypervisor and instead has designed its own microvisor.”

So what’s the issue with their use of the term microvisor (emphasis ours)?  If you go back through Sphere 3D’s previous press releases, financial statements, presentations, and listing applications over the last year and a half you can’t find a single mention of microvisor in any of them. That’s right, the very core of Sphere 3D’s Glassware 2.0 technology wasn’t mentioned until about a month ago. Doesn’t that seem odd?

So what is a “microvisor”? The term has been used by the companies Bromium  and General Dynamics.   Bromium describes their microvisor in this whitepaper  as a “small, security-focused hypervisor” used to isolate operating systems from potential attacks. Bromium even attempted to trademark the term (although the application was eventually abandoned).   General Dynamics’ version is used in mobile phones as described here.   They have not, as far as we know, attempted to trademark the term.

So there you go, Sphere 3D’s Glassware 2.0 product was designed utilizing a proprietary microvisor, a term used by only two other companies (one of which attempted to trademark it). One is for virus protection and the other is for mobile phones. Bromium and General Dynamics provide extensive documentation as to what their product does, how it works, and what it is used for. As usual, Sphere 3D’s documentation is a little less in depth. It consists of two sentences across a press release and Annual MD&A released in the last month.

Finally, given the focus both Bromium and General Dynamics’ microvisors place on security we were surprised to see the following disclosure in Sphere 3D’s latest “risk factors”:

“Plans of Sphere 3D for implementing its business strategy and achieving profitability are based upon the experience, judgment and assumptions of its key management personnel, and upon available information concerning the communications and technology industries. Management does not have experience in the anti-virus industry. If management’s assumptions prove to be incorrect, Sphere 3D will not be successful in establishing its technology business.”

Emphasis ours.

Peter T. and the mystery half penny shares

According to this press release, Tassiopoulos joined Sphere 3D as CEO on March 4, 2013.  We see no earlier mention of his name in any company filings or pr’s. Yet, at an investor conference in early 2014 he describes himself as “the CEO and one of the original founders of Sphere 3D”  (0:50):

The original founders (as mentioned in the qualifying transaction dated December 14, 2012 for T.B. Mining Ventures/Shpere 3D merger) were Mario Biasini with 2,746,429 shares and John Morelli with 1,528,571 shares. Tassiopoulos is not listed as a shareholder, which includes “proposed directors, officers, and Insiders of the Resulting Issuer and their Associates and Affiliates as of the date of this Filing Statement”. Tassiopoulos claims to have owned just 200,000 shares when he became CEO.

We find it hard to rationalize Tassiopoulos and his self-described status as a “founder” with his small share position, and are surprised that he would be satisfied in such an inequitable arrangement with the other founders. We also notice, however, on page 30 of Sphere 3D’s 155 page filing document, that on the same day that Sphere acquired IP from Biasini’s Promotion Depot for a deemed consideration of $695,000 (1M shares at $.65) the Company also sold 7,499,900 shares for $.005 for total consideration of only $37,500. This transaction caught the eye of an editor at stockwatch.com.

We’ll avoid further speculation on who holds those shares but is it not a fair and reasonable question that Sphere shareholders ask of management?

Aside from the issue of ownership of these shares, one might also ask: Why give away 7,499,000 shares if indeed Sphere had just come into possession of a ground-breaking technology?

Peter Tassiopoulos Part 3

In this post we examine his role with Biosign Technologies (BIO.V $.04), a highly promotional TSX Venture Company that ended in disaster for shareholders.

2009 – 2011 Biosign Technologies

Biosign LinkIn

The travails of Biosign are told well elsewhere.  Needless to say it was not a pretty story. The Company issued dozens of press releases which are included at the end of this post announcing a myriad of international deals over a period of nearly two years (coinciding with Tassiopoulos’ employment) that amounted to nothing but massive losses for shareholders that bought into the hype.

Tassiopoulos’ “version” of this history (as described on his LinkedIn page) differs materially from reality in several ways:

“TORONTO, April 19 /CNW/ – During a scheduled meeting yesterday, the board of directors of Biosign Technologies (TSXV: BIO) has accepted the resignation of Alfonse D’Amato as director of the company, relieved Peter Tassiopoulos of his duties as CEO, and resolved to start searching for a new chief executive.

