The Securities and Exchange Commission has charged Newport Beach-based equipment maker AirTouch Communications Inc. and its former chief executive and chief financial officer with misstating revenue and defrauding an investor.
The regulatory agency alleges that AirTouch, former Chief Executive Hideyuki Kanakubo, and former CFO Jerome Kaiser improperly recognized revenue of more $1 million. It also accused the executives of making false and misleading statements and omissions to an investor they solicited for a $2 million short-term bridge loan in exchange for a promissory note and warrant to purchase common stock.
Kanakubo and Tom Quan, vice president of sales and marketing, resigned in March 2013. Kaiser resigned in early April 2013.
AirTouch didn’t respond to inquiries, and Kaiser didn’t return calls made to his last known mobile phone number. Neither did he respond to inquiries at Pembroke Pines, Fla.-based Stemtech International Inc., where he’s served as finance chief for about a year, according to his LinkedIn page.
The allegations date back to the third quarter of 2012, when AirTouch reported sales of more than $1 million related to a new device, the SmartLinX U250, that allowed smartphones to make and receive calls from a landline via Wi-Fi. The SEC contends the products were never sold and that AirTouch should have reported no revenue in the quarter.
After Kanakubo misled an investor to believe that the products were sold to Mexico’s largest telecom, Telefonos de Mexico, owned by Carlos Slim Helu, AirTouch received the $2 million loan in October 2012, the SEC said.
Two days later, Kanakubo approved a $15,000 bonus payment to Kaiser for raising capital and authorized a $15,000 self-payment related to unused vacation time, according to the SEC.
Kaiser, in a June 2012 interview with the Business Journal, called the distribution deal a “game changer” and indicated the contract with Telmex—the common name for the Mexican telecom—was worth about $1.8 million. Kanakubo told the Business Journal he hoped the initial deal “will be the first of many large orders in the future.”
It’s unclear how many, if any, units of SmartLinX U250 were ever sold.
A hearing with an SEC administrative judge is scheduled for Sept. 22 .
Broadcom to Go for U.K. Rival?
A Liberum Capital analyst has linked Irvine-based chipmaker Broadcom Corp. as a possible bidder for CSR PLC since the U.K. competitor specializes in Bluetooth wireless technology.
Broadcom is considered an industry leader in the growing segment, lining up Apple and Samsung as longtime customers that use its connectivity chips in their popular smartphone models, laptops and other devices.
CSR, a major player in the burgeoning Internet of Things market, late last month rejected a bid from Arizona-based Microchip Technology Inc., sending its shares up 35% to a market value of $2.6 billion on the London Stock Exchange. The news didn’t budge Broadcom shares.
“We won’t be providing comment,” a Broadcom spokesperson told the Business Journal.
Smith Micro Raises $5.5M
Aliso Viejo-based Smith Micro Software Inc. raised $5.5 million after selling more than 6.8 million shares of common stock to accredited investors in a private placement, according to a filing with the SEC. The company ended the second quarter with about $6.2 million in cash and short-term investments, down from $14.7 million a year earlier.