2014-11-05 SEC Press pdf 24 KB 7,714 chars

In re COROWARE

Exhibit of SEC Sanctions 10 Companies for Disclosure Failures Surrounding Financing Deals and Stock Dilution

summary

CoroWare, Inc. violated Section 13(a) and Rule 13a-11 of the Exchange Act by failing to disclose over seven billion unregistered share issuances (exceeding 35,000% of outstanding shares) and a material April 2014 financing agreement, resulting in a cease-and-desist order and a $25,000 civil penalty.

paragraph

CoroWare, Inc., a Delaware-based reporting company, failed to file required Form 8-K disclosures between January and June 2014 regarding over seven billion unregistered shares issued—amounting to more than 35,000% of its outstanding shares as of November 2013. It also concealed a material financing agreement entered on April 4, 2014, which triggered disclosure obligations under Items 1.01 and 3.02 of Form 8-K. Without admitting or denying the allegations, CoroWare consented to a cease-and-desist order and agreed to pay a $25,000 civil penalty in eight installments through June 2015.

narrative

CoroWare, Inc., a Delaware corporation registered with the SEC and trading on OTC Link under the symbol COWI, violated Section 13(a) of the Securities Exchange Act and Rule 13a-11 by failing to disclose material events in required Form 8-K filings. Between January 10 and June 6, 2014, CoroWare issued more than seven billion unregistered shares of common stock, which exceeded 35,000% of the shares outstanding reported in its November 2013 Form 10-Q. Additionally, on April 4, 2014, CoroWare entered into a material financing agreement with a third party involving share issuances under Section 3(a)(10) of the Securities Act but did not file a Form 8-K within the required four business days. These omissions constituted willful failures to meet ongoing reporting obligations as a registered issuer. The SEC initiated cease-and-desist proceedings, and CoroWare consented to the order without admitting or denying the findings. As part of the settlement, CoroWare agreed to pay a $25,000 civil penalty in eight installments, with the final payment due by June 15, 2015. The Commission emphasized that the violations undermined investor confidence and the integrity of public disclosures.

Enriched metadata

Scheme: unregistered-securities (80%)
Outcome: settled
Civil penalty: $25,000

Classified unregistered-securities(confidence 80%). EDGAR detection: forms Form D/S-1· recall 41% / precision 30%. detection rule →

Extracted insights

Dollar amounts 5

$25K $25,000 $10K–$100K
$10K $10,000 $10K–$100K
$2K $2,000 <$10K
$2K $2,000 <$10K
$1K $1,000 <$10K

Entities 3

company coroware, inc.
agency sec under section 12(g) of the exchange act since october 9, 2001
agency Securities and Exchange Commission

Triples 10

CoroWare, Inc. is Delaware Corporation Headquartered In Kirkland, Washington
CoroWare, Inc. registered with SEC Under Section 12(g) Of The Exchange Act Since October 9, 2001
CoroWare, Inc. is Smaller Reporting Company Under Rule 12b-2 Of The Exchange Act
CoroWare, Inc. has shares quoted on OTC Link Under Symbol COWI
SEC instituted cease-and-desist proceedings against CoroWare, Inc. Pursuant To Section 21C Of The Securities Exchange Act Of 1934
CoroWare, Inc. entered into financing agreement with Financing Company On April 4, 2014
CoroWare, Inc. issued shares in reliance on Section 3(a)(10) Of The Securities Act Of 1933
CoroWare, Inc. failed to file Form 8-K disclosing Financing Agreement On Or Before April 10, 2014
CoroWare, Inc. sold More Than Seven Billion Shares Of Common Stock Between January 10, 2014 And June 6, 2014
CoroWare, Inc. sold unregistered shares to Financing Company And Other Parties

PDF

In re COROWARE · Source

Text layers

Extracted body text (7,714c)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73523 / November 5, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16254

In the Matter of

COROWARE, INC.

Respondent.

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER

The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against CoroWare, Inc. (“CoroWare” or “Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “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 to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over CoroWare and the subject matter of these
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.

III.

2
On the basis of this Order and Respondent’s Offer, the Commission finds
1
that:

Company Background

1. CoroWare is a Delaware corporation headquartered in Kirkland, Washington.
CoroWare is a smaller reporting company under Rule 12b-2 of the Exchange Act and has been
registered with the Commission under Section 12(g) of the Exchange Act since October 9, 2001.
CoroWare’s last-filed periodic report was the Form 10-Q/A for the period ended September 30,
2013. Its shares are quoted on OTC Link (formerly “pink sheets”) operated by OTC Markets
Group Inc. under the symbol COWI.

Applicable Reporting Requirements Concerning the Issuance of Unregistered Shares

2. Under Item 1.01 of Form 8-K, a registrant must disclose its entry into a material
definitive agreement that provides for obligations that are material to and enforceable against the
registrant. Under Item 3.02 of Form 8-K, a smaller reporting company must disclose the
unregistered sales of equity securities unless such sales, in aggregate since its last report filed under
Item 3.02 or its last periodic report, whichever is more recent, constitute less than five percent of
the number of shares outstanding of the class of equity securities sold. For both items, the
registrant must file within four business days of the date of the occurrence or when such agreement
becomes enforceable against the registrant.

