Tibanna

SVCX is Dead

2006-05-24T07:57:00.000-07:00

I was right all along. The Board fired Chris Haigh on April 25.
Now the company has gone belly-up owing me more than $120,000.

All the stockholders can thank the putsch which forced me out of the company after we had launched one product (the prepaid card) and as we were actually launching another product -- the virtual Pocketpass account with our first customer, the Arizona Republic newspaper's online premium article archives.

It was clear to those who forced me out that I would not issue false and deceptive press releases nor claim to have contracts or deals that we did not have.

Those responsible know who they are and bear the blame for the dishonest and deceptive actions that led directly to the failure of this company which I founded and whose main products, Pocketpass and Tibanna were so masterfully programmed by Eric Harold.

=========================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
May 17, 2006
Date of Report (Date of earliest event reported)
Commission File Number: 000-26969
-----------------------------------
SVC FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1343219

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)

235 Montgomery Street, Suite 956, San Francisco, California 94104

(Address of principal executive offices)

(866) 370-9600

(Issuer's telephone number, including area code)

if changed since last report)

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

Item 8.01 Other Events

Effective May 17, 2006, SVC Financial Services, Inc. ("SVC" or the "Company") accepted the resignation of Christopher Sorenson as Interim President and Chief Executive Officer of the Company. Additionally, the Company has ceased operations pending additional financing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 23, 2006

SVC FINANCIAL SERVICES, INC.

/s/ Robert Gold

Robert Gold

Chairman of the Board of Directors

==================================

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

April 25, 2006

Date of Report (Date of earliest event reported)

Commission File Number: 000-26969

-----------------------------------

SVC FINANCIAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

Colorado 84-1343219

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)

235 Montgomery Street, Suite 956, San Francisco, California 94104

(Address of principal executive offices)

(866) 370-9600

(Issuer's telephone number, including area code)

if changed since last report)

Item 1.02 Termination of a Material Definitive Agreement

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

Effective April 25, 2006, SVC Financial Services, Inc. ("SVC" or the "Company") cancelled all services agreements with The Tyburn Group, which has been providing the services of Christopher Haigh as the President and Chief Executive Officer of the Company. The Board of Directors engaged the services of Christopher Sorensen as interim President and Chief Executive Officer, effective April 25, 2006.

Mr. Sorensen, Age 45, is a management consultant with extensive experience providing interim executive services to early stage companies. He has served as the Company's Vice-President of Operations since October 2003. Previously, Mr. Sorensen was a founding member of the Advanced Technology Group at Andersen Consulting (now Accenture), and has worked with numerous financial services firms, including Northern Trust and Allstate, to design and implement mission critical applications. Sorensen holds a Bachelor's Degree in Economics and an MBA with a concentration in Finance from the University of Illinois, and a Master's of Computer Science Degree from Northwestern University.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 1, 2006

SVC FINANCIAL SERVICES, INC.

/s/ Christopher Sorensen

Christopher Sorensen

Interim President and Chief Executive Officer

No Sign That I am wrong

2005-09-09T19:32:00.000-07:00

I've been quiet for a year. Trying to give them a chance to produce something.

It's still all bullshit and bluster.

Sound and fury signifying that they don't have a clue or a product.

Customers? Oh, sure.

2004-09-02T13:01:00.000-07:00

CEO Haigh and the Transfund guys are long on talk and short on detail when it comes to customers.

They keep citing the same "twelve customers."

But never a name. Never.

The logical thing for them IF they actually have a customer is to talk about it. It would certainly make for a lot more credibility than the hype and flackery they've issued about "authorizing" some kind of meaningless alliance.

See "SVC Authorizes New Partner, Alliance Group International for Outbound Marketing, Data Mining, and Email Campaign Support" for the sort of tripe they have been putting out instead of announcing REAL customers.

This just makes one wonder ...

2004-09-02T12:58:00.000-07:00

After ousting me from Pocketpass, the new CEO, Chris Haigh did not contact our existing customers or a ranking executive at Prudential Securities who had people interested in investing.

This makes me wonder why?

Why did Haigh and the Transfund investors NOT want customers and investors that were beyond their own tight circle?

