PR breakdown Very Long .... Dr D Posting

[Franko10 ™]

On March 16, 2005, the United States Securities and Exchange Commission ("Commission") deemed it in the public interest that a public administrative proceeding be instituted pursuant to Section 12(j) of the Securities Exchange Act of 1934 ("Exchange Act") against CMKM Diamonds, Inc.
to determine:
Dr.D- The SEC claims to be doing this to CMKX to protect us and the public from CMKX or more properly preventing us from receiving the information the company is making an effort to release. Therein also lays a problem. It appears they (CMKX) may not have the information (financials and reports) to supply to us or the SEC. IMHO.

-- Whether CMKX is required to file with the Commission current and accurate information in periodic reports under Section 12(g); and
Dr.D – To determine if CMKX is a reporting or non reporting company based upon the 15A information of 2003 and 2005.

-- Whether CMKX failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 there under by failing to file required periodic reports.
Dr.D – Since the revocation of the 15A occurred in Feb 2005, the SEC is trying to prove that CMKX possibly intentionally misfiled the 15A in 2003 and misrepresented the number of shareholders in order to withdraw from the reporting status falsely. If so, then CMKX would have intentionally deceived the SEC and no waiver or variance would be available for CMKX’s past due filings and penalties could be imposed including the revocation of CMKX’s registration.

CMKX, pursuant to the Commission's order has been provided 20 days in which to respond to the allegations in the order.
Dr.D – Self explanatory, giving CMKX 20 days from the date of the commission’s order March 16, 2005 – 5 Apr 2005) to respond to the SEC’s allegations which the company should have received official notification in writing indicating specifics by now, IMHO.

Upon CMKX's filing of a response, a public hearing will be convened at a time and place to be fixed for purposes of taking evidence on the issues set forth in the Commission's order.
Dr.D – When CMKX responds to the commission’s order by filing the requested information/answers then a public hearing will be scheduled to allow testimony and evidence to be presented to the judge concerning the specifics CMKX has been challenged on.

At the hearing, an administrative law judge will determine whether it is necessary for the "protection of investors" to suspend or revoke the registration of CMKX's securities from the Exchange Act.
Dr.D – The Judge after the evidence and testimony will decide if it is in our best interest and the best interest of the investing public to either excuse CMKX and allow them to continue to report; or suspend the registration up to 12 months (which makes no sense); or revoke the registration of CMKX and make it a non reporting company again (Once again makes no sense) with the exception if the SEC does either the suspension or revocation it could keep CMKX off the Threshhold Security List and unprotected by Regulation SHO. I know that SHO isn’t much, but it appears changes are coming.

In July 2003, CMKX filed a Form 15 “in an attempt” to terminate its registration under the Exchange Act. However, this filing contained an error in the stated number of record stockholders, which was discovered by CMKX's new securities counsel in February 2005.
Dr.D – This is still confusing to me as to who is responsible for this error. Is it CMKX’s attorney at the time? Is it the Transfer Agent? Who, what, where, when and how would be nice here. I would think that info would have been sent from the Transfer Agent and if so, why not state it clearly so the responsible party is clearly indicated. Seeing that hasn’t happened it is a faint indicator to me that someone in the company blew it. JMHO. A clear statement here leaves the company open as the position of the company is that “NO ONE KNEW UNTIL” the new securities counsel discovered it in Feb 2005. You would think that Roger Glen should have gone over the pertinent filings of the company in his efforts to bring it up to date and compliant thus discovering the error, but it didn’t happen! JMHO

"When the error in the Form 15 was brought to the board's attention, it was incumbent upon us to take corrective action, regardless of CMKX's ability to file all delinquent reports within the stated 60-day timeframe. We could not continue to have a clearly inaccurate document filed with the Commission, when we knowingly had more stockholders of record than was stated in the Form 15 filing," stated Robert Maheu, co-chairman of CMKX.