Radu Leca, Biosign’s President, has been named CEO on an interim basis.”

Biosign, despite trading at a peak near $3/sh in February 2011, now trades for pennies. Is it possible that Tassiopoulos did everything right and was forced out by an incompetent board? Sure, you can believe that if you want. But if Tassiopoulos himself isn’t willing to tell current Sphere 3D shareholders (and journalists) the real story of what happened at Biosign, how likely does that really sound?

 

Conclusion

Since 1995 Peter Tassiopoulos has been involved with stock promoters, stock promotions, a bankrupt electronics manufacturer, a failed shell company, a bankrupt health care technology company, and a stock promotion and failed technology company. He has misrepresented his past on several occasions and repeatedly made big promises while failing to deliver actual results. Take a read through the Biosign press releases issued while he was with the Company. Now compare their content and tone to those released by Sphere 3D over the last 18 months.

Maybe Sphere 3D is the venture that finally works for Tassiopoulos. We doubt it.


Biosign press releases

Below are links to the majority of Biosign Technology press releases issued during Peter Tassiopoulos’ employment with the company. Occasional comments, excerpts, or summaries are included.

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Peter Tassiopoulos Part 2

In Part 1 we took a look at some of Tassiopoulos’ early associations with stock promoters. In Part 2 we’ll dig into his first executive experience, taking control of a publicly traded shell company with several colleagues, and working as CEO of a privately held health care devices company.

Koda Resources

In 2000, Tassiopoulos, Steve Garner (President of Playandwin, see Part 1) and several others bought control of dormant shell company Koda Resources. They bought a 3 million share block (total outstanding was 4.5m) at an undisclosed price with the stock trading at $.75 at the time.

Intravest Capital, a company controlled by Peter Tassiopoulos and another individual, were then awarded 90k options at $0.60/sh for its “consulting services in locating one or more business opportunities to be vended into the company…”

Soon after, on November 30, Koda Resources announced it had signed a non-binding letter of intent to merge with SDL Technologies, a “specialist contract supplier of electronic circuit board assemblies…”.

n April 2001, Koda announced that it was advancing $40k to SDL to “help offset unforeseen expenses.” Later filings suggest this amount grew to $140k.

On May 21, 2003, 18 months after announcing the transaction with SDL Technologies, Koda announced that it was no longer proceeding with the business combination owing to SDL’s filing for bankruptcy on April 23, 2003.

Also announced on May 21 was the fact that the Company had begun negotiations with African Gold Group toward a business combination.

Sometime following the African Gold Group announcement, Peter Tassiopoulos joined Koda’s board of directors and became president, replacing Stewart Garner.

On October 1, 2003, Koda announced it had entered into an agreement with African Gold Group. The deal would see Koda acquiring all 14.3mm African Gold Group shares with the issuance of 48.9mm shares of Koda on a 3 for 1 basis. Following the deal a 1 for 3.5 share consolidation would be undertaken.

Later that month African Gold Group announced it would issue 2mm special warrants at $0.60/sh via a financing with Sprott Securities. Given the 3 for 1 exchange ratio, this financing implied a value per Koda share of $0.20/sh – significantly below the price at which Koda shares closed following its change of control.

On February 5, 2004, the deal closed. Initial trading of African Gold Group following its merger and share rollback was around $3/sh or roughly 86c per adjusted Koda share. However, African Gold Group would fall to about $1.20 by the end of 2004 or about 35c per Koda share. Today African Gold Group trades for about 18c or roughly 5c per Koda share.

It is clear that Tassiopoulos was intimately involved in Koda Resources beginning with his ownership group taking control of the Company in April 2000. He and his partner were paid consulting fees in common shares and his former compatriot at Playandwin, Stewart Garner, became President. Through this time the Company pursued a merger (and advanced $140K that was likely never repaid) over 18 months with a company that eventually went bankrupt, negotiated a merger with an African gold company which would fall about 65% in less than a year from its initial print. The investors which hopped on board following Tassiopoulos and Garner’s takeover of the shell company would eventually lose most of their money depending on when they got out.