Greater Fool Theory

2004-08-25T08:59:00.000-07:00

I have been on a road trip for the past 10 days signing books, visiting book stores and media and so have not been posting substantial stuff. That will resume next week.

However, I was looking at the 16,000 shares of SVCX purchased yesterday at $0.45 and can't help wondering just what would make someone toss almost $8,000 on a stock based on no credible news, no product, no visible customers and no current SEC filings.

Fast Talking and Fancy Dancing

2004-08-18T09:05:00.000-07:00

Either:

Something exists, or it doesn't;

Something works, or it doesn't;

Customers exist or they don't;

Commitments are honored, or they're not.

All the fast talking and fancy dancing in the world may obscure reality but will never change it.

SEC Filings?

2004-08-18T09:01:00.000-07:00

Other than ownership filings and those mysterious auditor filings, there has been nothing from SVCX since January 2004.

In the absence of SEC filings, audited financials and solid data (which the CEO and CFO must legally stand behind) there is no credible information from the company.

No credible information means that all of the trades which have taken place this year are either purely speculative or insider trading.

And that means that the listed stock price is NOT based on value, but is just a sucker's bet.

Blue smoke, mirrors and excuses ...

2004-08-18T08:46:00.000-07:00

Seems to be ALL that SVC Financial has to show.

While CEO Chris Haigh claims to have a working product, he is incapable of showing it to anyone outside the company. I'd say that means he does NOT have the working product he claims.

He also claims he has 12 "customers." But he won't name them. Could that be because no customers exist? And by customer, I mean someone using the system for "REVENUES" that SVCX would get a share of.

Pocketpass had paying customers a year ago -- Wine Market Report and Olive Software/Active paper. And we had many others evaluating it because a year ago, anybody with a web connection could download Tibanna and use it ... it was a complete product ... rules, wrapper and payment processing system. Tibanna was its own sales vehicle until Transfund choked it to death.

Further, from what I have been able to tell, the "Mazarin" product sounds like an application tool kit rather than a product that is ready-to-use "out of the box" as Tibanna was. Sure, the first tibanna was for .pdf, but each supported format was going to cost $5K or less.

Tibanna's target market was not simply the technically adept (which is what you have to use an apptoolkit) but to expand far, far beyond that and migrate to the content creator.

If what I have heard is true, then it is VERY dismaying, because there are other companies offering toolkits ... nobody needs another tool kit ... and the transaction processing side is the CORE of the system and the profit model. without the back-end, the product is useless.

So, there's no credible proof of real customers and nothing other than a few "strategic alliances" that are just hype.

Fired Auditors Cover Their Assets?

2004-08-09T06:45:00.000-07:00

I'll make no comment on this until after this Friday (8/13/04) other than to say it makes me wonder just what the heck really is going on.

From FORM 8-K/A Filed By SVC Financial Services With The SEC August 9, 2004

Exhibit 16.1

August 6, 2004

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Re: SVC FINANCIAL SERVICES, INC.

Commission File No. 000-26969

Ladies and Gentlemen:

We have read Item 4 of SVC Financial Services, Inc.'s Form 8-K/A dated August 3, 2004, and we agree with such statements, except that [emphasis added]

(1) in reference to item (a)(iii), we are not in a position to confirm that the change was ratified by the Board of Directors of SVC Financial on December 18, 2003 as no formal written communication was received by us regarding the change, and

(2) we are not in a position to confirm that SVC Financial Services, Inc. engaged new principal accountants on December 18, 2003, and therefore, during the fiscal years ended December 31, 2002 and 2001, and the subsequent interim period to the date hereof, SVC Financial Services, Inc. did not consult Weinberg regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B.

Very truly yours,

/s/ Lichter, Weil & Associates

Lichter, Weil & Associates

Waiting ....

2004-08-07T10:13:00.000-07:00

A bit more than a week now and...nothing. Not a product, not a word.

Wait and See...for a Fortnight

2004-07-30T16:32:00.000-07:00

I received a communication from SVC Financial and an indication that I might get an actual copy of the elusive Mazarin -- the alleged Tibanna work-alike DRM product. The product CEO Chris Haigh and others told me was ready months and months ago.

