Michael Goode – Page 11

FusionPharm: Oh, by the way, we got raided by the Feds $FSPM

Trading in FusionPharm (FSPM) was suspended by the SEC back on May 16th. It reopened for trading on the Grey Market on June 2nd. In a press release prior to the market open that day FSPM announced that the stock would begin trading again and added this nice tidbit in the second paragraph:

On May 16, 2014, a search and seizure warrant was executed at the Company’s offices located in
Commerce City, Colorado as part of an ongoing investigation of potential securities law
violations. In executing the warrant, federal authorities seized company records, computers and
approximately $200,000 in funds from one of the Company’s bank accounts.

I shorted FSPM multiple times at Centerpoint Securities over the next couple days and made some money but I was impatient because of the $0.013 per share daily borrow fee so I covered before the drop below $0.90. The stock is currently at $0.70 and is quite illiquid. My thesis was simple: the seizure of records and money is a huge negative (it is exceedingly rare for a company to be investigated for criminal stock fraud and many times executives go to prison in these cases) and the legal risk to the executives means that they likely won’t be putting out any more press releases.

Here are two of my trades on FSPM:

$460 profit FSPMShort Stock
Centerpoint batch import through June 5th

Secret Broker

Posted by MichaelGoode /
http://profit.ly/1MozMS

$198 profit FSPMShort Stock
Centerpoint batch import through June 5th

Secret Broker

Posted by MichaelGoode /
http://profit.ly/1MozMT

Of course, there are plenty of people who disagree with me, and I am glad that they do so that someone will buy the shares I sell short. For example:

$FSPM compared to other Halted co’s phot cann $FSPM traded stronger. Alot of support behind this co.The Industry is “GrOwInG” fast. WA next

— WoLf~MoNsT3R (@MuRk_MoNsT3R) June 3, 2014

Disclaimer: I have no position in any stock mentioned. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

SEC Suspends trading in marijuana stocks SK3 Group $SKTO and Alternative Energy Inc $AEGY

This morning prior to the market open the SEC suspended trading in SK3 Group (SKTO) and Alternative Energy Inc. (AEGY). I first wrote about SKTO fifteen months ago, saying I thought it was at risk for a trading suspension. I was premature to say the least. But when both companies became marijuana companies earlier this year the odds of them getting suspended increased greatly and finally the SEC obliged. These suspensions are the tenth and eleventh suspensions of marijuana-related stocks this year by the SEC (the prior suspension was yesterday’s suspension of WBXU). The two stocks will reopen for trading at the market open on June 20th. Here is a list of marijuana stocks that have been suspended by the SEC this year: SKTO, AEGY, WBXU, FRTD, FSPM, PHOT, CDFT, PTOG, AVNE, CBGI, and CANN.

SEC suspension press release (PDF)
SEC suspension order (PDF)

From the SEC press release:

The Commission temporarily suspended trading in the securities of AEGY and SKTO because of
a lack of current and accurate information about the companies. There are questions regarding
the accuracy and adequacy of publicly available information about the business activities, the
control of the companies, and trading in the securities of both companies

Disclaimer: I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

SEC Suspends trading in marijuana stock WebXU $WBXU

This morning the SEC suspended trading in WebXU (WBXU), a perennial pump and dump and new hemp company. This is the eighth suspension of a marijuana-related stock this year (the most recent suspension was of FRTD). WBXU was most recently promoted by StockMarketProfessor.com on May 22nd; see quote from disclaimer:

Stockmarketprofessor.com has been compensated up to Seven-Thousand Dollars Cash via bank wire transfer by a third party (Eden Media Group, LLC) for a 1 Day Marketing Program regarding WBXU.

The first compensated pump email I received on WBXU was from Awesomepennypick.com on March 29th, 2013.

SEC suspension press release (PDF)
SEC suspension order (PDF)

From the SEC press release:

The Commission temporarily suspended trading in the securities of WBXU because of
questions that have been raised about the accuracy and adequacy of publicly disseminated
information concerning, among other things, the company’s finances.

