55. Kennedy was very involved in certain projects during January 2000, including Nielsen and Untitrin, as he actively worked to manage those customer accounts. The company recognized revenue on software development projects based on an estimate of the percentage of the project that was complete. 110. 11. Updated: 6/1/2018 Overview: This article provides a quick walkthrough for using Tenfold App Auto-Updater. Ensure high quality applications by automating tedious, repetitive and error-prone coding tasks. 183. See the platforms that Tenfold currently supports. The Utica transaction, as restructured, was highly unusual, and designed to accelerate revenue recognition. [...] The auditors warning was clear - if we are not accurate in our project estimates we will lose our ability to recognize license revenue up-front! WHEREFORE, the Commission respectfully requests that the Court: Find that the defendants, and each of them, committed the violations alleged. The recognition of the additional $2.25 million in upfront license revenue on the General UA license was material to TenFold's financial results, and allowed TenFold to show a profit, instead of a loss, for fiscal 1998. Defendant TenFold violated Section 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. Violations of Section 13(b)(2)(B) of the Exchange Act). 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. 162. 101. 153. TenFold Corporation, a Delaware corporation, develops large-scale software applications. In addition, a participant in the call asked about the breakdown between "product" revenue and "technology" revenue in the revenue that TenFold reported. 104. 1801 California Street, Suite 1500 TenFold filed its 10-Q for the first quarter of 2000 on April 15, 2000. No. . By reason of the foregoing, TenFold violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 [15 U.S.C. ", 126. ", "Our failure to accurately estimate the resources required for a project or our failure to complete our contractual obligations in a manner consistent with the project plan would likely cause us to have lower margins or suffer a loss on the project, which would negatively impact our operating results. 141. 129. Application of Spiritual Warfare 9. TenFold allows standards-based integration within or outside the enterprise, using both thick and thin (web) client based development and access for Enterprise applications. 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. By the end of 1999, all of the contracts for the Delayed Projects except one contained the TenFold guarantee. 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. Hughes did nothing to correct Kennedy's statements or the false impression they created, and Kennedy failed to correct misinformation provided by Hughes. § 77q(a)(3)]. 118. Hanks stated that Kennedy should have been clearer about project problems. 16. Hughes failed to contact Utica concerning its response prior to interpreting that response for KPMG. Utica used this language in its response. Among other reasons, and as noted above, they all participated in the weekly forecast meetings and received the spreadsheets containing completion dates on a weekly basis. 109. By reason of the foregoing, TenFold, Kennedy, Hughes, Hanks and Clayton violated Rule 13b2-1 under the Exchange Act [17 C.F.R. At about the same time, TenFold offered Ohio Farmers a standard allocation of 10,000 shares in its IPO as part of a directed share program. 35. Plaintiff repeats and realleges paragraphs 1 through 248 above. TenFold's auditors considered use of the holdback to be appropriate and consistent with TenFold's historical experience. During all relevant periods, KPMG LLP ("KPMG") served as TenFold's outside auditors. License revenues consist of fees for licensing the Universal Application as a tool, and license fees for the applications that the Company owns and resells. 57. § 77q(a)], Sections 10(b), 13(a), 13(b)(2), and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. 105. 106. Hughes also provided materially inaccurate and misleading information during the call. § 78u(d)(2)] and the general equitable powers of the court. Plaintiff repeats and realleges paragraphs 1 through 254 above. (801) 944-5969, Robert P. Hughes 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. 2926 East 3835 South Moreover, on January 28, 2000, the parties amended the contract and extended the completion date to September 1, 2000. TenFold, which began to develop applications for customers in 1996 or 1997, claimed that it could rapidly develop software applications in a fixed time and for a fixed price using the UA platform. 5 Ratings. On January 28, 2000, the parties amended the contract and extended the completion date to September 1, 2000. . 