The request was that I give the company two weeks. Reluctantly, I agreed.

The interesting thing is that this time last year, we had Tibanna ready for ANYONE to download ... a simple mouse click, not a two week wait then... maybe something.

We'll see.

Meanwhile, I will uphold my end of the bargain. I will suspend posts here and I will delay the August 9, 2004 lawsuit filing until ... I just checked my calender and two weeks from today is Friday the Thirteenth.

Prophetic? Ironic? Time will tell (two weeks worth).

The NOT So "Clean" Public Shell

2004-07-30T08:26:00.000-07:00

A reverse merger involves buying a company that already has a public listing, folding your company into it and voila! instant IPO on the cheap.

Good in theory. Good in practice IF you have a truly clean shell among other things.

The Pocketpass board was repeatedly assured by Transfund’s representatives (Len Hartkemeier and Harvey Bornstein) that Secure Sign, previously known as YourBankOnline.Com was clean, appropriate and the best vehicle for our proposed reverse merger.

We repeatedly asked Transfund why, if their backers liked Pocketpass and had money to invest, did we need to go the reverse merger route. In addition to the seamy reputation of reverse mergers, it entailed a lot of extra expense and time to accomplish the merger and would entail added time and expenses for a small company to comply with reporting and other requirements for a public company.

We were told that the Transfund backers wanted their investment to be liquid. The plan, Transfund insisted, was to have our reverse-merged company resume trading on Nasdaq's Over-The-Counter Bulletin Board (OTCBB) system rather than the Pink Sheets where Secure Sign had languished since its own demise.

Again, we proceeded despite our negative "gut" feelings about this. After all, we did need the money. Along with this bridge funding was the representation that "Private Merchant Banker" James M. Morse would raise as much as $5 million for the new company. Despite very glowing and positive representations that the money could be raised, the "fine print" made the promises hollow. More about this in future posts.

In future posts, I'll detail some of the frustrations and foot-dragging by Secure Sign and others, but what shocked us as due diligence proceeded was the dirty laundry that would come.

Some of the initial dirty laundry (which Transfund tried its best to explain away, blame others and otherwise imply that the issue was just a misunderstanding) included:

SEC and U.S. Attorney Coordinate Efforts to Crackdown on "Cooking the Books"
See Item 4

Securities and Exchange Commission Litigation Archive Search

SEC CHARGES SEATTLE SOFTWARE FIRM WITH FRAUD, FILES RULE 102(e) PROCEEDINGS AGAINST AUDITOR.

Online banking firm hit by SEC

SEC SETTLES FRAUD CHARGES AGAINST SEATTLE SOFTWARE FIRM

On February 5, the Commission settled cease and desist proceedings previously instituted against Secure Sign, Inc., of Mountlake Terrace, Washington (Secure Sign or the Company).

The Commission instituted proceedings against Secure Sign in September 2000, alleging that the Company - then known as YourBankOnline.com, and previously as Consolidated Data, Inc. - fraudulently inflated the value of its assets in public statements and Commission filings. According to the staff, the Company issued a press release in March 1999 claiming to have purchased the rights to an Internet banking software program for $10 million in cash and stock. This press release, which was followed by additional Company statements touting the software program, caused YourBankOnline's stock price to jump from less than $1 to $32 over a two- week period.

As alleged in the Order, the March 1999 press release greatly overstated the value of the software and misrepresented YourBankOnline's financial strength. The Company (which had less than $200 in cash at the time) had no ability to make any substantial cash payments to acquire the software. In addition, the staff alleges, the Company stock exchanged for the software was worth far less than $10 million. Moreover, the $10 million value was unreasonable in light of the fact that the same software had been purchased for approximately $400,000 in a separate transaction just a few months earlier.

The staff further alleges that the Company also fraudulently inflated the value of the software in financial statements filed with the Commission in August 1999.

In the Order announced today, the Commission found that Secure Sign violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordered the Company to cease and desist from committing or causing violations of those provisions. The Commission accepted an offer of settlement submitted by Secure Sign in which the Company, without admitting or denying the Commission's findings, agreed to the entry of the Order.