Dr.D – Mr. Maheu acted immediately upon the knowledge of inaccurate previously filed information by the company he is co-chairman of (CMKX) in spite of the company’s unprepared state to meet the obligations that such a find would impose upon it. Knowing they could not possibly meet the 60 day deadline that the revocation of the Form 15 would demand on CMKX, they acted promptly, responsibly and professionally in correcting the inaccurate information which disqualified CMKX from being eligible for the Form15 withdrawal of July, 2003. Showing once again and indicating Mr. Maheu’s impeccable character and leadership qualities that have made him one of the top men in the business. IMHO. Thank you Mr. Maheu, sir.


On February 17, 2005, CMKX filed an amended Form 15 to revoke the previous filing and reinstate its reporting obligations under the Exchange Act. Management does not believe the filing of the amended Form 15 had anything to do with the Commission's decision to institute the administrative proceeding.
Dr.D – To correct the erred information that had been filed in July, 2003, CMKX filed the amended form 15 or Form 15A on 17 Feb 2005 which revoked the erred information, but also brought reporting obligations on CMKX they could not expeditiously hope to comply with. In spite of the revocation of the erred information and the mis-stated number of shareholders as the reason for the revocation of the Form 15, (Which would be rare IMHO) Mr. Maheu and Mr. Casavant do not think the revocation of the Form 15 had anything to do with the temporary trading suspension or the upcoming public hearing. It would be interesting to know what the company thinks instigated the suspension and upcoming public hearing. In a past PR Urban seemed to think (or indicated IMHO) it may be due to information supplied by CMKX during the SEC investigation on UCAD/USCA.

CMKX believes that it is required to have its securities registered under Section 12 of the Exchange Act as a result of the number of its stockholders, at least 698 in July 2003 and in excess of 2000 in February 2005.
Dr.D – CMKX believes that in spite of the SEC’s opinions and concern over the company’s operations, it is currently required to have its securities registered under Sec 12 and are therefore obligated to produce the expected filings and reports in a timely manner. It is strange when a company is trying to clear up its financials and delinquent reports to disclose vital information to shareholders and the investing public/market and the SEC is on the other side trying to stop the process. What is wrong with this picture? The SEC is supposed to be the knight in shining armor for the shareholders when a company is hiding, but not when the company is clearly taking appropriate steps to report and demonstrating good faith to the SEC and shareholders to disclose. Something smells, IMHO.

Under the current rule, the number of stockholders is determined by the number of stockholders of record. Although CMKX has securities registered under Section 12 of the Exchange Act, according to the Commission CMKX is delinquent in its filings.
Dr.D – The current rule indicates a shareholder as being a shareholder of record with the company/TA thus making a “Street Name” (such as Ameritrade and all of their thousands of clients) one shareholder of record. The company here confirms that they have securities registered with the SEC under Sec 12 and according to the commission CMKX is delinquent. This may allude to the fact that when CMKX filed the revocation of the Form 15, we had by SEC regulation a full 60 days to file all reports that would have been due if the Form 15 had not been filed in July, 2003. That would mean that CMKX truly would not be delinquent or failing to comply until the 60 days had expired. JMHO.

"We only want to comply with federal regulations and do what is right for our stockholders. If the Commission deems it in our stockholders best interest to forbid us from providing information through filings with the Commission, we will comply," stated Urban Casavant, president of CMKX.
Dr.D – Mr. Casavant here states that they will comply with the federal regulators regardless. If for some unknown reason the regulators want to prohibit CMKX management from providing vital company information through filings to the SEC and the shareholders/investing public, then the company will have to comply. Too, there seems to be a little sarcasm Mr. Casavant was able to muster in the midst of the heat generated by the SEC’s latest inquiry into the company. Go Mr. C! OOOrah!

Replying to the Commission's administrative proceeding is a high priority for CMKX's management, which plans to take the following actions.

