Here's great compilation of DD by Plague:
STOA DD Compilation
Here is my full compilation of DD (Due Diligence) regarding STOA with special attention on the last three Schedule 13G (SC-13G) forms representing a party's ownership of stock that is over 5% of the company.
The latest SC-13G was filed June 21, 2013. It showed Hanover Holdings I
, LLC owning 25,837,320 shares.
The next SC-13G was filed April 29, 2013. It showed ASHER ENTERPRISES, INC.
Four SC-13Gs were filed between 2013 and 2012 for Magna Group LLC
which reported 4,545,454 shares in the latest filing.
These companies have had extensive research done on them and this information has been posted in the DD research forum on IHub. From the looks of things, these companies almost always lead to dilution which causes a lower share price over time. Post by NoDummy, most respected DD analyst on IHub: “Asher Enterprises, Inc - toxic debt financier
Over the past several months I have seen Asher Enterprises Inc show up in more and more penny stock filings.
Doing a search through SEC reporting companies brings up the name Asher Enterprises Inc almost 800 times since March of 2010 http://searchwww.sec.gov/EDGARFSClient/jsp/EDGAR_MainAccess.jsp?search_text=%22Asher%20Enterprises%2C%20Inc%22&isAdv=false
Asher Enterprises, Inc is a toxic debt financing company domiciled in Delaware, located in New York, and run by Curt Kramer.
ASHER ENTERPRISES, INC.
1 Linden Pl., Suite 207
Great Neck, NY. 11021
Curt Kramer, President
People may recognize the name Curt Kramer from Mazuma Holding Inc and Mazuma Funding Corp. Mazuma ran out of the same office as Asher Enterprises, Inc. While involved with Mazuma, Curt Kramer and his partner Charlie Mayo helped finance several penny stock scam companies.
Asher Enterprises Inc usually gets involved in smaller sized financing agreements that do not require S-1 filings. Common factors in Asher Enterprises Inc financing agreements are really high interest rates and especially ugly conversion ratios. The terms of most Asher Enterprises Inc Notes allow Asher to convert their debt into free trading shares at a 60% discount to the 3 worst closing prices over the previous 10 trading days. Taking the 3 worst closing prices over the previous 10 trading days can often translate into Asher Enterprises Inc getting their shares at well below half of the market price.
These kind of toxic debt arrangements are the most damaging type of financing arrangements because of the high amount of interest the Notes accumulate and the huge discounts given on the shares issued to the Note holder.
The lower the share price goes the more profitable these toxic debt agreements become for the Note holder like Asher Enterprises Inc. Because of this there is incentive for the Note holder to short the stock to drive down the price before converting the Note into free trading shares. After converting the Note into shares the interest changes to pumping the stock to attract buyers to try to sell those shares at as high a price as possible. The Note holder will often time pay for a promotion to facilitate the dumping of their shares. This brings in unsuspecting investors who have no idea they are about to get dumped on probably causing them great losses.
The dumping of these super discount shares drives down the share price of the stock. The lower the share price goes the harder it becomes for the company to raise capital forcing the company to seek out more toxic financing agreements. The lower the share price goes the more discounted shares have to be issued to settle these toxic debts in the future. The company is now trapped in a toxic death cycle. Once a company signs a toxic financing agreement like the type that Asher Enterprises Inc offers there is usually no escaping the inevitable toxic death cycle after that. The outstanding share count will continue to go up and the share price will continue to go down.
It is for this reason that all investors (whether short term flippers or long term investors) need to learn to read filings and recognize toxic financing agreements. Look for convertible debt Notes and look at the terms of those Notes.
Unfortunately not all penny stocks are fully reporting. For non-reporting companies there is usually no way to know if the company is involved in a toxic financing arrangement. This is one of the reasons that non-reporting companies are so risky. You never know when dilution is going to be a major factor in destroying the share price.
Not every toxic Note holder has an easily recognizable name like Asher Enterprises Inc or Lionheart Associates LLC or JMJ Financial or Tangiers Investors LP or NIR Group. Sometimes it is the insiders of the company (former officers/directors, current officers/directors, friends and relatives of former or current officers/directors, etc) that set up toxic convertible debt Notes for their own self-enrichment.
Any time you see a convertible debt Note show up in a company filing you better be well aware of when the Note holder received that debt Note and when that Note can start being converted into discounted free trading shares. All convertible debt Notes are red flags for future dilution.
Hopefully some of the changes that come out of the recent SEC Roundtable on the Execution, Clearance and Settlement of Microcap Securities will help curve these self-enrichment scams that involve insider owned Toxic debt Notes and also prevent the market manipulation that so often comes with all Toxic financing agreements like the ones offered by Asher Enterprises Inc.”
Here is some of the shady history of Magna group and what they did with SMHS.
My apologies for any errors that may have occurred in the copy/paste. NoDummy: “SMHS has a history of issuing free trading shares to a company called Magna Group LLC which according to SMSH is owned by Jason Sason
In total Magna Group LLC got 87,156,912 free trading shares between October 5, 2010 - March 31, 2011.
It looks like they have some kind of draw down financing arrangement with this company. Magna Group LLC is being issued shares at a discount to the market price and then they are selling those shares for a profit. SMHS gains financing from the arrangement, Magna Group LLC makes money, and the SMHS shareholders lose out.
You can see how the number of shares issued to Magna Group LLC gradually becomes higher and higher each time. That is for two reasons.