The proceedings previously instituted by the Commission against the Company's former president, Pakie Plastino, and outside auditor, William L. Butcher, remain pending. (Rel. 34-43923; AAE Rel. 1366; File No. 3- 10313)

The Lead Life Preserver

2004-07-29T13:50:00.000-07:00

Thinking back on the financing trail, it’s hard to believe now that we missed all the danger signs that the life preserver thrown at us was made out of lead. Maybe depleted uranium for that matter.

But when you are desperate, you WANT to believe the best despite the queasy gut feelings and the unmistakable signs along the way. After all, the DotCom meltdown had burned all the way to China and we really didn’t have any decent cards to play.

So we went ahead despite the fact that no one on the board really liked the idea of a reverse merger. We thought that by hiring the squeakiest of the cleanest auditors and attorneys, we could protect ourselves. So we plunged ahead with the reverse merger with Secure Sign and got about $412,000 out of the $450,000 promised to us by Transfund: Len Hartkemeier, Harvey Bornstein and Transfund’s main investor Bob Gold. The other $38,000 went to various finder’s fees to Len, Harvey and (I believe but will check my notes for a future post) others.

The terms of the bridge loan were that it should last for 120 days. As we would later find there would be some icky stuff to clean up (like an SEC enforcement action for some less-than-honest news releases). And I would have to make the “120-day” bridge loan stretch over nine months instead.

And despite all out efforts to convince Len, Harvey and Transfund to find another shell, they did not do so despite the fact that there were plenty of squeaky clean ones available for a song.

I keep asking myself: Why Secure Sign? Why was this the only shell Transfund would go for?

More details and some thoughts on that next post.

And take a look at the tribute site for Pocketpass.

The iBill Performance Trials - May 2001

2004-07-27T11:47:00.000-07:00

With a final agreement with iBill in place and upper management onboard, the final step was an in-person performance trial at their offices near Ft. Lauderdale, FL.

In order to make sure that the Pocketpass system worked as promised and that it wasn't just some sort of demo that was tricked up to look like a real system, we needed to install Pocketpass on a server of iBill's choice at the iBill facility.

Despite iBill's passive-aggressive, Microsoft-uber-alles, not-invented here IT department, Eric Harold easily installed Pocketpass on one iBill's slowest and least-Internet-ready servers.

Despite the obstacles that iBill's IT department threw at us, everything worked as promised on May 9 when we gathered at iBill's Conference room for the performance trials in which executives who had never used the system before were able to easily open their account, fund it with a credit card and with the pre-paid, stored value Pocketpass cards, then quickly buy online content.

With the Pocketpass system fully proved, the decision was to move ahead with deployment. Because iBill was an all-Microsoft with no ability to administer a Linux/Oracle environment, we agreed to modify the terms of the original licensing deal with them. Originally, we had agreed to install and configure the Ppass code on their server and let them take it from there.

However, we agreed to form a joint venture -- Interactive Payments LLC -- 50-percent owned by Pocketpass and 50% by iBill to operate the Pocketpass platform as a stand-alone system and interface with the main iBill system.

iBill's Chairman & CEO Albert Angel was so solidly behind this that by the end of the day, he had arranged for a local Linux hosting company to construct a secure cage within their facility for the ppass servers, and to administer the servers for them.

Because iBill requested some extensions to the Pocketpass code that would allow it to interface more easily with their system and to make the user interface easier to use, it meant that Eric Harold would have income to allow him to continue working for Pocketpass even though there was still no funding for anything else.With a final agreement with iBill in place and upper management onboard, the final step was an in-person performance trial at their offices near Ft. Lauderdale, FL.

In order to make sure that the Pocketpass system worked as promised and that it wasn't just some sort of demo that was tricked up to look like a real system, we needed to install Pocketpass on a server of iBill's choice at the iBill facility.

Despite iBill's passive-aggressive, Microsoft-uber-alles, not-invented here IT department, Eric Harold easily installed Pocketpass on one iBill's slowest and least-Internet-ready servers.

Despite the obstacles that iBill's IT department threw at us, everything worked as promised on May 9 when we gathered at iBill's Conference room for the performance trials in which executives who had never used the system before were able to easily open their account, fund it with a credit card and with the pre-paid, stored value Pocketpass cards, then quickly buy online content.

