Then, in its 1999 annual report on Form 10-K, TenFold failed to disclose ongoing and pervasive problems it had been and still was experiencing with completing on a timely basis many of its largest software development projects. 96. TenFold's percentage of completion accounting method assumed that TenFold would expend consistent effort in each month over the life of a project, regardless of the actual time its staff spent on the development project. Section 13(b)(5) of the Exchange Act). (Violations by TenFold, Kennedy, Hughes, Hanks and Clayton of Our focus is on innovative technologies that make our world more sustainable. Njbgonah , 09/07/2018. In August 2000, TenFold stock traded in the range of $8 per share. Wynn K. Clayton, a resident of Salt Lake City, Utah, started working for TenFold in June 1998. 24. After these negotiations, however, TenFold, on its own initiative, restructured the transaction. Under the Exchange Act). 250. They looked for the percentage of revenue attributable to license sales to grow if TenFold was succeeding with its business model. In 1999 and the first part of 2000, TenFold engaged in a pattern of announcing positive news and withholding negative news. 173. 123. 1801 California Street, Suite 1500 145. Hanks has held a Utah CPA license since 1993. TenFold missed the completion date. 193. 200. From June 1999 until February 2001, Clayton was the vice president of finance and controller for TenFold's insurance group or subsidiary. 4. This overstatement of revenue and income resulted from TenFold's improper recognition of revenue on three customer contracts. 66. 6329 Howie Drive As discussed in more detail below, Kennedy, Hughes, Hanks and Clayton knew at the time the fourth quarter and year-end 1999 results were released that completion dates that were no longer correct or feasible had been used to calculate revenue. TenFold and Unitrin originally contracted for TenFold to complete an application for Unitrin by March 7, 1999. In connection with KPMG's audit of TenFold's 1999 financial statements, KPMG requested that TenFold confirm end dates with certain customers. 191. TenFold's books, records and accounts were subject to Section 13(b)(2)(A) of the Exchange Act. Hanks also criticized Hughes for claiming that TenFold was "conservative" with its revenue recognition at year-end. 4. easily review other users in queue and confirm that you want to chat with them Utica used this language in its response. TenFold knew at the time the first quarter 2000 10-Q was filed that the completion date had been extended to September 30, 2000. As a result of errors in its percentage of completion revenue calculations for the Utica, Unitrin and Trubull contracts, including but not limited to use of incorrect completion dates and the need to maintain appropriate holdbacks, TenFold overstated revenues and income in its 1999 10-K and its 10-Q for first quarter of 2000 in amounts that were material. 259. 42. 64. IT administrators and users must only set the desired level of authorization (read, modify) and tenfold will take care of the rest. § 77q(a)(3)]. Code is not even generated behind the scenes of the TenFold app. He said this decrease was "very important" to him "because it indicates how satisfied our customers are and how successful we are with them. 88. 196. DISSEMINATION OF FALSE AND MISLEADING INFORMATION REGARDING TENFOLD'S BUSINESS OPERATIONS AND STOCK SALES BY DEFENDANTS, A. Rule 13b2-1 Under the Exchange Act). TenFold's long-term business strategy was to develop entire software applications on specific customer projects that it could subsequently resell to other customers. Enter an order barring Kennedy and Hughes from serving as an officer or director of any publicly-held company pursuant to Section 21(d)(2) of the Exchange Act. 87. Attorneys for Plaintiff Despite TenFold's true circumstances, Kennedy opened the analyst call on February 1, 2000 by stating: "I have been searching for some sort of adjective to describe our performance this quarter other than the trite awesome, phenomenal, everything else I could think of but everything just does not seem to give apt descriptions of what kind of quarter it was. 34. (Aiding and Abetting by Kennedy, Hughes, Hanks and Clayton of TenFold's Violations of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13). D. Tenfold's Pricing Practices and Revenue Recognition Policies. Order Kennedy, Hughes, Hanks, and Clayton to disgorge and pay over, as the Court may direct, all ill-gotten gains received or benefits in any form derived from the illegal conduct alleged in this Complaint, together with pre-judgment interest as provided by law. Under generally accepted accounting principles, in order to use the percentage of completion method of revenue recognition an entity must be able to make estimates that are reasonably dependable. Kennedy, Hughes, Hanks and Clayton were aware of the end dates used to calculate revenue on the projects. ‎TENFOLD Education is South Africa’s first Mobile based learning application for High School learners. No reports of illness have been made so far and it is unknown what the possible health impact of consuming marijuana products with unapproved pesticide residues on it would be, OLCC said. KPMG relied on the information concerning completion dates it received from TenFold. Hanks also pointed out that Kennedy falsely stated that the majority of the license revenue was product revenue when in fact the majority of the license revenue was technology revenue. 53. ", "In specific circumstances, we have been required to commit unanticipated additional resources to complete projects. 252. At the time the 10-K was filed, TenFold was aware that the projected end date for the project had been extended to September 1, 2000. (TenFold's violations of Section 13(b)(2)(A) of the Exchange Act). Whatever words I use though, it was, by far, our best quarter ever." 44. Between 1993 and 1996, TenFold focused on the development of its base technology-the "Universal Application" (the "UA")-which was intended to serve as the software platform for TenFold to develop large-scale business software applications for customers. When TenFold was having difficulty completing a project, one way it attempted to get back on schedule was to assign additional people to the project. It's up to you to ensure that this does not happen. Data owners can then decide themselves who is to gain access to their files/data as part of the workflow process and who is not. Section 17(a)(1) of the Securities Act). In order to reach this estimate, TenFold assumed that a standard number of people worked on a development project and expended consistent effort over the course of a week. The heart of TenFold's software is its Universal Application. Thus, after adding the General UA license, the cost to Utica for the licenses and services discussed totaled $8.9 million. 183. In addition, Hughes put pressure on TenFold's staff to use and acquiesce in the use of inaccurate completion dates. 54. Accordingly, use of proper completion dates was essential in TenFold's method of calculating percentage of completion revenue. Extreme Rapid Application Development (XRAD) utilizes a descriptive development model that is built for speed. 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