INITIAL DECISION RELEASE NO. 809

ADMINISTRATIVE PROCEEDING

File No. 3-16510

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of

The Registration Statement of

Kismet, Inc.

1516 E. Tropicana Ave., Suite 155

Las Vegas, NV 89119

INITIAL DECISION OF DEFAULT

June 10, 2015

APPEARANCE: Christine Nestor for the Division of Enforcement, Securities and Exchange 

Commission

BEFORE: James E. Grimes, Administrative Law Judge

SUMMARY

This Initial Decision suspends the effectiveness of the Form S-1 registration statement

filed by Kismet, Inc., on May 30, 2013, and amended on November 22, 2013, December 13, 

2013, January 14, 2014, and January 29, 2014.

INTRODUCTION

On April 23, 2015, the Securities and Exchange Commission issued an Order Fixing Time 

and Place of Public Hearing and Instituting Proceedings Pursuant to Section 8(d) of the Securities 

Act of 1933 (OIP). The OIP alleges Kismet’s registration statement contains untrue statements of 

material fact and omits material facts necessary to make representations in the registration statement 

not misleading. In particular, the OIP provides that Kismet’s registration statement misrepresents 

that Respondent is “entirely dependent on the efforts of [Respondent’s sole officer and director] 

because of the time and effort he devotes to [Respondent].” OIP at 2 (alterations in original). The 

OIP alleges this and similar statements are misleading because undisclosed control persons have 

been significantly involved in Respondent’s founding and business operations. The OIP further 

alleges that Respondent failed to cooperate with the Division of Enforcement’s attempted 

examination under Section 8(e) of the Securities Act, and that this failure constitutes an additional

basis for suspension of the registration statement’s effectiveness. The OIP directed that a hearing 

take place on May 13, 2015. 
2

According to an affidavit of service filed on May 1, 2015, Kismet was personally served 

with the OIP on April 25, 2015.1

 Accordingly, its Answer was due by May 5, 2015. See OIP at 3; 

17 C.F.R. § 201.220. To date, Kismet has not filed an Answer. On May 1, 2015, I rescheduled the 

hearing to May 11, 2015, to comply with the Securities Act Section 8(d) requirement that the 

hearing occur within fifteen days of service of the OIP. See The Registration Statement of Kismet, 

Inc., Admin. Proc. Rulings Release No. 2616, 2015 SEC LEXIS 1684. 

On May 6, 2015, the Division of Enforcement filed a Motion and Memorandum of Law 

Supporting Default against Respondent, with the following exhibits: the Affidavit of Process 

server, establishing April 25, 2015, service on Kismet (Ex. A); a printout from the Nevada Secretary 

of State’s website listing Ju Hyuk Kim as its sole officer and director, and its registered agent, 

IncSmart.biz (Ex. B); a compilation of Kismet’s Form S-1 and amendments, certified by a custodian 

of records for the Commission as being files received and maintained by the Commission, including 

the May 30, 2013 registration statement and the three subsequent amendments2 (Ex. C); a bank 

account application for Kismet (Ex. D); a document from Kismet’s registered agent, IncSmart.biz, 

showing incorporation and registered agent fees (Ex. E); emails between individuals purporting to 

represent Kismet and Dean Law Corp. (Ex. F); a check from Paul Kwon’s, an individual purporting 

to act on behalf of Kismet, checking account to Dean Law Corp. for $5,000 (Ex. G); a credit card 

authorization form for Callcentric customer support (Ex. H); a credit card in the name of Kismet and 

Paul Kwon (Ex. I); and a collection of subpoenas and correspondence from the Division to Kismet 

and Kim (Exs. J-K).

On May 6, 2015, after Kismet failed to timely file an Answer, I issued an order warning 

Kismet that if it failed to attend the hearing or otherwise defend the proceeding, it could be found 

in default and its Form S-1 registration statement could be subject to a stop order. See The 

Registration Statement of Kismet, Inc., Admin. Proc. Rulings Release No. 2638, 2015 SEC 

LEXIS 1734. The hearing was held by videoconference with the Division in the Commission’s 

Miami Regional Office. Kismet failed to appear, and the Division stated on the record that 

Kismet had not communicated with it since before the OIP was issued. Tr. 3. At the hearing, I 

accepted the Division’s Motion and admitted into the record Exhibits A-K attached to the 

Division’s Motion. Tr. 6. 

FINDINGS OF FACT

Kismet is in default for failing to file an Answer, appear at the hearing, or otherwise 

defend the proceeding. See OIP at 3; 17 C.F.R. §§ 201.155(a)(1), (2), .220(f), .310. As 

 1 In an order issued May 1, 2015, I incorrectly stated the service date was April 24, 2015. See 

The Registration Statement of Kismet, Inc., Admin. Proc. Rulings Release No. 2616, 2015 SEC 

LEXIS 1684.

