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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19699 / May 15, 2006

Accounting and Auditing Enforcement Release No. 2429 / May 15, 2006

SEC v. Exotics.com, Inc., et al., (United States District Court, District of Nevada, C.A. No. CV-S-05-0531-PMP-GWF)

Final Judgment Entered Against Canadian Accountant Barry F. Duggan in Market Manipulation and Financial Fraud Case

The Securities and Exchange Commission announced on May 16, 2006, the federal court in Nevada entered a final judgment, by consent, against Barry F. Duggan, of Vancouver, British Columbia, in connection with a stock manipulation and accounting fraud scheme that occurred between 1999 and 2002. The judgment permanently enjoins Duggan from violating the antifraud, reporting, books and records and internal accounting controls provisions of the federal securities laws. The judgment also orders Duggan to pay a $25,000 civil penalty, prohibits him from acting as an officer or director of a publicly-traded company and bars him from participating in any offering of a penny stock.

The judgment against Duggan arises out of an April 21, 2005 civil action filed by the Commission against Exotics.com, Inc., a Nevada corporation based in Vancouver, British Columbia, and 12 other principal defendants and a relief defendant. The Commission alleges in its complaint that, between at least 1999 and 2002, Exotics, which was then an Over-the-Counter Bulletin Board company in the business of operating adult Web sites, was the subject of a manipulation and accounting fraud perpetrated by, among others, its officers, attorneys and outside auditors. The Commission alleges that Duggan, who during the relevant period was a certified general accountant (CGA) in Canada and the chief executive officer and a director of Exotics' sole subsidiary, played a role in the scheme by, among other things, approving Exotics' false reporting of $3.6 million of goodwill in its financial statements (which led to an overstatement of assets by approximately 627%) and reviewing and approving drafts of fax and e-mail spam messages sent out on behalf of the company which contained misleading financial information.

Without admitting or denying the allegations in the Commission's complaint, Duggan consented to the entry of the final judgment against him. The final judgment enjoins Duggan from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder. The judgment also imposes a $25,000 civil penalty against Duggan, prohibits him from acting as an officer or director of a publicly-traded company and bars him from participating in any penny stock offering.

In addition to the above, on May 15, 2006, the Commission issued a settled Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions ("Order") against Duggan, based on the April 20, 2006 final judgment entered against him. The Order, which was effective immediately, suspends Duggan from appearing or practicing before the Commission as an accountant.

For further information, see Litigation Release Nos. 19207 (April 28, 2005) and 19645 (April 7, 2006).