With the Pocketpass system fully proved, the decision was to move ahead with deployment. Because iBill was an all-Microsoft with no ability to administer a Linux/Oracle environment, we agreed to modify the terms of the original licensing deal with them. Originally, we had agreed to install and configure the Ppass code on their server and let them take it from there.

However, we agreed to form a joint venture -- Interactive Payments LLC -- 50-percent owned by Pocketpass and 50% by iBill to operate the Pocketpass platform as a stand-alone system and interface with the main iBill system.

iBill's Chairman & CEO Albert Angel was so solidly behind this that by the end of the day, he had arranged for a local Linux hosting company to construct a secure cage within their facility for the ppass servers, and to administer the servers for them.

Because iBill requested some extensions to the Pocketpass code that would allow it to interface more easily with their system and to make the user interface easier to use, it meant that Eric Harold would have income to allow him to continue working for Pocketpass even though there was still no funding for anything else.

The new joint venture site was called Readipass. One of the most significant items in the joint venture agreement was for iBill to provide for a high-volume Internet merchant account for Readipass and for Pocketpass as well.

Fraud is a huge issue for the Internet, but most people don't realize that merchants are far more defrauded than customers and users. Because of that, it is very hard for small companies, especially those like Pocketpass which had one foot in the grave back then, to get a merchant account that could handle the anticipated volume that iBill -- as one of the largest Internet payment processors -- would send us.

In addition, "fraud scrubbing" -- the detection of scammers, hackers and other slime -- was very tough for a small company to do. Fortunately iBill had one of the most effective fraud scrubbing systems in the world.

The iBill/Readipass deal also provided us other advantages.

First of all, the licensing agreement was a “cross licensing” deal which gave Pocketpass the right to use all the new code Eric was writing for Readipass.

Second of all, iBill had a killer sales department at that time and the promise (which was later kept) was that as soon as we made the tweaks and extensions iBill wanted, we would be put in front of iBill’s large customers and prospects. Indeed, Olive Software (which I mentioned in my July 24, 2004 blog post) was one such customer. It is hard to express the incredible feelings of embarrassment and betrayal – on iBill’s part and mine – when the Transfund investors decided to strangle Pocketpass just as a successful beta test ended and we were ready to proceed with the revenue-producing stage of the agreement.

But I had no clue that this sort of betrayal was in the future. So everyone was pretty happy that the Readipass joint venture extended the life of Pocketpass, paying for Eric Harold's services while I worked for free and my wife and I continued to front all the company's expenses. I’d have been happier to have had an income and some money to pay expenses, but I was grateful for the opportunity and happy that my investors would not have to lose their money. Then.

The new joint venture site was called Readipass. One of the most significant items in the joint venture agreement was for iBill to provide for a high-volume Internet merchant account for Readipass and for Pocketpass as well.

Thus it was that the Readipass joint venture extended the life of Pocketpass, paying for Eric Harold's services while I worked for free and my wife and I continued to front all the company's expenses.

Why THIS Blog NOW?

2004-07-26T08:57:00.000-07:00

Good question.

I have had many concerns about the CEO, Chris Haigh and the Transfund investment group that now control the company, but I have remained silent for a year now in the hopes that I was wrong about my concerns and suspicions. I also wanted very much for my own stock to be worth something and to maintain the value of the stock for other investors.

I started this blog now because I have lost all faith that SVC Financial actually has a product. The blog also serves as a sort of "rough note-taking" exercise in preparation for writing a book on the subject.

As regards the company's product, I have e-mails dating back to December 2003 indicating that the company has a Tibanna-workalike product called "Mazarin." I've repeatedly asked for a review copy so that I could test it.

I keep getting the run-around and so far: no product. I have suspected for several months now that the product either did not exist or did not work as represented. I still hope I am wrong about that.

The immediate factor that sparked the blog now is the refusal of the Pocketpass board to honor their previous written commitment to compensate me with equity for the 19 months I worked for no compensation. When someone walks away from a written commitment, it calls his or her honesty into question.

In addition, while SVC Financial has reportedly received additional funds in the past year, they have failed to pay anything toward the thousands of dollars in out-of-pocket expenses my wife and I are owed, nor have they done anything about paying on a $13,500 promissory note for money we loaned the company on March 3, 2003 and which they defaulted on in May 2003.

