Short Report, pump newsletters, debt and insiders selling

For full report follow the link below: https://utopiacap.com/2020/01/13/cpah/

Massive +75% decrease since our short call. For more information on Utopia Capital Research visit our website by clicking the link for the short report below:
INPX short report

Isracann Biosciences Inc. (Pink: ISCNF) Short Report

For full report follow this link: https://utopiacap.com/2019/12/27/iscnf/


Security Details:

Symbol: ISCNF

Share price: $0.51

Outstanding Shares: 109,999,958

Market Cap: $56 million


Intro:

Isracann Biosciences Inc. has had quite the run over the last ten trading days with its share price increasing by nearly 100% from less than $0.27 to more than $0.50, volume consistently exceeding 2 million shares a day with yesterday’s volume exceeding 8 million (average daily volume over the last 3 months has been under 1 million) and RSI breaching 85. This is not a strange occurrence in the world of small caps but it deserves some attention nonetheless, especially when one bears in mind the company’s recent history. In this short report we will be taking a closer look at the company’s ever-changing nature (from gold exploration to bitcoin mining to cannabis farming), its addiction to printing cheap shares and recent paid promotional activity.


Company information:

The company has a not too long but fairly convoluted history. It was first incorporated in Alberta Canada on January 21 2010, under the name “Sypher Resources Ltd.”, an opportunity focused gold exploration company. I would appear things didn’t quite “pan out” so on July 23, 2014, in connection with a reverse takeover transaction with Atlas Cloud Enterprises Ltd., the Company changed its name to “Atlas Cloud Enterprises Inc.”, a clouding computing company. Once again this “business model” didn’t quite take off so on July 27, 2018, the Company changed its name to “Atlas Blockchain Group Inc.”, a bitcoin mining company (do we need comment how comically dubious this is). Thus, the “natural progression” was to become a cannabis company… which it did on July 18, 2019, when it changed its name to “Isracann Biosciences Inc.” when it “acquired” an Israeli Cannabis company. If this sequence of events is not making your trading/financial “spidey” sense tingle just a little bit, we are afraid you might be a bit too naïve to be involved with OTC companies and should abstain from trading this type of stocks. Furthermore, Isracann makes some grand claims when it states that it is “Israel’s First Pure-Play Cannabis firm”. These claims don’t seem reliable as a quick google search will reveal several other Israeli cannabis companies such as Breath of Life International Ltd., which filed a preliminary prospectus for a proposed initial public offering of shares on the Toronto Stock Exchange (TSX) back in May (1). Furthermore, we were unable to confirm whether ISCNF has any cannabis licences in Canada by looking at their filings as they all state that these supposed licenses are waiting for approval. They also claim have a partnership with an Israeli Cannabis farm by the name of “JV Farmer” through one of its subsidiaries that goes by the name of Cannisra Holdings, but we were also unable to confirm the existence of said farm or any details relating to it besides ISCNF paying the farmer a mere CA$7,500 a month for its cultivation/production services.


Financial Highlights: (aka cheap paper)

ISCNF’s SEC filings are very limited, amounting only to three Form-Ds. And its most recent financial information as far as USA filings are concerned pertains to quarterly financial report dating back to February 28 when the company’s shares still traded under the name Atlas Blockchain group. This report is an OTC disclosure filing which means that it less reliable than its SEC equivalent. Consequently, a look must be taken at its SEDAR filings under the ticker IPOT where the most recent Interim Financial Statement report dates back to the quarter ended August 31 (this document is titled “Interim Financial Statements/report- English” and was filed on October 30) (2). For this time period a net loss and comprehensive loss of nearly CA$1 million was incurred. Furthermore, the company held CA$2.6 million in cash, meaning that it was not flush with cash at the end of August and will likely run out of it sometime early this coming year.