219. §§ 240.12b-20, 240.13a-1, and 240.13a-13], and unless restrained and enjoined will continue to aid and abet violations of these provisions. The confirm documents, which were sent in January 2000, were to be returned directly to KPMG by the customer. Kennedy and Hughes knew of the highly unusual circumstances surrounding the Utica and Ohio Farmers transactions and that these transactions turned losses for the year 1998 and first quarter of 1999 into profits. When pricing a Specific UA license, TenFold typically charged its customer approximately twenty-five percent (25%) of the cost of its estimated development services. 255. As CFO, Hughes was responsible for the information transmitted to KPMG, but he failed to provide updated and accurate information, and affirmatively misled KPMG. 22. 224. Second, the Ohio Farmers contract contained an acceptance provision, whereby payment of $5 million in fees including $4.1 million for the General UA license was due only after TenFold had finished developing the software application and Ohio Farmers agreed to accept it. TenFold, Kennedy and Hughes, directly or indirectly, in the offer or sale of securities, by the use of means or instruments of transportation or communication in interstate commerce, or by the use of the mails, engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon purchasers of securities, in violation of Section 17(a)(3) of the Securities Act [15 U.S.C. KPMG relied on Hughes' explanation in its audit of TenFold's 1999 financial statements. 180. (TenFold's Violations of Section 13(b)(2)(B) of the Exchange Act), 249. Trumbull returned the confirm without comment, and its officers may not have known at that time that TenFold would seek an extension of the completion date. Go light years beyond RAD when it comes to rapid feedback and top quality. 240. Universal Communications Layer Accelerate time to value, maintain voice quality and eliminate security risks by leveraging Tenfold’s Universal Communications Layer to connect into your existing communications platforms Automatically Log every Call with Notes 81. (Colo. Attorney Reg. Facilitate rapid change with lightning fast development. This was the first loss for any period that TenFold reported since its IPO. TenFold manipulated the structure of the Utica transaction in a way that enabled it to accelerate recognition of revenue into 1998. TenFold's estimation methodology was inadequate because TenFold's team sizes did not remain constant. TenFold also reallocated the cost of the various components in the two contracts, charging $3.4 million for the General UA license, and $5.5 million for the commercial lines development project, training, support, and Specific UA license. 159. Kennedy knew that some of TenFold's customers were extremely dissatisfied and unhappy with TenFold's performance. For those customers whose payments were not tied to TenFold's achievement of certain intermediate results (called "milestones"), TenFold sometimes collected money from its customers that it could not yet recognize as revenue because the projects were behind schedule. TenFold's long-term business strategy was to develop entire software applications on specific customer projects that it could subsequently resell to other customers. For the financial results TenFold reported in its 10-Q for the first quarter of 2000, TenFold used completion dates of March 25, 2000 and April 3, 2000 to calculate revenue on the Trumbull project. . At the time the 10-K was filed, TenFold was aware that the project had not been completed by February 18, 2000 and would not be completed by April 3, 2000. 2. Certain of the transactions, acts, practices and courses of business constituting the violations of law alleged herein occurred within this judicial district. 82. TenFold recognized approximately $2.9 million in upfront license revenue on the sale of the General UA license to Utica. 236. 205. Section 13(b)(5) of the Exchange Act). Information concerning the Utica transaction and its effect on revenue and income would have been important to a reasonable investor. 99. 44. 139. TenFold stock was delisted from the Small Cap Market effective November 12, 2002 for failure to meet the minimum bid price and equity requirements, and now trades on the OTC Bulletin Board. 225. UNITED STATES DISTRICT COURT By reason of the foregoing, TenFold, Kennedy, Hughes, Hanks and Clayton violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and unless restrained and enjoined will continue to do so. 194. 243. Purchase with purpose! 130. TenFold performed its loss position calculations based on the estimated labor expended on a project. 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. Kennedy resigned from his positions as the president, CEO, and a director of TenFold in January 2001, at the request of the board of directors. 