UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 42882 / June 1, 2000

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1266 / June 1, 2000

ADMINISTRATIVE PROCEEDING
File No. 3-10042

In the Matter of James D. Montgomery, II, Danny R. Auerbach, and Michael L. Glaser Respondent.

: : : : : : :

ORDER MAKING FINDINGS AND IMPOSING A CEASE-AND-DESIST ORDER AS TO DANNY R. AUERBACH

I.

On September 28, 1999, the Securities and Exchange Commission ("Commission") deemed it appropriate that public administrative cease-and-desist proceedings be instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Danny R. Auerbach ("Auerbach").

Following the institution of those proceedings, Auerbach submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, Auerbach consents to the entry of this Order Making Findings and Cease-and-Desist Order ("Order") without admitting or denying the findings set forth herein, except as to the jurisdiction of the Commission over him and over the subject matter of these proceedings, which are admitted.

The Commission has determined that it is appropriate to accept Auerbach's Offer and accordingly is issuing this Order.

II.

On the basis of this Order and the Offer, the Commission finds the following:¹

A. Computone Corporation ("Computone") is a company headquartered in Alpharetta, Georgia that designs, manufactures and sells computer hardware and software products. Computone's common stock is registered pursuant to Section 12(g) of the Exchange Act.

B. Computone filed with the Commission its January 3, 1997 Form 10-QSB on February 14, 1997.

C. Auerbach, of Lawrenceville, Georgia, was Computone's national sales manager in January 1997.

D. On or about January 3, 1997, the last day of Computone's FY 1997 third quarter, Auerbach was instructed by the then President of Computone to prepare an internal Computone sales order form reflective of the quantities of product Auerbach anticipated that a customer of Computone's, for whom Auerbach had principal responsibility, would be ordering. Auerbach complied with the request. Auerbach knew that a purchase order from the customer had not been received by Computone. No purchase order was received as of the end of the quarter.

E. In part as the result of Auerbach's conduct, Computone recognized this transaction as a sale which caused it to overstate materially its FY 1997 third quarter reported income from continuing operations by approximately $75,830. In part, this caused Computone to report $126,000 of income from continuing operations during this quarter rather than a loss of approximately $488,992.

F. Auerbach committed violations of Section 13(b)(5) of the Exchange Act, committed violations and caused Computone to violate Rule 13b2-1 of the Exchange Act, and caused Computone to violate Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) of the Exchange Act and Rules 10b-5 and 13a-13, thereunder, as more particularly described in paragraphs II.A through E, above.

III.

In view of the foregoing, it is appropriate to impose the sanction agreed to in the Offer. Accordingly, IT IS HEREBY ORDERED that Auerbach cease and desist from committing or causing any violation and any future violation of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder and from causing any violation or any future violation of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rule 13a-13 thereunder.

By the Commission.

Jonathan G. Katz
Secretary

¹ The findings herein are made pursuant to the Offer of Settlement of Auerbach and are not binding on any other person or entity named as a respondent in this or any other proceeding.