#1) because the share price gradually goes down as those shares are diluted into the market
#2) because as the outstanding share count goes up Magna Group LLC is able to be issued more shares without going over 10% ownership and having to do filings to claim those shares.
So you can pretty much be sure that this pattern has continued since March 31, 2011 with Magna Group getting a higher and higher number of discounted shares to sell each time.
Just for an example of what kind of discount Magna Group LLC is getting let's look at what the share price of the stock was at compared to the price that Magna Group LLC had to pay starting from the first issuance on October 5, 2010 all the way to March 31, 2011. Take notice on how the share price has gotten lower and lower and lower and lower during those 6 months.
On October 5, 2010 Magna got 905,066 shares at $.031/share. On October 5, 2010 SMSH closed at $.052/share.
On October 15, 2010 Magna got 1,604,279 shares at $.0187/share. On October 15, 2010 SMSH closed at $.043/share.
On October 26, 2010 Magna got 1,500,000 shares at $.02/share. On October 26, 2010 SMSH closed at $.019/share.
On November 22, 2010 Magna got 2,272,727 shares at $.011/share. On November 22, 2010 SMSH closed at $.021/share.
On December 2, 2010 Magna got 2,272,727 shares at $.011/share. On December 2, 2010 SMSH closed at $.023/share.
On December 9, 2010 Magna got 2,500,000 shares at $.01/share. On December 9, 2020 SMSH closed at $.022/share.
On December 17, 2010 Magna got 2,840,909 shares at $.0088/share. On December 17, 2010 SMSH closed at $.016/share.
On December 29, 2010 Magna got 4,496,402 shares at $.00556/share. On December 29, 2010 SMSH closed at $.016/share.
On January 4, 2011 Magna got 4,496,402 shares at $.00556/share. On January 4, 2011 SMSH closed at $.022/share.
On January 12, 2011 Magna got 3,500,000 shares at $.01/share. On January 12, 2011 SMSH closed at $.018/share.
On January 19, 2011 Magna got 5,714,286 shares at $.007/share. On January 19, 2011 SMSH closed at $.016/share.
On January 28, 2011 Magna got 5,714,286 shares at $.007/share. On January 28, 2011 SMSH closed at $.013/share.
On February 9, 2011 Magna got 9,523,810 shares at $.00315/share. On February 9, 2011 SMSH closed at $.0081/share.
On February 23, 2011 Magna got 9,523,810 shares at $.00315/share. On February 23, 2011 SMSH closed at $.012/share.
On March 3, 2011 Magna got 7,792,208 shares at $.0035/share. On March 3, 2011 SMSH closed at $.0072/share.
On March 16, 2011 Magna got 10,000,000 shares at $.003/share. On March 16, 2011 SMSH closed at $.0055/share.
On March 31, 2011 Magna got 12,500,000 shares at $.002/share. On March 31, 2011 SMHS closed at $.0032/share.
On average Magna Group LLC is getting their shares at about a 50% below the market price then selling them immediately into the market and driving the share price lower and lower.
This constant share selling is killing any pump that is done on this stock and over time it continues to drive the price gradually lower and lower.
Between January 1, 2011 and March 31, 2011 the float increased by almost 65,000,000 shares from 47,773,426 to 112,300,132. All of those shares were shares issued to Magna Group LLC
I would estimate that between April 1, 2011 and June 30, 2011 based on the average trading price of the stock during that time and the pattern of share issuing to Magna in the past, Magna received approximately 150,000,000 more free trading shares during that 3 months bringing the float up to around 262,300,132.
Who is Magna Group LLC?
They were formed as a business entity in Texas on January 27, 2010. According to SMHS their sole officer is Jason Sason.
Magna Group LLC doesn't have its own address. It uses the address of its resident agent - United Corporate Services Inc. The company seems pretty much obscure.
SMHS never put out a single press release or did a single filing for this financing agreement with Magna Group LLC. The first time that any disclosure at all was given for this financing arrangement was in the most recent quarterly report filed on May 10, 2011 (8 months after the share dilution started).
Very very suspicious set-up going on there to say the least. Hanover Holding is related to Magna Group. DD by Cassandra. Cassandra:
“Magna Group / Hanover Holdings is typically just as toxic as other similar financiers like Asher Enterprises. Magna is a newer entity so less notorious (inception in 2009).
There are two types of PIPEs specified in the 8-K. The first is what is sometimes called a shelf offering wherein ADXS will file a registration statement for the shares underlying the offering. Once the registration is declared effective by the SEC, shares already issued as well as future shares will be immediately free-trading.
The other is assignment of two convertible notes. These shares are often sold in reliance upon Rule 144 and, if over 1 year old, are often converted as free-trading shares.
Interestingly the shelf offering is being done by Hanover Holdings I, LLC - an affiliate of Magna Group while the convertible notes are with Magna.
The specific terms for both the shelf offering and convertible notes are included with the 8-K: http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8887000
You will likely notice certain market makers (e.g. AUTO or others) executing the sales of the dilution shares but they will not show the entire block on the ask. They are typically in small blocks with a new one showing up seconds after execution of the former one. It's impossible to tell the true depth of the ask with this method of trading.
From the Magna Group website:
IN-HOUSE TRADING DESK
Our blocks of shares are handled exclusively by our in-house desk
Stock is worked on a trade-by-trade, second-to-second basis – we never place a limit order on an entire block of shares
We use agency-only executing desks, no market makers take positions against our orders and order placement is discreet
Our traders are only trading the small and mid-cap markets and have priceless experience in understanding the differences amongst these and the broader stock market”