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The beleaguered Internet animation company said late Jan. 2 that the Securities and Exchange Commission has launched an informal probe on trading of its stock by “certain individuals or entities.” “The company plans to cooperate fully with the investigation and to turn over to the SEC any information in its possession which may be helpful to the investigators,” Kenneth Williams, president and CEO, said. Stan Lee, based in Encino, Calif., also said that it “discovered evidence of possible misuse of company funds by some former members of the company’s management team during an internal investigation.” The SEC announcement comes after a difficult December for Stan Lee. The company, created by former Marvel Enterprises Inc. artist Stan Lee, whose colored pens created such comic legends as Spider-Man, the Incredible Hulk, X-Men, The Fantastic Four and the Silver Surfer, secured $40 million in equity financing and $2.2 million in bridge financing early in the month, only to see its fortunes sour three weeks later when it couldn’t complete the balance of the bridge financing or raise additional funds needed to stay in business. Hoping to turn a profit by 2002, Stan Lee was instead forced to suspend production operations and lay off most of its staff. That announcement prompted the Nasdaq to halt trading of Stan Lee shares until the company provided it with further information. With trading still halted, Stan Lee said it is complying with the request and seeking “strategic alternatives.” The company said it does not believe the latest developments will adversely affect its near term strategic plan. Stan Lee also said it ended its consulting agreement with Paraversal Inc. and its employment contract with Stephen Gordon, former executive vice president of operations for the company. The most recent financial figures for the company put revenue for the nine months ended September 30, 2000 at $1.2 million and its losses at $18.8 million. After going pubic in April 1999 and hitting a 52-week high of $28 per share February 8, 2000, Stan Lee’s stock remains stagnant at about 9 a share. Some of the company’s recent projects included partnering with pop music’s Backstreet Boys to create an animated superhero franchise based on the band and producing Web serials such as “The Accuser” and “The Drifter.” Copyright (c)2001 TDD, LLC. All rights reserved.

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