2 Kismet incorrectly labeled the first amendment to its registration statement on November 

22, 2013, as Amendment No. 3. In this ID, I refer to the November 22, 2013, S-1 as Amendment 

No. 1.
3

authorized by Rule 155(a), I find the allegations in the OIP to be true. In addition, I have 

considered the Division’s exhibits attached to its Motion.

3 

Kismet is a Nevada corporation headquartered in Las Vegas, Nevada. OIP at 1; Ex. B at 

1; Ex. C: Reg. Stmt. at 1, 5; Amendment No. 1 at 1, 5; Amendment No. 2 at 1, 5; Amendment 

No. 3 at 1, 5; Amendment No. 4 at 1, 5.

4 Kismet filed a Form S-1 registration statement on May 

30, 2013, seeking to register the offer and sale of four million common shares, and the 

registration statement was amended on November 22, 2013, December 13, 2013, January 14, 

2014, and January 29, 2014 (referred to collectively as the registration statement). See generally 

Ex. C.

Kismet’s registration statement identifies Ju Hyuk Kim as its sole officer and director. 

See, e.g., Ex. C: Reg. Stmt. at 6, 9-10, 22, 30-31; Amendment No. 1 at 6, 9-10, 22, 30-31; 

Amendment No. 2 at 6, 10-11, 23, 28, 31-32; Amendment No. 3 at 6, 10-11, 23, 28, 31-32; 

Amendment No. 4 at 6, 10-11, 23, 28, 31-32. Kismet stated in its registration statement that 

Respondent “is entirely dependent on [Kim] because of the time and effort that he devotes to 

[Respondent]; and, “[w]e currently rely on our sole officer and director, [Kim], to manage all 

aspects of our business.” Ex. C: Reg. Stmt. at 10, 27; Amendment No. 1 at 10, 27; Amendment 

No. 2 at 11, 28; Amendment No. 3 at 11, 28; Amendment No. 4 at 11, 28. The registration 

statement and amendments state that “[o]ther than Mr. Kim, the Company has no promoters as 

that term is defined by Rule 405 of Regulation S-K.” Ex. C: Reg. Stmt. at 30; Amendment No. 

1 at 30; Amendment No. 2 at 31; Amendment No. 3 at 31; Amendment No. 4 at 31. 

Kismet’s statements that it was solely dependent upon Kim, and that Kim managed all 

aspects of the business were false because two controllers and promoters, whose names do not 

appear in the registration statement or its amendments, performed the following functions. An 

individual named Paul Kwon opened Respondent’s bank account and is the sole signatory on the 

account. Ex. D. The application to open the account for Kismet lists Paul Kwon as the 

“Owner/Key Individual.” Id. Kim is not listed on the account application. Id. Paul Kwon 

incorporated Respondent and paid its incorporation and registered agent fees. Ex. E. He also 

established Respondent’s corporate telephone number and maintained a credit card jointly with 

Kismet (Exs. H-I). Paul Known and an individual named Charles Kwon retained Dean Law 

Corp., the law firm that facilitated the filing of Kismet’s registration statement. Ex. F. In an 

email to an attorney at Dean Law Corp., Charles Kwon told the attorney about a deal he was 

“working on with another group . . . called Kismet, Inc.” and that he would need a legal opinion 

for Kismet’s registration statement. Id. Paul Kwon used a personal checking account to pay the 

$5,000 attorney’s fee to Dean Law Corp. Ex. G.

In addition, pursuant to a Securities Act Section 8(e) examination of Kismet, on February 

24, 2014, staff for the Division issued a subpoena to Kismet for the production of documents. 

OIP at 2; Ex. J. The staff re-sent the subpoena to Kismet on March 13, April 2, and June 26, 

 3 I take official notice of Exhibit C, the collection of Kismet’s Form S-1 and amendments, as 

it is a set of documents in the public official records of the Commission. See 17 C.F.R. § 201.323.

4 The pages cited to in this decision refer to the pagination that appears at the bottom of pages

in the registration statement and its amendments.
4

2014. OIP at 2; Ex. J. Kismet failed to respond to the subpoena. OIP at 2. On June 23, 2014, 

also as part of the examination under Securities Act Section 8(e), Division staff issued a 

subpoena to Kim, Kismet’s sole officer and director, for testimony. Id.; Ex. K. The staff reissued the subpoena on June 26, and on July 11, 2014, re-sent the June 23, 2014, subpoena to 

Kim via Kismet’s purported email address. OIP at 2; Ex. K. Kim failed to appear for testimony. 

OIP at 2.

CONCLUSIONS OF LAW

Section 8(d) of the Securities Act provides that if a registration statement includes any 

untrue statement of material fact or omits to state any material fact required to be stated therein 

or necessary to make the statements therein not misleading, the Commission, or its designee, 

may suspend the effectiveness of the registration statement. 15 U.S.C. § 77h(d). “[T]he 

essential purpose of [a registration statement] is to ‘protect investors by promoting full disclosure 

of information thought necessary to informed investment decisions.’” The Application of 

mPhase Techs., Inc., Exchange Act Release No. 74187, 2015 SEC LEXIS 398, at *22 (Feb. 2, 

2015) (citing The Application of World Trade Fin. Corp., Exchange Act Release No. 66114, 

2012 WL 32121, at *7 (Jan. 6, 2012)). “Information in a registration statement is material when 

there is a substantial likelihood that a reasonable investor would attach importance to it in 

determining whether to purchase the security in question.” Petrofab Int’l, Inc., Securities Act 

Release No. 6769, 1988 SEC LEXIS 782, at *16 (Apr. 20, 1988) (citing TSC Indus., Inc. v. 