“Luckily” the company has been issuing a “fair” amount of shares over the last year of so, a quick look at Note 6 titled “Share Capital” will reveal that on January 14 the company “closed the first tranche of the non-brokered offering consisting of 30,588,236 subscription receipts at $0.17 per subscription receipt for a total amount of $5,200,100. Each subscription receipt entitles the holder to receive, upon satisfaction of certain escrow release conditions, and without payment of additional consideration, one unit in the capital of the Company. Each unit will be comprised of one common share of the Company and one purchase warrant. Each warrant will entitle the holder thereof to acquire one common share of the Company at $0.34 for two years following the date of issuance.” In addition to this, on May 21, the company “closed the second tranche of the non-brokered offering consisting of 28,883,596 subscription receipts at $0.17 per subscription receipt for a total amount of $4,910,211. Each subscription receipt entitles the holder to receive, upon satisfaction of certain escrow release conditions, and without payment of additional consideration, one unit in the capital of the Company. Each unit will be comprised of one common share of the Company and one purchase warrant. Each warrant will entitle the holder thereof to acquire one common share of the Company at $0.34 for two years following the date of issuance”.

But this is not the end of the story as far as share issuance is concerned. A look at the filing titled “Business Acquisition Report” dated December 20 will reveal that on February 14 the company “closed its private placement and issued a total of 42,000,000 common shares for total gross proceeds of $630,000. 28,000,000 common shares were issued at $0.02 per common share. An additional 14,000,000 common shares were issued to insiders at a price of $0.005 per common share”.

This is a massive red flag as it can be easily argued that ISCNF is little more than share printing machine, willing to hand out massive numbers of shares for certain investors and insiders at laughably low prices. If any of these shares were to be sold at ISCNF’s current trading price, the seller stands to make a considerable sum of money.

ISCNF’s biggest red flag is the amount of paid promotion it has enjoyed. It has been featured on pump sites such as equity.guru on seven different occasions this year (3) due to the fact that the company is one of equity.guru’s marketing clients. It also has its very own landing page courtesy of hotstocksreview.com. According to the disclaimer on the landing page: “HotStocksReview.com is a website owned by Mountain Capital Corp (“Mountain”). Mountain has received $50,000 USD from Isracann Biosciences Inc. for the purpose of preparing, hosting and advertising this content for a period of 30 campaign days. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this newsletter as the basis for any investment decision.” (4).

Needless to say, this should make investors extremely sceptical about ISCNF’s recent price run as it indicates that it is likely predicated on positive “news” that have they have paid for as opposed to anything of real substance. Good companies don’t need to pay for good publicity, especially when this fact is made so explicitly clear in the disclaimers.

Furthermore, this is not the first time these shares have been subject to promotional activity. On September 9, 2018, when the company was known as Atlas Blockchain, it issued a statement regarding recent trading activity as its shares had traded in a range of $0.079 – $1.25 in the past 52 weeks and in the last month, shares had traded between $0.10 and $0.17. The company claimed that it “only became aware of certain promotional activity on its securities on September 5, 2018 when it received correspondence from OTC Markets” (5). Management playing dumb at the time should come as no surprise as management/consulting and short-term benefits amounted to $484,337 in the nine-months ended February 2019 compared to $166,654 in the same period 2018. While this amount for consulting services paid to management may seem trivial, forensic accountants commonly view consulting expenses paid to directors, officers, or other members of management as an accounting red-flag. Consulting expenses paid to these related-parties may be for services of limited value to the company or even worse may be paid without any services being performed at all, which would constitute fraudulent financial reporting. This is a strong indication that management at the time lacked integrity and therefore financial results as a whole cannot be trusted, especially as they were unaudited. But what about the current management? How much has changed?