Baristas Coffee Company $BCCI files ‘audited’ quarterly financial statements

While accounting in real companies is usually boring, penny stock accounting is almost always exciting, whether it is a $100m+ market cap company with fewer total assets than I have in my checking account (like GHIL), companies with financial statements so badly faked as to make me suspect brain damage rather than intent to defraud, and now the case of the unaudited “audited” financial statements, courtesy of Baristas Coffee Company (BCCI).

First, I should thank the intrepid researchers on the Investorshub Due Diligence Fraud and Support Team message board for bringing this to my attention. Janice Shell was the first to notice the problems with the quarterly financial statements published yesterday by BCCI. See some of the replies (and more replies) to her post. The problem is that while the statements clearly state in multiple locations that they are audited, there is no auditor letter included with them. Furthermore, they are quarterly financial statements, which are generally never audited (though they normally pass auditor review). It is possible that the statements were audited and the company forgot to include the auditor letter. Perhaps worse is that the ‘audited’ statements don’t match the prior period unaudited statements. The starting cash ($0) on January 1, 2014 is different than the ending cash on Dec 31 ($43,645). And the intangible assets (which make up almost 95% of the company assets) drop by over $4 million between periods with no treatment on the income statement.

The CEO of Baristas Coffee Company, Barry Henthorn, doubled down on the ‘audited’ claim by issuing a press release this morning stating in part (emphasis mine):

Baristas Files Audited Financials – Moves Forward With Uplisting to Senior Exchange

Jun 05, 2014
OTC Disclosure & News Service

–

SEATTLE, June 5, 2014 (GLOBE NEWSWIRE) — Baristas Coffee Company, Inc. (OTCPK:BCCI), announced that it has completed its audited financials which meet PCAOB standards and has filed its first set of audited financials. The filing of audited quarterly financials for the period ending March 31, 2014 can be viewed at www.otcmarkets.com under Filings and Disclosures. Baristas will be filing amended audited 10K and 10Q financials for years 2012, 2013 in the next week. Subsequently the Company will be filing its Registration Statement and will become fully reporting and will up list accordingly to a senior exchange.

CEO Barry Henthorn stated: “Becoming fully audited was among the most significant steps towards moving to a senior exchange and becoming a fully reporting public company. All legacy adjustments are now reflected according to PCAOB auditing standards and only revenues that were completely verifiable through the audit were recognized. In addition all stock based compensation has been reflected appropriately of which the Company does not foresee any upcoming substantial issuances. The processes and accounting review policies are now in place to allow all future revenues to flow to the books of the company and to produce and review timely audited financial statements.”

It is quite possible that Baristas Coffee has actually had a real audit done on its financial statements but it makes no sense to me why they would put out their Q1 2014 financials prior to restating their financials for the last two years. If these financials are not produced soon then I believe Barsistas Coffee is at risk for an SEC trading suspension.

On a side note, DKM CPAs, which Baristas Coffee Company lists as it “accountant or auditor” in the filing yesterday. DKM previously received a nasty-gram from the PCAOB (PDF) two years ago.

Disclaimer: I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. I have submitted my concerns to the This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Green and Hill Industries $GHIL: Yet another marijuana pump & dump

This morning prior to the market open I received an email from editor@untappedwealthonline.com promoting Green and Hill Industries (GHIL) and linking to the landing page pump at http://www2.breakawaystocksonline.com/ghil/index.html

Considering the relatively low budget, the absolute mess of financial statements / merger agreement (which are just begging for a negative Seeking Alpha article), and the large number of shares outstanding, I think it likely that this pump dumps spectacularly and soon.