But, judging by Tassiopoulos’ LinkedIn page, he came to the rescue of Koda Resources:

We’ll let you be the judge.

 KodaLinkedin

Igeacare Systems 2004 – 2008

IgeacareLinkedin

IgeaCare was and is a private company so we will have to take Tassiopoulos’ on his word that he was CEO of Igeacare for 4 years and grew its sales and staff by the amount he claims. But we can dig a little deeper into what actually took place there.

According to this November 12, 2009 court filing, IgeaCare Systems actually went bankrupt sometime in 2009 (shortly after Tassiopoulos departed).

The suit details how 6484093 Canada Inc. (Schwartzco) was not paid $820k commissions owed to it by IgeaCare on IgeaCare’s sales of EMU and SLU devices (small two way communications devices designed for patients and nurses).

IgeaCare was restructured later that year with IgeaCare Solutions acquiring the former IgeaCare Systems assets as detailed in this press release.

We don’t imagine that IgeaCare Systems investors were pleased with their former CEO Peter Tassiopoulos regardless of how many employees he hired or sales he made.

Conclusion

Tassiopoulos materially misrepresented his role with Koda Resources, and his next executive appointment ended in bankruptcy soon after his departure. Both cases suggest that Tassiopoulos’ was not a successful dealmaker or executive, in stark contrast to how he portrays his past.

Stay tuned for Part 3.

Peter Tassiopoulos Part 1

Peter Tassiopoulos, the CEO of Sphere 3D, brands himself as a dynamic and visionary information technology executive capable of building real businesses. You can view his LinkedIn profile here:

http://ca.linkedin.com/pub/peter-tassiopoulos/3a/7a0/276

The reality is a long ways off.  In this post we demonstrate that he has   associations with pump and dumps that had occasional criminal involvement.

Let’s start from the beginning.

Taylor Rand Inc.

According to George Chelekis, editor of “Hot Stock Whispers” newsletter, Peter Tassiopoulos is employed as Taylor Rand Inc.’s freelance PR spolesman as of April 28, 1995:

https://groups.google.com/forum/#!topic/misc.invest.funds/6aPicyY_Izk

“Taylor Rand Inc. (Cdn:TRND) is expecting to make a major news announcement on May 8th, according to the company’s freelance PR spokesman, Peter Tassiopoulos. TRND’s chairman is in the process of making a substantial deal to boost the company’s share values. As a member of Zaire’s royal family, he shuns publicity and hype, of which both Peter Tassiopoulos and I, as gossiping Greeks, adore. Said Tassiopoulos, “We’re softening up the stock and have a lid on the publicity until May 8th.” I confirmed with Geoffrey Eiten, editor for OTC Growth newsletter, that Taylor Rand is poised for a substantial move upward. Eiten said, “They’re going to make a ton of money on this deal.”

Chelekis was also a Scientologist who would eventually settle a complaint with the SEC for failing to disclose payments from companies he was touting:

http://www.factnet.org/altreligionscientology-week-review-108

Geoffrey Eiten also had subsequent run-ins with securities regulators as discussed here:

http://www.stockhouse.com/news/business-news/2013/07/29/stock-tout-nailed-for-$1-6-million-in-sec-fines-ov

Taylor Rand was a bulletin board traded gold explorer operating in Zairre. Its 1995 press release announcing a JV with the Country of Zaire is available here:

http://www.thefreelibrary.com/TAYLOR+RAND+ENTERS+INTO+ZAIRE+LETTER+OF+INTENT-a016202855

It was also apparently involved in mining gold tailings in Montana.

http://business.highbeam.com/436402/article-1G1-16712906/taylor-rand-rework-ore

Things don’t appear to have gone well for the shares however. On June 25, 1996 the Company was renamed Sheridan Reserve Incorporated and the shares rolled back on a one for ten basis. During the tech bubble, gold went out of fashion so Sheridan was renamed to Nevadabobs.com Inc., then Nevada Bob’s International Inc. in 2001. It was back to mining (after another consolidation) when Nevada Bob’s became Loncor Resources in 2008, finally back in the gold business.