(Continued)

[Franko10 ™]

Dr.D ¡V Of course responding to the questions generated by the commission¡¦s current investigation has a very high priority level for Mr. Maheu and Mr. Casavant and Counsel. Our reply¡¦s to the commission are in the form of ¡§answers¡¨.

First, CMKX will be providing a response to the Commission within the time set forth in the Commission's order.
Dr.D ¡V Very good news here. They will provide a response within the allotted time frame by the commission¡¦s order. This should shut some up that said that the company wouldn¡¦t show up or respond to any of the commission¡¦s specific questions. In short, the company is following through on the requests for answers from the SEC with answers. Of course they may not be the ones the SEC wants to hear, but they will be answers nevertheless. Why would I say it that way? Because later the company lets us know that they are trying to recreate some financial records they simply don¡¦t have because of, hmmmm possibly Mr. Casavant¡¦s decision to not hire someone competent to record and keep up with that vital information, I guess. Kind of disappointing actually. JMHO

Second, CMKX acknowledges that all of its stockholders have a right to access public information on CMKX and to that extent, is prepared to present CMKX's response via a public proceeding as ordered by the Commission.
Dr.D ¡V The phrase ¡§to that extent¡¨ is a little catchy here for me. I like it. Kind of spunky in the face of adversity. CMKX is saying that they agree that all shareholders of the company have a right to access public information and ¡§to that extent¡¨ or ¡§for that specific reason¡¨ and not necessarily because the SEC said it has to be done, CMKX is prepared to present their response by way of a public hearing to the commission. I¡¦m not sure which one (IBM or Mr.C) threw that one in, but if you like feisty, there you go. JMHO

Third, CMKX believes it is in the best interest of its stockholders to be informed about the securities in which its stockholders invest. There can be no doubt securities markets best perform their function of setting fair and accurate prices where buyers and sellers have full and complete access to all material information.
Dr.D ¡V Another little jab at the system here, IMHO, saying shareholders can make better decisions when they are informed properly by the market place as a whole, and not just by the company. ¡§Securities Markets¡¨ best perform their function of setting ¡§fair and accurate¡¨ prices where buyers and sellers have full and complete access to ¡§ALL¡¨ material information. This would include a slam at the unacceptable performance of the MM¡¦s/DTCC/SEC permitting NSS positions to accrue and weigh heavy upon a company¡¦s market performance by overloading a company with ¡§ILLEGAL/Counterfeit shares thus defrauding the investing public by corrupting the legitimate information

Recent changes to the federal securities laws mandated by The Sarbanes-Oxley Act have increased the implicit and explicit cost of providing information for reporting companies.
Dr.D ¡V We all know the Sarbanes Oxley Act has increased management accountability, responsibility, and risk, but CMKX points out another area affected by Sarbanes that needs to be considered. Implicit and Explicit costs - Implicit Costs = a cost that is represented by lost opportunity in the usage of a company's own resources, excluding cash. These are intangible costs that are not easily accounted for. For example, the time and effort that an owner puts into the maintenance of the company rather than working on expansion. Explicit Costs = A cost that is represented by lost opportunity in actual cash payments. These are tangible costs which can be easily accounted for. For example: salaries/wages, rent and materials and such. These are costs are more difficult to calculate, but CMKX is experiencing these costs as I write this due to the commission¡¦s investigation etc¡K The company is attempting to reduce these costs by continuing to focus on our assets and revenue producing priorities in Canada and Ecuador.

Unfortunately, from the time of CMKX's filing of a 14C Information Statement in February 2003, CMKX has not been able to rely on either previous information or current information relating to its financial statements.
Dr.D - Obviously this is not good. It isn¡¦t extremely bad, but it isn¡¦t good. Why have filings been delayed and why could CMKX not meet the 60 day filing deadline after the revocation of the Form 15? We have our answer. The information is either inaccurate, incomplete or non existent IMHO. Having been in business for some time, I know how these situations can occur just the same as anyone reading this has experienced while trying to keep up with their personal checkbook, receipts, or tax information. Most of the time this information can be rebuilt, recreated or has a duplicate some where. I say most of the time, because there are exceptions to the rules. It would be unusual for a company to not be in a position to recreate records by itemized data held in individual records. I once had an individual that ran off with all of my company records (several years worth) and we were able to recreate them. It was very costly and time consuming, but we did it through our clients, their account records, our suppliers, customer base at the time, etc... 60 days for us would have been impossible at the time. It took about 9 months. Not being able to file because of inaccurate records is difficult especially when Sarbanes Oxley holds the management personally and criminally responsible for the contents of the filings.