If you don’t follow me on Twitter, I suggest doing so — I tweet about new pumps before I write these blog posts:

$GHIL another marijuana pump and dump http://t.co/5BkBmtynUs

— Michael Goode (@goodetrades) June 3, 2014

Disclosed budget: $200,000
Promoter: Breakaway Stocks / Erick Dickson / List Data Solutions
Paying party: Development Solutions Co.
Shares outstanding: 101,139,212
Previous closing price: $1.12
Market capitalization: $113 million

Excerpt from disclaimer:

Green and Hill Industries, (GHIL), the company featured in this issue, appears as paid advertising by Development Solutions Co. Ltd. to provide public awareness for GHIL. Breakaway Stocks and List Data Solution (LDS) have used outside research and writers using public information to create the advertisement coming from Breakaway Stocks about GHIL.

…

LDS has managed a total production budget of up to $200,000 per week for advertising efforts and will retain any amounts over and above the cost of production, copywriting services, mailing and other distribution expenses, as a fee for its services. Breakaway Stocks is paid $5,000 as an editorial fee from LDS and also expects to receive new subscriber revenue as a result of this advertising effort.

Full disclaimer:

IMPORTANT NOTICE AND DISCLAIMER: This advertising issue of Breakaway Stocks does not purport to provide an analysis of any company’s financial position, operations or prospects and this is not to be construed as a recommendation by Breakaway Stocks or an offer or solicitation to buy or sell any security. Green and Hill Industries, (GHIL), the company featured in this issue, appears as paid advertising by Development Solutions Co. Ltd. to provide public awareness for GHIL. Breakaway Stocks and List Data Solution (LDS) have used outside research and writers using public information to create the advertisement coming from Breakaway Stocks about GHIL. Although the information contained in this advertisement is believed to be reliable, Breakaway Stocks and LDS makes no warranties as to the accuracy of any of the content herein and accepts no liability for how readers may choose to utilize the content. All commodity, stock prices and theoretical projections were current as of the writing of this advertisement. Prices and projections may not be current as of the dissemination of this advertisement. Readers should perform their own due-diligence, including consulting with a licensed, qualified investment professional or analyst. Further, readers are strongly urged to independently verify all statements made in this advertisement and perform extensive due diligence on this or any other advertised company. Breakaway Stocks is not offering securities for sale. An offer to buy or sell can be made only with accompanying disclosure documents and only in the states and provinces for which they are approved. Many states have established rules requiring the approval of a security by a state security administrator. Check with http://www.nasaa.org or call your state security administrator to determine whether a particular security is licensed for sale in your state. Many companies have information filed with state securities regulators and many will supply investors with additional information on request. LDS has managed a total production budget of up to $200,000 per week for advertising efforts and will retain any amounts over and above the cost of production, copywriting services, mailing and other distribution expenses, as a fee for its services. Breakaway Stocks is paid $5,000 as an editorial fee from LDS and also expects to receive new subscriber revenue as a result of this advertising effort. *More information can be received from GHIL’s investor relations firm. Further, specific financial information, filings and disclosures as well as general investor information about publicly traded companies like GHIL, advice to investors and other investor resources are available at the Securities and Exchange Commission website www.sec.gov and www.nasd.com. Any investment should be made only after consulting with a qualified investment advisor and after reviewing the publicly available financial statements of and other information about the company and verifying that the investment is appropriate and suitable. Investing in securities is highly speculative and carries a great deal of risk especially as to new companies with limited operations and no history of earnings. The information contained herein contains forward-looking Information within the meaning of section 27a of the Securities Act of 1993, as amended, and section 21e of the Securities Exchange Act of 1934, as amended, including statements regarding expected growth of the featured company. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act, GHIL notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the Company’s actual results of operations. Factors that could cause actual results to differ include the size and growth of the market, the Company’s ability to fund its capital requirements in the near term and in the long term; pricing pressures, technology issues etc.