 

Playandwin Inc.

Peter Tassiopoulos is listed as the contact for all mail directed toward Playandwin Inc. in its February 14, 2000 registration filing to list on the Bulletin Board.

http://www.sec.gov/Archives/edgar/containers/fix044/1092762/000108417800000016/0001084178-00-000016-index.htm

Playandwin is an interesting story. It was founded in 1995 by Peter Berney, a stock promoter, convicted felon, and convicted child molester, all covered here:

http://www.reviewjournal.com/news/crime-courts/stock-cheat-guilty-incest

The early history of the Company is detailed here:

http://www.siliconinvestor.com/readmsgs.aspx?subjectid=32522&msgnum=1904&batchsize=10&batchtype=Next

Interesting to note that Berney supplied a shell to career fraudster Michael Mitton.

By the time Playandwin was listed in the US (and Tassiopoulos’ involvement disclosed in its registration statement) Peter Berney was no longer officially involved with the Company, but his brother, Andrew, remained a large shareholder.

Playandwin’s law firm, Chapman & Flanagan, also had subsequent problems with securities regulators – one complaint regarding the manipulation of Exotics-Nevada is detailed here:

http://www.sec.gov/litigation/complaints/comp19207.pdf

Most characters involved in Playandwin were of dubious nature, but Tassiopoulos was only tangentially involved, right? Well, in addition to receiving all of Playandwin’s mail at 155 University Avenue, Suite 501, Tassiopoulos was also a paid consultant for the Company:

http://www.secinfo.com/d112xt.5f891.2.htm#1stPage

The document, dated September 19, 2000 discloses that Tassiopoulos was engaged as a consultant to Playandwin and was paid 350,000 common shares, valued at US$0.875/sh or $306,000 total.

Apparently Tassiopoulos was of no help to Playandwin shareholders as the online gaming business was abandoned within a year, and the Company eventually merged with juice maker D’Angelo Brands Ltd. where it was subject to another pump and dump. D’Angelo’s President, Frank D’Angelo, would later describe the experience in a Globe and Mail report as follows:

Desperate for capital, D’Angelo tried to raise money on the stock market. He was introduced to a group of penny stock promoters who proposed to take D’Angelo Brands public through a reverse takeover of a shell company. Problems surfaced almost as soon as the deal closed. D’Angelo is reluctant to discuss the details. “I have the IQ of a gnat when it comes to the stock market,” he says. But he suspects his company was used as a vehicle for a “pump and dump” scam. He immediately moved to go private again, but the process took more than two years.

 

Bach-Hauser

Peter Tassiopoulos liked the consulting for penny stock business so much he decides to do it once more with a company called Bach-Hauser, detailed in this October 1, 2000 SEC filing:

http://www.secinfo.com/d112xt.5f89q.a.htm

Tassiopoulos received 200,000 shares (valued at $0.355/sh or $71k total). He probably got the connection to Bach-Hauser through the law firm Chapman and Flanagan (which had issues with the SEC detailed earlier) as Bach-Hauser was also a client and as this stockpatrol.com report detailed, earlier filed an 8-K mistakenly naming Playandwin on the document, not Bach-Hauser.

Much like Playandwin, Bach-Hauser never went anywhere and investors were ultimately wiped out. The gory details can be discovered in the previous report. Tassiopoulos’ association with both companies does not reflect highly upon him.

Many investment professionals were tarred by their association with Playandwin and Bach-Hauser. One Canadian investment advisor was the subject of a dispute with IIROC over trading in the two companies (and Playandwin’s successor, D’Angelo Brands) detailed here:

http://www.iiroc.ca/Documents/2005/BC52E5BC-BB17-4E5F-A9A8-E76FFBF08DC5_en.pdf

 

Conclusion

Peter Tassiopoulos’ first forays in the public equity markets were not in the highest quality of companies (they appear to be exclusively heavily promoted bulletin board stocks) nor with the highest quality people (many have been convicted of securities violations). In Part 2 we’ll look into his management and executive experience in two additional companies, one public, one private.