As a result of its inability to provide accurate information about its financial condition, CMKX has retained the services of individuals who have been promulgated with the task of rebuilding its financial records and providing the public current periodic reports as required by Section 13(a) of the Exchange Act.
This is good news. The good news is they have retained the services of individuals to set to the task of rebuilding its financial records, which means the data must be there or accessible to work with or there is no need to hire someone to do it. Also the periodic current reports that will become due will be provided by these same individuals. My experience with the government agencies are that if you are working to resolve the situation they will usually work with you, but if you are ignoring and trying to hide issues then they will usually draw a quick conclusion to your circumstance. This is a clear indicator that the company (CMKX) had a poor or nonexistent book keeping system in place, but has moved to remedy the situation and did so before the SEC stepped in. Nice job CMKX. Timing sometimes is everything. If they would have waited until the SEC stepped in then it could have been ugly. What we are seeing now is not ¡§UGLY¡¨ it just isn¡¦t as pretty as we would like it to be. ƒº

The implicit costs associated with Sarbanes-Oxley is that current management will not file the required periodic reports until such time as the accuracy of the information required in such reports has been verified, inclusive of the financial aspects of CMKX, stockholders equity reports, and the mining claims and other corporate assets.
Dr.D - This may sound bad on the surface, but is actually what Sarbanes Oxley intends in an off beat sort of way. Remember that Implicit Costs = a cost that is represented by lost opportunity in the usage of a company's own resources, excluding cash. These are intangible costs that are not easily accounted for. For example, the time and effort that an owner puts into the maintenance of the company rather than working on expansion. They are going to be tied up 24/7, so to speak, while they are building, recreating, and verifying all of the required information whether it is financial, mining, share structure, or corporate assets and the current management is not going to file reports that can not be attested to as being accurate. This is not accurate within reason nor to the best of their ability with available resources. This is accurate to the degree that if it is found to be wrong you may go to jail and lose a substantial amount of money accurate. That is what Sarbanes Oxley wanted to invoke into the minds of corporate America. IMHO

Although it is CMKX's intention to continue to pursue the effectuation of periodic reports in compliance with Section 13(a) of the Exchange Act, but management realizes that the Commission may prevail in suspending the registration of CMKX's securities for a period not exceeding twelve months, or revoking its registration altogether.
Dr.D ¡V Indicating that it is CMKX¡¦s desire to continue to be a reporting company and file the 10Q¡¦s, 8k¡¦s, etc¡Kbut Mr. Casavant and Mr. Maheu are aware that the commission is probably out to suspend or revoke the registration of the company and if the commission gets its way then that is what would happen. IMHO.


(Continued)

[Franko10 ™]

"Unfortunately management and others involved in CMKX's previous operations were not blessed with the trait of being perfectionists. Past professional guidance has left a void which prevented the Company's ability to prepare complete and accurate periodic reports under Section 12(g) of the Exchange Act," stated Maheu.
Dr.D – I love this one. We are not sure if this “previous operations” is speaking of Cybermark or early CMKI/CMKM, but it seems to indicate the “CMKX” period or a time frame involving the last 12 months. I am not sure the aim of this language by the company, but I am going to guess at whom this may implicate, and his initials could be R. G. In my book, ultimately I would hold Urban Casavant responsible for the availability of the records and the oversight of the company. Sorry U.C., but I am a president of a few companies and if that info is missing it is because I didn’t stay on top of my job. To his credit, Mr. C has had illness off and on over the last year and that could have impeded him somewhat. Too, I believe he relied on the expertise of R.G., but to what extent none of us know for sure. I’m still behind Mr. C and Mr. Maheu (or IBM as some call him) 100%, but I call them as I see them. The President/CEO is ultimately accountable in my book.