Norway, Inc., 426 U.S. 438, 449 (1976)); see 17 C.F.R. § 230.405 (defining a material fact as 

one to which “there is a substantial likelihood that a reasonable investor would attach importance 

in determining whether to purchase the security”).

Kismet included misleading statements in its registration statement about which

individuals founded and operated the company, and omitted disclosing promoters and control 

persons who met the definitions ascribed to those terms. Item 11(n) of Form S-1 requires a 

registrant to furnish the information required by Item 404 of Regulation S-K, including the 

identity of any promotor or control person that the registrant had within the last five fiscal years. 

See Item 11(n) of Form S-1; 17 C.F.R. § 229.404. A promoter is defined to include “[a]ny 

person who, acting alone or in conjunction with one or more other persons, directly or indirectly 

takes initiative in founding and organizing the business or enterprise of an issuer.” 17 C.F.R. 

§ 230.405. Control is defined to mean “the possession, direct or indirect, of the power to direct 

or cause the direction of the management and policies of a person.” Id. Paul Kwon and Charles 

Kwon each meet the definitions of promoters and control persons with respect to Kismet. Both 

were instrumental in establishing Kismet as a corporate entity; getting its registration statement 

filed; and setting up basic operational functions, such as a bank, phone, and credit card accounts. 

Kim, meanwhile, was absent from these basic organizing and operating functions. At a 

minimum, it was a misrepresentation to state that Kismet was “entirely dependent” and solely 

relied on Kim for management of all aspects of its business. 

Misrepresenting Kim’s role and omitting Paul Kwon and Charles Kwon as promoters and 

control persons in Kismet’s registration statement and amendments was material. Both courts 

and the Commission have held that failure to disclose promoters’ and control persons’ 

participation in an issuer’s formation, offering, and operations in registration statements 

constitutes a material omission. See SEC v. Fehn, 97 F.3d 1276, 1290 (9th Cir 1996); The 
5

Registration Statement of Hughes Capital Corp., Securities Act Release No. 6725, 1987 SEC 

LEXIS 4158, at *18-19 (July 20, 1987); Am. Fin. Co., Securities Act Release No. 4465, 1962 

SEC LEXIS 632, at *5 (Mar. 19, 1962); Hart Oil Corp., Securities Act Release No. 4147, 1959 

SEC LEXIS 33, at *4 (Oct. 9, 1959). 

In addition, Section 8(e) of the Securities Act empowers the Commission to authorize an 

examination to determine whether a stop order pursuant to Section 8(d) is appropriate. 15 U.S.C. 

§ 77h(e). Failure by the issuer to cooperate with the examination is an independent ground for 

the issuance of a Section 8(d) stop order. Id. Kismet failed to comply with subpoenas issued on 

it and to its purported sole officer and director, further making a stop order appropriate. 

ORDER

It is ORDERED that, pursuant to Section 8(d) of the Securities Act of 1933, the 

effectiveness of the Form S-1 registration statement of Kismet, Inc., filed May 30, 2013, and 

amended on November 22, 2013, December 13, 2013, January 14, 2014, and January 29, 2014,

is SUSPENDED.

This Initial Decision shall become effective in accordance with and subject to the provisions 

of Rule 360. See 17 C.F.R. § 201.360. Pursuant to that Rule, a party may file a petition for review 

of this Initial Decision within twenty-one days after service of the Initial Decision. A party may 

also file a motion to correct a manifest error of fact within ten days of the Initial Decision, pursuant 

to Rule 111. 17 C.F.R. § 201.111(h). If a motion to correct a manifest error of fact is filed by a 

party, then a party shall have twenty-one days to file a petition for review from the date of the 

undersigned’s order resolving such motion to correct a manifest error of fact. 

This Initial Decision will not become final until the Commission enters an order of finality. 

The Commission will enter an order of finality unless a party files a petition for review or a motion 

to correct a manifest error of fact or the Commission determines on its own initiative to review the 

Initial Decision as to a party. If any of these events occur, the Initial Decision shall not become 

final as to that party.

Respondent is notified that it may move to set aside the default in this case. Rule 155(b) 

permits the Commission, at any time, to set aside a default for good cause, in order to prevent 

injustice and on such conditions as may be appropriate. 17 C.F.R. § 201.155(b). A motion to set 

aside a default shall be made within a reasonable time, state the reasons for the failure to appear 

or defend, and specify the nature of the proposed defense in the proceeding. Id.

_____________________

James E. Grimes

Administrative Law Judge