CoroWare Failed to Disclose the Issuance of Unregistered Shares
and the Existence of a Related Financing Agreement

3. On April 4, 2014, CoroWare entered into an agreement with a financing company
(“financing agreement”) pursuant to which CoroWare issued shares of common stock to the
financing company purportedly in reliance on a registration exemption found in Section 3(a)(10) of
the Securities Act of 1933 (“Securities Act”). The financing agreement provided for obligations
that were material to and enforceable against CoroWare.

4. CoroWare failed to file a Form 8-K with the Commission, on or before April 10,
2014 or thereafter, disclosing the financing agreement.

5. Between January 10, 2014 and June 6, 2014, CoroWare sold more than seven
billion shares of common stock to the financing company and other parties in transactions that
were not registered under the Securities Act. By January 14, 2014, the common stock sold, in the
aggregate, exceeded five percent of the number of shares of common stock outstanding reported on
CoroWare’s November 19, 2013 Form 10-Q as amended by CoroWare’s November 25, 2013 DEF
14C. Ultimately, the common stock sold exceeded 35,000 percent of the number of shares of

1
The findings herein are made pursuant to Respondent’s Offer of Settlement and are not
binding on any other person or entity in this or any other proceeding.

3
common stock outstanding reported on CoroWare’s November 19, 2013 Form 10-Q as amended
by CoroWare’s November 25, 2013 DEF 14C.
2

6. CoroWare failed to file a Form 8-K with the Commission between January 16,
2014 and June 12, 2014, disclosing the unregistered sales of equity securities.

7. As a result of the conduct described above, CoroWare violated Section 13(a) of the
Exchange Act and Rule 13a-11 thereunder, which require every issuer of a security registered
pursuant to Section 12 of the Exchange Act to file with the Commission information as the
Commission may require, including current reports on Form 8-K to disclose the occurrence of
certain events.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent CoroWare’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent CoroWare cease and
desist from committing or causing any violations and any future violations of Sections 13(a) of the
Exchange Act and Rule 13a-11 thereunder.

B. Respondent shall pay civil penalties of $25,000 to the Securities and Exchange
Commission. Payment shall be made in the following installments: $10,000 on or before
November 15, 2014; $2,000 on or before December 15, 2014; $2,000 on or before January 15,
2015; $2,000 on or before February 15, 2015; $2,000 on or before March 15, 2015; $2,000 on or
before April 15, 2015; $2,000 on or before May 15, 2015; $2,000 on or before June 15, 2015; and
$1,000 on or before July 15, 2015. If any payment is not made by the date the payment is required
by this Order, the entire outstanding balance of civil penalties, plus any additional interest accrued
pursuant to 31 U.S.C. 3717 shall be due and payable immediately, without further application.
Payment must be made in one of the following ways:

(1) Respondent may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov
through the SEC website at http://www.sec.gov/about/offices/ofm.htm
; or

(3) Respondent may pay by certified check, bank cashier’s check, or United
States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:

2
On November 25, 2013, CoroWare filed a DEF 14C announcing a 1:200 reverse stock
split resulting in a reduction of the number of shares of common stock outstanding.

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying
CoroWare as a Respondent in these proceedings, and the file number of these proceedings; a copy
of the cover letter and check or money order must be sent to William P. Hicks, Division of
Enforcement, U.S. Securities and Exchange Commission, 950 East Paces Ferry Road, NE, Atlanta,
GA 30326-1382.

By the Commission.

Brent J. Fields
Secretary

OCR text (7,641c · tika · 95% conf)

UNITED STATES OF AMERICA
Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73523 / November 5, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16254

In the Matter of

COROWARE, INC.

Respondent.

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER

II.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that:

Company Background

Applicable Reporting Requirements Concerning the Issuance of Unregistered Shares

CoroWare Failed to Disclose the Issuance of Unregistered Shares
and the Existence of a Related Financing Agreement

4. CoroWare failed to file a Form 8-K with the Commission, on or before April 10,
2014 or thereafter, disclosing the financing agreement.

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not

binding on any other person or entity in this or any other proceeding.

common stock outstanding reported on CoroWare’s November 19, 2013 Form 10-Q as amended
by CoroWare’s November 25, 2013 DEF 14C.2

6. CoroWare failed to file a Form 8-K with the Commission between January 16,
2014 and June 12, 2014, disclosing the unregistered sales of equity securities.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent CoroWare’s Offer.

Accordingly, it is hereby ORDERED that:

(1) Respondent may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondent may pay by certified check, bank cashier’s check, or United

States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:

2 On November 25, 2013, CoroWare filed a DEF 14C announcing a 1:200 reverse stock
split resulting in a reduction of the number of shares of common stock outstanding.

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying

CoroWare as a Respondent in these proceedings, and the file number of these proceedings; a copy
of the cover letter and check or money order must be sent to William P. Hicks, Division of
Enforcement, U.S. Securities and Exchange Commission, 950 East Paces Ferry Road, NE, Atlanta,
GA 30326-1382.

By the Commission.

Brent J. Fields
Secretary