6. This license enabled customers to develop applications on their own using the UA platform, to hire third parties to develop applications for them based on the UA platform, or to later hire TenFold to develop applications using the existing license. ", "In specific circumstances, we have been required to commit unanticipated additional resources to complete projects. TenFold stated in several different places in its 10-K that it delivers applications on time to its customers or it refunds the customer's money. Kennedy, Hughes, Hanks and Clayton were aware of the end dates used to calculate revenue on the projects. Further, the risk disclosures were affirmatively misleading because they created the false illusion that TenFold was not at the time experiencing significant project delays. In fact, TenFold completed just one project during the first quarter of 2000, a project that was finished before the analyst call and had a minimal effect on revenues. Originally, TenFold and Utica negotiated an application development contract that provided for Utica to purchase TenFold's development services, a Specific UA license, training, and support for a total of $8.25 million. Moreover, the TenFold accounting department was generally not informed when team sizes changed on projects, so it could not even re-estimate labor costs. In addition, Hughes put pressure on TenFold's staff to use and acquiesce in the use of inaccurate completion dates. 42. (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). Additionally, due to inherent uncertainties involved in accurately estimating the percentage of completion for its development projects, TenFold established a policy, which it communicated to its auditors, of holding back twenty percent (20%) of the revenues from a project (the "holdback") until the project was completed or close to completion. The proposal and contract included a TenFold Guarantee that covered the entire $8.25 million contract price. Kennedy, Hughes, Hanks and Clayton also knew that Kennedy had made false and misleading statements and provided incomplete information during the February 1, 2000 analyst call, and that no one from TenFold had taken any action to correct the erroneous and misleading statements made by Kennedy. 28. They knew that TenFold had not fully and fairly disclosed the problems and delays it had been experiencing in its development projects. The world’s most simple and effective resource to learn how to pray, now available as an app! TenFold files periodic reports with the Commission pursuant to Section 12(b) of the Exchange Act. By reason of the foregoing, TenFold violated Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. tenfold reduces administrative efforts to a minimum and makes managing your users and access rights a walk in the park by providing a clear and transparent overview of all access rights. Tenfold's president Gary D. Kennedy, its CFO Robert P. Hughes, its controller Stanley G. Hanks, and the controller of a TenFold group and subsidiary, Wynn K. Clayton, were all responsible for TenFold's fraud. Violations of Section 13(b)(2)(A) of the Exchange Act). Among other things, TenFold increased the cost allocated to one component by over four hundred percent, and eliminated the cost associated with another component (to keep the total price paid by the customer for all components the same) in a way it had never done before. §§ 240.12b-20, 240.13a-1, and 240.13a-13] and unless restrained and enjoined will continue to do so. As described elsewhere in this Complaint, during the relevant period, TenFold filed materially inaccurate and misleading annual and quarterly reports with the Commission. 193. TenFold missed the August 31, 1999 completion date. The 2020/2021 Universal College Application is now available. 90. Ohio Farmers told TenFold that it would not agree to amend the contract at that time unless TenFold increased its IPO allotment to 250,000 shares. Universal application 108 "manifests" to the end-user custom target application 100 as … 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. 56. Plaintiff repeats and realleges paragraphs 1 through 239 above. 134. At the end of 1999 and the beginning of 2000, Kennedy, Hughes, Hanks and Clayton all participated in the weekly forecast meetings on a regular basis. Hughes prepared TenFold's response. 32. 128. Kennedy, Hughes, Hanks and Clayton knew that end dates which were no longer correct or feasible were being used to calculate revenue on certain TenFold contracts. Kennedy's statements relating to the reasons service revenues had declined were materially misleading. By way of example, Kennedy, Hughes, Hanks and Clayton were all aware of the problems and changing schedules associated with the Delayed Projects and all of TenFold's development projects. Information concerning the removal of the termination for convenience and acceptance clauses in exchange for the unusual allocation of shares to Ohio Farmers, and the effect on revenue and income, would have been important to a reasonable investor. 151. Unitrin also received a confirm request listing an end date of March 31, 2000. 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. 8. Exchange Act Rules 12b-20, 13a-1 and 13a-13). 230. By reason of the foregoing, TenFold, Kennedy and Hughes violated Section 17(a)(3) of the Securities Act and unless restrained and enjoined will continue to do so. 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