Mobile location services provider U.S. Wireless Corp. is under threat of being delisted from the Nasdaq National Market following a series of findings that call into question the integrity of its founder and now former chief executive officer, Dr. Oliver Hilsenrath.
Nasdaq issued U.S. Wireless a Notice of Staff Determination that the company is not in compliance with listing requirements, saying the company’s investigation into certain activities of Hilsenrath and another former executive, and the resulting amendments that need to be made to Securities and Exchange Commission filings, make U.S. Wireless non-compliant with listing rules.
Nasdaq halted trading of U.S. Wireless stock on May 29, where it last traded at $2.91 per share. U.S. Wireless said it is working with its independent auditor, legal counsel and the audit committee of its board of directors to amend previous filings, and plans to file these amended SEC reports by July 16.
Hilsenrath was replaced by Dennis Francis as the company’s chief executive officer at the end of May after the audit committee said they “uncovered various irregularities,” including cash payments, stock issuances and issuances of stock options. The board said these activities either occurred with insufficient documentation to establish the basis for the transactions, or the transactions had not been approved by the board of directors.
“Certain of these payments and issuances were made to entities that the executive committee of the board of directors believes may be affiliated with Dr. Hilsenrath and another former (undisclosed) executive officer of the company, and were not disclosed as required in Securities and Exchange Commission filings,” said U.S. Wireless.
The executive committee concluded that, among other things, Hilsenrath’s activities did not result from material weaknesses in the company’s internal control policies. U.S. Wireless emphasized the fact that its internal audit function was strengthened in the latter half of 2000.
Hilsenrath then issued a statement on his own saying he supports the choice of Francis as CEO and Louis Golm as chairman of the board, but he is in strong disagreement with the audit committee’s allegations, and in fact, the improvements to the company’s internal audit function were initiated and implemented by him.
Hilsenrath said the various bankers, agents and consultants compensated by him supported U.S. Wireless by “facilitating financing and creating important relationships for the company at a stage in its existence when other financing sources of support were not available.”
“All my decisions have been made with the best interest of the company and its shareholders in mind,” Hilsenrath said.
No evidence was found linking any other employee, officer or member of the company’s board of directors to any improper action.
U.S. Wireless, based in San Ramon, Calif., is building a national location network based on its RadioCamera location pattern matching technology, which pinpoints the locations of mobile-phone users. The company has been actively touting its technology as an E911 solution, but it also can provide traffic information, local directory assistance and vehicle and asset tracking.