Significantly, Megan and I scraped up that cash and continued to pay for expenses upon the repeated emailed assurances from Transfund that the funding they had promised a number of months before would arrive before the note went into default.

That funding never arrived. Indeed, during this time period and stretching back several months (I'll detail these in future posts), Pocketpass's company counsel, Dan Eng and I disagreed with a number of things that I was asked to do as CEO, especially the demands for rosy-slanted news releases at a time when the company had no money and was in imminent danger of shutting down.

Again, I will describe these in future posts, but I think my resistance to these demands is what resulted in Transfund strangling the company to install a new CEO.

Back To The Garage

2004-07-25T10:35:00.000-07:00

In hindsight, we started Pocketpass at just the wrong time. The DotCom boom was already starting to meltdown behind the scenes which was making it nearly impossible to raise the money we needed for expansion.

Pocketpass had the usual problems for a start-up trying to develop new technology: programming obstacles, personality conflicts and that all-important goal: finding the first paying customer. Even though we had engineered a working payment system and run the company for almost two-and-a-half years on just over $1 million (not the usual DotCom burn rate), by the end of 2000, the company had run out of money.

Even more significantly, some of our strategic partners were hitting the wall and leaving us without capabilities we had counted upon. One of the most important was eCommony (later known as Verai) which allowed direct transfers of money from one credit card to another. Pocketpass was their first partner and we engineered their PayToCard technology seamlessly into the Pocketpass system. Unfortunately, when they went splat! It left a big hole in what we had to sell.

Things looked headed for the final Board meeting in early 2001. I had already been working for no salary since the previous summer and there was no money to pay for rent or phones much less people. The only choice seemed to shut the company down in an orderly manner.

The only chance to stay alive was a deal I had been working on for months with a large Internet payments company called iBill which needed the micropayment system that Pocketpass was offering.

I had several other potential deals in the works at that time, but iBill seemed to be the closest to closing.

The iBill deal seemed to be taking forever, but I would later learn this was the result of resistance from some of the iBill technology people: partly because of the “not invented here” syndrome and partly because we were Linux-based and they were “Microsoft Uber Alles” people.

But I was confident enough by early February 2001 I created the “Back to the Garage” plan for the company which involved my working for free and fronting all the expenses necessary to keep the company alive. The only person paid would be our programmer, developer Eric Harold.

I sent out the e-mail memo on Feb. 8, 2001:

Subject: "Back to the Garage" Respirator Plan for Pocketpass

Regardless of what the final iBill offer becomes, we will need to cut burn even more while retaining enough engineering resources to make a comeback. I call this "back to the garage" because I believe that we can return to the beginning and re-build, only we have 200,000 lines of code, the first licensing contract, prospects for more contracts and for acquisition.

This allows us to maintain or increase value as we look to be acquired. Hopefully we can turn this around in a month or two while staying afloat on the iBill $$.

The board approved the plan and the first draft of iBill’s Letter of Intent (LOI) to license the Pocketpass software arrived on Feb. 26. The LOI was negotiated and a final letter signed on April 26.

While the up-front money was not as good as we had hoped, it would be sufficient to keep our doors open and the development continuing. It would also set the stage for the Readipass joint venture with iBill, an operation that would take us right up to the point of revenues and big customers before the Transfund investment group would abruptly throw the company into crisis again.

In hindsight, letting the company die in February 2001 might have been a better alternative. From where I stand now, it would have meant that I could get on with my life and not endure two more financially draining years, shelling out money for the company's expenses and working for no compensation most of that time.

It would also have meant that my two good friends, board members and investors -- Drs. Yaqub Mirza and Inder Singh -- could have cut their losses then and gotten on about their own lives as well.

But I felt duty- and honor-bound to go down swinging, to use every ounce of energy I had to make this a success and help them recover the money they had invested.

Besides, things were looking up with the iBill deal. I had no idea back in mid-2001 that new investors a year later would spell disaster for the company.

