==========================================START OF PAGE 1====== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. LITIGATION RELEASE No. 15093 / September 30, 1996 ACCOUNTING AND AUDITING ENFORCEMENT RELEASE No. 834 / September 30, 1996 SECURITIES AND EXCHANGE COMMISSION v. BOLLINGER INDUSTRIES, INC., GLENN BOLLINGER, AND RONALD BOLLINGER, United States District Court for the District of Columbia, Civil Action No. 96-CV-02257 (HHG). The Securities and Exchange Commission ("Commission") today announced the filing of a complaint in the U.S. District Court for the District of Columbia seeking a permanent injunction against Bollinger Industries, Inc., a supplier of consumer fitness products headquartered in Irving, Texas. The complaint also seeks a permanent injunction against the company's President and Chief Executive Officer, Glenn Bollinger, and the company's former Chief Operating Officer, Ronald Bollinger; seeks civil penalties against Glenn Bollinger and Ronald Bollinger; and seeks an officer and director bar against Ronald Bollinger. The complaint alleges that the defendants committed violations of the antifraud and books and records provisions of the federal securities laws, and that the company and Ronald Bollinger violated the internal controls provisions of the federal securities laws. The Commission's complaint alleges that Bollinger Industries fraudulently overstated its earnings and revenue for fiscal year 1994 and throughout fiscal year 1995 by: (1) recording three purported "bill and hold" transactions as sales even though the conditions for recognizing revenue on such transactions had not been met; (2) recording two transactions as sales even though the company had guaranteed the customers rights of return; (3) recording sales in the fourth quarter of fiscal year 1995 for merchandise which was not actually shipped until after the fiscal year-end; (4) concealing merchandise returned by one customer in an off-site warehouse to avoid detection by the company's accounting department and auditors; and (5) delaying an additional return from the same customer until after the end of the fiscal year. The complaint further alleges that Bollinger Industries materially understated returns due to a failure in the internal controls of the company. The material misstatements were set forth in Bollinger Industries' periodic reports filed with the Commission, including its Annual Report for fiscal year 1994 and its Quarterly Reports for the first three quarters of fiscal year 1995. The company's ==========================================START OF PAGE 2====== independent auditors detected certain material misstatements contained in the company's financial records for the fiscal year ended March 31, 1995, and prevented such misstatements from being included in the company's Annual Report for fiscal year 1995. Based on this conduct, the Commission charged Bollinger Industries with violating Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b- 5, 13a-1, and 13a-13 thereunder. The Commission charged Glenn Bollinger and Ron Bollinger with violating Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, and 13b2-2 thereunder. Without admitting or denying the allegations of the complaint, all three defendants consented to the entry of permanent injunctions prohibiting them from committing violations of the provisions specified above. Glenn Bollinger also agreed to pay a civil penalty of $40,000. Ronald Bollinger consented to the entry of an order prohibiting him from serving as an officer or director of a public company. The Commission is not seeking the imposition of a civil penalty against Ronald Bollinger based on his demonstrated inability to pay.