Management: Some old faces and some dubious new ones

Unsurprisingly, two directors have kept their roles after Atlas Blockchain turned into Isracann, they go by the name of Yana Popova and Sean Bromley. But what about the new ones? The most notable one is the new CEO, Darryl Jones. According to Isracann’s website, Mr. Jones currently serves on the board of other public companies such as Strikepoint Gold (TSXV: SKP/OTC: STKXF) and Voltaic Minerals Corp. (TSXV: VLT/OTC: VTCCF), and was also involved in the early stages of True Leaf Medicine (CSE: MJ/OTC: TRLFF). These companies are not the most reputable ones and a quick look at their price history will show that all of them are characterised by significant price increases followed by significant price decreases much like Isracann’s price history when it used to trade under different names/tickers. Perhaps this has something to do with the fact that according to ISCNF’s latest “Annual information form” which was filed on December 18, Mr. Jones was described as a promotor as he holds 523,333 shares, 439,999 warrants and 1,000,000 options, and has received an aggregate sum of $84,000 in cash as compensation for his services. It thus appears that the CEO’s main function is not so much manage the company but rather to fulfil promotional functions in exchange for large numbers of shares, warrants and options as well as dubious cash compensation (1).


Opinion:

ISCNF looks like an awful investment. The combination of subpar unaudited financials, huge numbers of recently and cheaply issued shares/warrants/options, paid promotion, and a management team that has been involved with the company’s previous shady iterations and whose main function appears to be promoting the company in exchange for management/consulting fees/cheap shares, is extremely dubious to say the least.


For full report follow this link: https://utopiacap.com/2019/12/27/iscnf/

Don't be a vacuum cleaner bag holder!!!

For full report with images and links to sources please click the following link:
https://utopiacap.com/2019/11/19/nexcf/

Intro:
Like all other tickers featured in our short reports, NEXCF has exhibited highly suspect behaviour recently. Over the last three weeks its share price has increased over 100% and its trading volume has been considerably above average. It didn’t take much digging around to unearth some major red flags such as: financial distress, paid promotion, over-reliance on share issuance and a board of directors that raises some worrying questions.

Company information:
NEXCF describes its business activities as “the acquisition and development of augmented reality technology for purposes of generating revenue from multiple sources including a platform for omni channel solutions for augmented reality, eCommerce, analytics and advertising”. They claim to have acquired an exclusive license to a portfolio of patens and pending patents applications related to “interactive gaming, interactive advertising, and augmented reality (“AR”) technology” as well as “a portfolio of 400 published applications both in Apple’s app store as well as Google Play store” with the aim to “develop a new 3D fully immersive advertising platform targeting the cannabis industry”.

Financial Highlights:
NEXCF’s financial information is not the most comprehensive as they are yet to file SEC financial reports, but what we have found in there OTC reports is not particularly encouraging. Between May 2018 and May 2019 cash in hand decreased by more than CA$1 million, assets decreased by nearly CA$3 million and liabilities increased by over CA$1.3 million. Furthermore, during this time period NEXCF generated nearly CA$600,000 in gross profits but ended up incurring losses greater than CA$4.6 million as their administrative expenses amounted to a whopping CA$5.3 million. Administrative expenses were largely comprised of consulting fees and employment costs (CA$1.6 million), share based payments (CA$750,000) and administrative fees and office costs (CA$690,000). Management does not dispute this as it acknowledges that the company’s ability to continue is “a going concern and is dependent upon the continued support of its shareholders”.

Yet another point of concern is that between the date it was listed as publicly traded company in the USA and August 31st 2019 NEXCF issued over 58 million shares, 14 million of which were the result of debenture and warrant conversions for an average price of CA$0.23, meaning that whoever got a hold of these shares stands to make significant profits if they were to be sold. It thus appears that the company is reliant on share issuance as a means of expanding and continuing its operations as well as servicing its debt obligations. 11 million of these shares were given to Future Farms Technologies Inc. (OTCQB: FFRMF) as a part of an arrangement agreement where NEXCF received FFRMF share in exchange (1). A quick look at FFRMF share price history will give reasons for concern. Between November 2017 and January 2018, FFRMF shares went from $0.17 to $1.66 and then all the way down to $0.56, they currently trade at $0.05. These type of price movements are highly suspect as they are eerily similar to those of a pump and dump.