Keeping Tibanna and Pocketpass Alive

2004-07-24T09:23:00.000-07:00

In the summer of 1999, I got the idea for an Internet payment system that would be:

Anonymous,
Funded with cash for people without credit cards or who didn't want to use their credit cards for privacy and/or security reasons, and
Cost-effective for micropayments (music, content and other "digital deliverables."

I joined forces with entrepreneur Douglas Denoff and highly successful technology executive Dr. Inder Singh who also provided the initial seed investment. By August 1999, the idea became a company called Pocketpass.

We were blessed to be joined in this adventure by gifted programmer and developer Eric Harold and by an immensely intelligent seed investor and board member, Dr. Yaqub Mirza.

Then, in 2001, with Napster and P2P file-sharing on the rise, I had another idea for a product that would set premium digital content free in the world and still allow the content's creator to make some money.

This idea became a DRM product called Tibanna. Tibanna was free software that any individual could download and use. It took the content, the "digital wrapper" and the Pocketpass payment system and combined them into a single file that could be copied, shared and set free on the Internet without all the hassles still associated with premium content.

In the spring of 2003, we had signed up our first customers, one a large global software company, Olive Software, which was integrating Pocketpass into their Active Paper product. We also had another customer, a small, high-priced wine industry newsletter, Wine Market Report.

I'll talk more about these customers in future posts.

By the end of March 2003, we had gone live with Wine Market Report (WMR). We structured a search engine for WMR that searched all of the newsletter's .pdf (Adobe Acrobat) files then returned a Google-like set of search results. When the user clicked on one of the links, they received a Tibanna-wrapped file that allowed for quick, easy payment of a small dollar amount to unwrap the file.

Significantly, if the user wanted to send that file to other people, they could do so, but only the wrapped version, thus assuring that Rich Cartiere, the one-man-operation behind WMR got some compensation.

Even more importantly, I envisioned -- and the technical team incorporated -- an affiliate-like system into Tibanna. This allowed a person to "sign" the Tibanna-wrapped file before forwarding it or linking to it from a web site. If another person opened and paid for that file, the person they got it from would receive an Amazon-scale affiliate fee.

This unique and patentable feature of Tibanna produced three important results within a file-sharing environment:

Continued income for the content creator
Affiliate income for intermediaries, thus a financial incentive to push the content (good for the creator and the affiliate)
A financial incentive NOT to make pirated content available.

In April 2003, we were in final beta testing of the integration of Pocketpass and the Active Paper software (which did not use Tibanna at the time). The beta test site was the Arizona Republic.

Indeed, as May 2003 rolled around, the only issues left were mostly cosmetic web site layout issues with a couple of simple-to-fix requests from the client on how the dynamically generated pages would appear. The system worked and our first customer was very happy.

Then an investment group, which we had mistakenly trusted, pulled the plug on funding -- an investment they had promised, in writing, to provide months earlier.

Indeed, my wife and I had borrowed money to help bridge the company financially on their false assurances that funds would be arriving imminently. That bridge was also funded by Drs. Singh and Mirza along with an outside investor.

Unfortunately, the promised investment never happened and on the eve of actually starting to get revenues from a major customer, the investment group pulled the plug, foisted their own choice of a CEO on the company, and forced me out of the company I had founded.

Why?

I am unsure of the details, but has something to do with the investors' plans for a "reverse merger," the process of taking an empty but publicly traded corporation and folding the company into it.

While a reverse merger with a public shell can be accomplished in a completely honest and aboveboard manner, most savvy investors consider them shaky and shady.

The investment group stacked the board with their own people, did their reverse merger with a company called Secure Sign, then renamed Pocketpass, SVC Financial which trades on the Pink Sheets as SVCX.

And while the group had promised to finish financial audits and get current with SEC reports, a year has passed now without ANY solid data other than back-patting news releases filled with self-congratulatory phrases, unsubstantiated superlatives and other hype.

They fired a top-flight and straight-arrow auditing firm, Perry-Smith (and stuck them with unpaid bills), hired another auditor, Lichter, Weil & Associates, then fired THEM on June 22, 2004!

I'll talk more about all these issues - naming names, dates and specifics based on emails and documents - in future blog postings. Through this, I will chronicle the rise and fall of a company and a cool product the market still needs.