CMKX's stockholders should realize that among publicly traded securities, two different standards exist for providing disclosures to investors. First, companies with a class of securities registered under Section 12 of the Exchange Act that are current in their obligations as a registrant ("reporting issuers") provide annual, quarterly and periodic reports on Forms 10-KSB, 10-QSB and 8-K, in addition to other reports for small business issuers such as CMKX. The second category contains companies that do not have a class of securities registered under the Exchange Act ("non-reporting companies").
Dr.D – Simply a clarification setting up options that the company has. 2 different standards are available: 1 = reporting and 2 = non-reporting and they give a breakdown

Reporting issues are required to provide their stockholders and the investing public with annual audited financial statements, whereas non-reporting companies do not have to provide their stockholders or the public audited financial statements. Further, companies traded on the Pink Sheets that are not reporting issuers are not required to have audited financial statements in order to continue trading on the Pink Sheets. If the Commission were to suspend or revoke CMKX's registration under the Exchange Act, CMKX would be considered a non-reporting company and would continue to trade on the Pink Sheets. In this event, CMKX intends to provide material information to the public, when available, through press releases and postings to its website.
Dr.D – 1st of all I think they are trying to put some shareholders at rest as to what would happen to their investment if CMKX has their registration revoked. Obviously your shares are fine and will remain in tact and fully contain any and all value both immediate and potentially. The company states that a viable alternative if the SEC so chooses to prevail in their quest and possibly revoke or suspend CMKX’s registration is to move to a non-reporting status on the Pink Sheets and continue to trade as they have until what time they can fully become compliant and re-file for registration. If this scenario does unfold then CMKX voluntarily obligates their self to provide the company information to the shareholders that would otherwise be required by a fully reporting status. That information will be supplied to us through PR’s and postings to its website. IMHO.

Casavant went on to say, "We are committed to pursuing the corporate cleanup required to allow us to provide periodic reports to our stockholders; however, in the event the SEC determines that a suspension or revocation is in order, then aside from our compliance with such order, we will utilize our best efforts to provide minimum basic information to our stockholders, allowing for CMKX to continue trading on the Pink Sheets."
Dr.D – Mr. C says the corporate cleanup is going to continue regardless of the hearings outcome. If the SEC revokes or suspends CMKX’s registration then the information required by the NASD/Pink Sheets to continue trading will be satisfied to them. I would not think this would lessen the information that the company just announced above that would be released to the shareholders regardless of the hearings outcome. Unless this is contradictory to the previous statement then this is simply indicating that the company would file the necessary minimal information to the proper authorities and shareholders to continue a listing on the Pink Sheets.

Although CMKX currently anticipates being able to continue to trade on the Pink Sheets regardless of the outcome of the administrative proceeding, it is unclear at this point if the Commission will take further action in an attempt to prevent the trading of CMKX's common stock on the Pink Sheets or any other medium.
Dr.D – The company doesn’t foresee that the SEC will try and prevent the company from trading on the pinks, but they could. Regardless of the hearings outcome the company expects to move back to the Pinks and resume trading. If the SEC attempts to prevent that then other action will be necessary on the part of the company, but not a concern at this time. What are these options available to the company? Go private? Merge? Reverse Merge? Comply and reregister/re-file? Etc… Shareholders are carried along with the company regardless of the decision. IMHO!

