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The Children's Internet Announces U.S. District Court Decision, Settlement of State Lawsuit, Resignation of CEO and Board, Appointment of New CEO and Board, Proposed Annual Shareholder Meeting, and New Corporate Headquarters

Posted on: Wednesday, 17 December 2008, 07:00 CST

GOLD RIVER, Calif., Dec. 17 /PRNewswire-FirstCall/ -- The Children's Internet, Inc. (OTC Bulletin Board: CITC) announced today that on October 23, 2008, Judge Claudia Wilken signed her ruling in the Securities and Exchange Commission's (SEC) case against The Children's Internet, Inc. (TCI), among others. In her ruling, Judge Wilken decided not to impose any monetary penalties or fines against TCI. In particular, the SEC sought disgorgement penalties against TCI for $3,475,044. However, the Court in ruling against disgorgement concluded that, "While some of these funds could potentially be subject to disgorgement, ordering disgorgement against TCI would not benefit the corporation's shareholders, who are the victims of the Hamedanis' unlawful conduct."

In addition, the Court ordered that all TCI shares owned by the Hamedanis' must be disgorged and deposited into an escrow account with the ultimate disposition of those shares to be determined by the TCI Board. Specifically, the Court concluded that, "[o]rdering disgorgement only against the Hamedanis' individually and divesting them of their interest in TCI and TDN (Two Dog Net, Inc.) is the most appropriate remedy under the circumstances. This approach will allow TCI shareholders the best hope of realizing a return on their investment."

Richard J. Lewis III, recently appointed Acting CEO of TCI, stated that, "We could not be more delighted with the Court's ruling. The Court clearly decided to punish the wrong-doers and not the company and its innocent shareholders. We fought long and hard for this ruling and now, we can focus again on business and the future."

Settlement of Lawsuit, Resignation of TCI CEO and Board, Appointment of New CEO and Board

On October 23, 2008, The Children's Internet Holding Company, LLC (TCI Holding), made demand on the TCI Board to set an annual shareholder meeting. When the TCI Board refused to set a date for the annual TCI shareholder meeting, on October 24, 2008, TCI Holding caused a lawsuit to be filed against TCI and each of its Board Members in the First Judicial District Court of the State of Nevada in and for Carson City, Nevada, Case Number 08 OC 00367 1B. The lawsuit asked the Court for A Petition and Application for Order Compelling Shareholder Meeting and Order to Show Cause and/or Writ of Mandamus to Compel Shareholder Meeting.

On October 29, 2008, TCI and TCI Holding agreed to settle the lawsuit by entering into a binding Control Agreement under which Tyler Wheeler resigned as Chief Executive Officer (CEO) of TCI and Richard J. Lewis III was appointed as the Acting CEO. Due to the vacancy that existed because of Sholeh Hamedani's resignation from the Board on October 23, 2008, Mr. Lewis was also appointed as director and acting Chairman of TCI to fill that vacancy. In addition to Ms. Hamedani's resignation, all other TCI Directors (Jamshid Ghosseiri, Roger Campos and Tyler Wheeler) submitted their irrevocable resignation as well.

Commenting on the lawsuit and subsequent settlement, Mr. Lewis stated, "In light of Judge Wilken's ruling, to allow the same officers and directors to maintain control over the day-to-day operations of TCI seemed like the ultimate definition of insanity; yet, that is exactly what was occurring. The lawsuit forced the issue and resulted in the immediate resignation of TCI's CEO and all of its Board Members, who were Hamedani nominees."

Filing of 14f-1 and Scheduling of Annual Shareholder Meeting

As a result of the settlement and the appointment of new TCI officers and directors, on November 6, 2008, TCI filed a 14f-1 with the SEC and caused the 14f-1 to be mailed to each TCI stockholder of record to inform each stockholder about the terms of the Control Agreement, and in particular, about the appointment of Mr. Lewis as the Acting CEO and Chairman, and the appointment of Ronald Bender and Richard Kwiecinski to the Board to fill the vacancies created by the Wheeler, Ghosseiri and Campos resignations. To learn more about Mr. Lewis, Mr. Bender and Mr. Kwiecinski, please go to TCI's website at www.thechildrensinternetinc.com.

On November 16, 2008, the new Board met for the first time and one of its first orders of business was to call for an annual TCI shareholder meeting to be held during the second week of January, 2009. At this meeting, in addition to other matters, a new slate of Directors will be nominated and voted on by the TCI shareholders. This will be the first ever annual shareholder meeting held by TCI.

New Corporate Headquarters

As part of new management taking over the day-to-day operations of TCI, on December 8, 2008, the company commenced moving its headquarters from the Bay area to Sacramento County. The move was completed on December 15, 2008. TCI's new corporate address is 2377 Gold Meadow Way, Suite 100, Gold River, CA, 95670. TCI's new telephone and fax numbers are T: 916.631.1987 and F: 916.631.1515, respectively.

About The Children's Internet, Inc.:

The Children's Internet, Inc., http://www.thechildrensinternetinc.com is the exclusive marketer and distributor of The Children's Internet(R) membership based service created just for kids. The Children's Internet is the most comprehensive, secure Internet service and "educational super portal" for children, pre-school to junior high, providing them with SAFE, real time access to millions of the best pre-selected, pre-approved educational and entertaining web pages accessed through a kid-friendly search engine.

The Children's Internet provides kids with a rich array of easy to use applications, including secure e-mail, search engine, homework help, games, news, learning activities and virtually limitless educational resources all within its safe, protected online community that gives kids a sense of freedom and parent's total peace of mind!

Awards won by The Children's Internet(R):

The Children's Internet(R) was declared winner of Outstanding Products of 2006 by iParenting Media Awards in the software category.

The Children's Internet(R) received the coveted National Parenting Center's Seal of Approval.

The Children's Internet(R) was ranked by PC Magazine as Editors' Choice in the category of "Kids' Browsers and Services" and declared the winner, rated #1 over AOL, MSN and EarthLink.

Forward-Looking Statements:

This press release may be deemed to contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements are made as of today's date and we do not undertake any obligation to update forward-looking statements. You can identify such statements by our use of such words as "should," "expect," "will," "intends," and similar words and phrases which denote future events and which may depend on the future performance of the Company. Specifically, these include statements as to future product releases, the implementation of strategic initiatives and the ownership in TCI upon completion of the transaction and whether or not the transaction will be consummated. Our assumptions underlying these statements are also "forward-looking" statements. Forward-looking statements are based on information and assumptions that are dynamic in nature and subject to rapid and sometimes abrupt changes. Our forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those stated or implied by the statements. Our forward-looking statements are also subject to important risks and uncertainties detailed in our latest reports filed with the SEC and available on its website at www.sec.gov.

SOURCE The Children's Internet, Inc.

Source: PR Newswire

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