PDF copy of pump page

New Media Insight Group $NMED promoted by Andy Carpenter / Wall Street Revelator

New Media Insight Group (NMED) is a bit of an odd promotion. I have only received emails from one promoter: INO.com (they aren’t technically stock promoters but they did get paid to send a promotional email to their email list). I received these emails on May 19th and have not received anything since then promoting NMED. The emails linked to http://nmedinfo.com/

Disclosed budget: $400,000
Promoter: Andy Carpenter / Wall Street Revelator
Paying party: CTSV Investments
Shares outstanding: 29,768,750
Previous closing price: $1.54
Market capitalization: $45 million

Excerpt from disclaimer:

The publisher, The Wall Street Revelator, understands that in an effort to enhance public awareness of New Media Insights and its securities through the distribution of this advertisement, CTSV Investments paid all of the costs associated with creating, printing and distribution of this advertisement which are estimated to be approximately $400,000. The publisher was paid the sum of $10,000 for its contributions

…

The publisher understands that CTSV Investments owns 1 million shares of New Media Insights common stock and has warrants to purchase an additional 1 million shares at a price of $1.00 per share.

Full disclaimer:

IMPORTANT NOTICE AND DISCLAIMER: This stock profile should be viewed as a paid advertisement. The publisher, The Wall Street Revelator, understands that in an effort to enhance public awareness of New Media Insights and its securities through the distribution of this advertisement, CTSV Investments paid all of the costs associated with creating, printing and distribution of this advertisement which are estimated to be approximately $400,000. The publisher was paid the sum of $10,000 for its contributions. If successful, this advertisement will increase investor and market awareness, which may result in increased numbers of shareholders owning and trading the common stock of New Media Insights, increased trading volumes, and possibly increased share price of the common stock of New Media Insights. The publisher understands that CTSV Investments owns 1 million shares of New Media Insights common stock and has warrants to purchase an additional 1 million shares at a price of $1.00 per share. Readers should understand and consider that CTSV Investments may sell some or all of those shares before, during or after the period in which this advertisement is being distributed. The publisher does not control or have any direct or indirect influence over CTSV Investments or its shares. The publisher may receive revenue, the amount of which cannot be determined to any degree of certainty, from sales of the accompanying offer for newsletter subscriptions. This publication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. This publication, its publisher, and its editor do not purport to provide a complete analysis of any company’s financial position. The publisher and editor are not, and do not purport to be, broker-dealers or registered investment advisors. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company’s SEC filings. Investing in securities, particularly micro cap securities such as New Media Insights, is speculative and carries a high degree of risk. Past performance does not guarantee future results. This publication is based exclusively on information generally available to the public and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the publisher cannot guarantee the accuracy or completeness of the information. This publication contains forward-looking statements, including statements regarding expected continual growth of the featured company and/or industry. The publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the company’s actual results of operations. Factors that could cause actual results to differ include the size and growth of the market for the company’s products and services, the company’s ability to fund its capital requirements in the near term and long term, pricing pressures, etc. The Wall Street Revelator is a trademark of Andrew Carpenter. All other trademarks used in this publication are the property of their respective trademark holders. The Wall Street Revelator and Andrew Carpenter are not affiliated, connected, or associated with, and are not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by The Wall Street Revelator or Andrew Carpenter to any rights in any third-party trademarks.

PDF copy of pump page

Eco-Shift Power Corp $ECOP gets promoted via hard mailers

Eco-Shift Power Corp has been promoted starting a few days ago (judging by the trading volume and reports of people receiving hard mailers). It was promoted back on May 22nd by Sherwood Ventures via email (and by OTCJournal.com on May 19th):

Sherwood Ventures LLC has been compensated thirty thousand dollars from Wave Capital Investment Ltd, (a non-affiliated third party) for ECOP advertising and promotional services.