CMKX is not allowing these regulatory issues to divert management's attention from its primary operational goals of claiming new land and continuing its drilling activities. The future of CMKX lies in the continued development of its assets.
Dr.D – Once again the company shows it is undaunted in its quest by the SEC’s inquiries from building shareholder value and streamlining the company for complete implementation of Mr. Maheu’s overhaul of the internal corporate governance. Sounds like we have needed it too. The primary operational goals are repeated from the last PR as being that of claiming new lands/mineral rights and continuing its drilling activities. This is good news. Sounds as if they have been claiming new lands and continued drilling. As a matter of opinion, I believe they have been. You can’t continue drilling activities unless you’ve been doing it, IMO. Too, you can’t continue developing the companies assets if you haven’t been previously developing the assets. There is a difference in obtaining assets and developing assets, I like the developing assets almost as good as obtaining assets. Go CMKX. We all know that is where the future for CMKX lies and that’s where I plan on being is right in the middle of CMKX’s future. When CMKX gets to there “future” my children, family, friends, I, or all of the above will get there with them. Not JMHO!


Consistent with this statement, Urban Casavant added, "Creating stockholder value is a primary concern to us. We have some very positive operational things happening, both in Canada and in Ecuador, and are extremely optimistic about the future of our operations."
Dr.D – This is incredibly strong language for a company going to a hearing and under SEC scrutiny already. Mr. C pulls no punches, regardless of the disclaimer at the end, that creating stockholder value is a primary concern and CMKX has some “VERY POSITIVE” operational things happening (MEOW), both in Canada and Ecuador, and are extremely optimistic about the future of our operations. No mention of the U.S.A. in that international volley of positive operational things happening so that might exclude the infamous, tender offer so many soap box about. No mention at all of an offer on table or anything. Oh well. JMHO!

In the time preceding the administrative hearing, CMKX intends to continue its development activities and anticipates filing operational updates on Form 8-K, as required, when they become available.
Dr.D – This tells us that they are right now actively working on its development of obtaining more land, exploring our current assets and continuing drilling activities.

(Continued)

[Franko10 ™]

CMKX's actual results could differ materially from such forward-looking statements because of factors such as: impact of the results of the administrative hearing on CMKX's stock price; impact of the hearing on CMKX's operations; CMKX's ability to continue to trade on the Pink Sheets; uncertain further regulatory scrutiny; the current state of operations, both in Canada and Ecuador; unavailability of documentation and corporate records; changes in the number of stockholders of record; the impact of failing to meet Exchange Act reporting requirements; the ability to rebuild financial records; timing necessary to comply with reporting requirements; lack of adequate internal controls; unforeseen capital deficiencies; unavailability of insurance; changes in the mining and metals environment, including actions of competitors; the effectiveness of CMKX's development and drilling programs; regulatory and legal changes; and other risks associated with companies in similar industries. CMKX undertakes no obligation to publicly update or revise any forward-looking statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Dr.D ¡V I love this disclaimer it has its own little information chest tucked away in it. It lists the factors that need to be considered by investors and what the company knows is to be calculated in to accurately assess the situation for CMKX and us. Nice list, but don¡¦t let it shake you they are just covering their rear and ours.

Overall assessment is that the company is trying to tell us there is little concern for the CMKX investor at this time. IMHO. The main topic being that the main action of the SEC is to revoke or suspend the registration and under those conditions the company would still be expected to return to the pinks with a non reporting status and resume trading ¡§soon¡¨. ƒº All shares will remain in the possession of the shareholder and information will be released to us through normal channels as in the past. The company is correcting the mistakes of the past and I would expect the SEC or at least the judge, to acknowledge that and realize the importance and desire of the shareholders to have the company in a position of being obligated by registered security regulations to produce up to date filings and reports disclosing information instead of counting on the company¡¦s good will. Company developments to hopefully increase shareholder value are continuing in Ecuador and Canada and some happenings are very promising. This is an excellent PR and I would like to express my gratitude to Mr. Casavant, Mr. Maheu and the company for being open and forthright.

These are all just my opinions and I ask that you treat them as such.

Success is at hand.

Dr.D

[Franko10 ™]

;D