Below is a tweet with some pictures of the mailer:

Got this mailer about $ECOP. Same guys promo’d $VEND (which ran 1,000%). I’m NOT saying buy, but def put on ya radar. pic.twitter.com/xBTlgZLF51

— Hardaway (@UseYourBrain) May 23, 2014

Disclosed budget: $1,300,000
Promoter: Andy Carpenter / Wall Street Revelator
Paying party: ??
Shares outstanding: 56,762,904
Previous closing price: $0.799
Market capitalization: $45 million

And the pictures from the Tweet:

The Most obviously fake financial statement I have ever seen, courtesy of $FRTD

There are few words that can adequately describe this quarterly report from non-SEC reporting company Fortitude Group (FRTD), which is currently suspended from trading after their absurd buyout press release. Read the 1st quarter report at OTCMarkets.com. There is so much idiocy in this report that I cannot do more than scratch the surface. But take a look at the cash flow statement for a start (on page 3).

The cash flow statement has the number of shares issued to pay for services as the dollar value of those shares, which of course don’t even belong in the “cash flows from operating activities.” The two acquisitions mentioned in the “cash flow from investing activities” section are just as nonsensical: it doesn’t matter that FRTD thinks those investsments are worth $38 million and $24 million — Fortitude Group didn’t pay those amounts in cash so they do not belong on the cash flow statement. The best part is that the “net increase in cash” of $63,194,456, when combined with the cash at the beginning of the quarter ($153) should add up to the “cash at end of period”; this is a very, very basic principle. But somehow FRTD only ended the quarter with $412,162. In other words, the company is off by over $62 million in its “net increase in cash”.

The balance sheet is just as bad: “stockholders equity” is, by definition, total assets minus total liabilities. But it also must equal the sum of paid in capital and retained earnings / accumulated deficit. For an example of how that works, look at the balance sheet of Livedeal (LIVE). The total stockholders equity is equal to the sum of the par value of all shares outstanding, the paid in capital, and the accumulated deficit. However with FRTD the resulting sum is $3,541,332 (and not $62,791,956).

[Edit 2014-6-9]: See George Sharp’s article on FRTD.

For the record: SEC Suspended trading in Andalusian Resorts & Spas $ARSP a week ago

Okay this is a week late but Andalusian Resorts and Spas (ARSP) was an active promotion right before the SEC suspended trading in the stock so I felt that I should post it for future reference. It was promoted by StockCabin.com and LionPennyStocks.com on May 15th. ARSP will reopen for trading at the market open on June 3rd. Read Janice Shell’s article on ARSP. See the letter of intent to purchase Mona Lisa Hotel and Resort; it is likely that this proposed purchase is what resulted in the trading suspension.

SEC press release (pdf)
SEC suspension order (pdf)

From the SEC press release:

The Commission temporarily suspended trading in the securities of ARSP because of questions
concerning the adequacy and accuracy of assertions by ARSP, and by others, in press releases
and other public statements to investors concerning, among other things, the company’s business
combinations.

SEC Suspends trading in marijuana stock Fortitude Group $FRTD

This morning at about 9:00 AM the SEC suspended trading in Fortitude Group Inc (FRTD), the seventh suspension of a marijuana stock this year. FRTD joins FSPM, PHOT, CDFT, PTOG, AVNE, and CANN on the list of marijuana stocks that have been suspended by the SEC this year. FSPM will begin trading again at the open on June 2nd. In connection with the suspension the SEC issued an investor alert about penny stock fraud in marijuana companies.

SEC suspension press release (PDF)
SEC suspension order (PDF)

The suspension of FRTD should not be a surprise to anyone who follows me on Twitter — I predicted it four days ago after the company put out a horribly sketchy press release about a buyout offer from an unnamed OTCQB company that valued FRTD at $0.12.

I give $FRTD two weeks tops before an SEC trading suspension following their absurd buyout PR http://t.co/QME6gBhCGs

— Michael Goode (@goodetrades) May 19, 2014

From the SEC press release:

The Commission temporarily suspended trading in the securities of FRTD because of
questions that have been raised about the accuracy and adequacy of publicly disseminated
information concerning, among other things, the company’s operations.

The Commission acknowledges FINRA’s assistance in this matter.