Management: False Testimonials?
A quick perusal of NEXCF’s website will reveal a rather worrying fact. In the testimonial section of NEXCF’s website two businesses are named, Mr. Steak and Vacuumcleanermarket.com. A look at Vacuumcleanermarket.com will reveal that their CEO is none other than the CEO of NEXCF, Evan Gappelberg, with a picture of the man himself. It also appears that Reuben Tozman, a NEXCF director, is also the COO of Vacuumcleanermarket.com (2). This finding brings into question the legitimacy of NEXCF’s client base and the trustworthiness of its management.

Paid Promotion:
This is perhaps the biggest red flag NEXCF raises. On October 31st 2019, Zacks Small Cap Research released a report which states that “Based on EV to forecasted 2020 sales, we believe NexTech stock could be worth $1.60per share if it can achieve those revenues and contain dilution” (3). But this claim is highly questionable as the disclosures section at the end of the report states that “Each issuer has entered into an agreement with Zacks to provide continuous independent research for a period of no less than one year in consideration of quarterly payments totalling a maximum fee of $40,000 annually”. This finding brings into question the veracity of all of NEXCF recent features on the financial media. Legitimate companies do not need to pay for positive press releases or reports.

Opinion:
NEXCF raises a few red flags and these flags are big. A financially distressed company with dubious directors that is issuing shares left right and centre at a fraction of the current trading price in order to finance every single aspect of its operations as well as paying tens of thousands of dollars for the promotion of its shares. We thus advise investors to stay away from NEXCF and believe that profits can be made on the short side provided the proper circumstances present themselves over the coming days.

For full report with images and links to sources please click the following link:
https://utopiacap.com/2019/11/19/nexcf/

She is not great at her job. She blocked us on twitter when we asked her to address our thoughts on GRNF. Any shareholders care to comment?

$GRNF And there you have it folks! Been blocked by Mrs. Pace. This is no way to reassure your shareholders. pic.twitter.com/WRSiZ8u36G

— Utopia Capital Research (@UtopiaCap) November 15, 2019

GRN Holdings Corp. (Pink: GRNF) One of the greatest pump and dumps of our time?

As some of you might know we have been keeping a close eye on GRN Holdings Corp. (Pink: GRNF) (formerly Discovery Gold Corp. DCGD) over the last couple of months and in the process have written three short posts which shed some light on this very dubious stock. Despite the information we have unearthed (which in our opinion offers plenty of reasons to not purchase this stock) GRNF/DCGD continues to be hugely overvalued, trading at around $0.90. We have thus compiled the information from our previous reports/posts and some new findings into one article in an attempt to make investors and traders aware of the many red flags this ticker raises.

The Shell:
GRN Holdings Corp. is the dictionary definition of a shell. At the present time it has no assets and no revenue, and this has been the case during most of the years it has existed under different names. It first became publicly traded in 2010 under the name of Norman Cay Development, Inc., at the time it was in the business of wireless phone and service plan resale (a curious name when one considers Norman Cay is a Caribbean island that acted as drug trafficking hub for Pablo Escobar’s Medellin Cartel). In 2012, it changed its name to Discovery Gold Corp., and became a mining company with prospective operations in Ghana. Between 2012 and 2018 no revenue was generated and the number of outstanding shares increased from less than 50 million to over 240 million.

On June 25th 2019, Justin Costello acquired a 55% stake in GRNF/DCGD when he purchased 139 million shares of common stock for the sum of $300,000 ($0.0021 per share) and was appointed as new CEO. Since then GRNF/DCGD has gone from being a sub penny stock to surpassing the $2.00 mark on September 11th. The reason touted for this is that Mr. Costello is supposedly a successful businessman and multi-millionaire who intends to transfer assets of his businesses into DCGD, something that is yet to happen as demonstrated by GRNF/DCGD’s latest 10Q which clearly states that assets and revenue remain at zero (1).

This is all perplexing to say the least. Why would a stock experience such a drastic price increase despite there being no concrete evidence of a supposed merger months after the Mr. Costello’s acquisition? And why would a successful businessman be willing to merge his multimillion-dollar businesses into a heavily diluted shell of which he only has 55% ownership?

GRN Empire?… Really?
For the sake of argument let’s assume the supposed merger will be taking place. If this is the case then Mr. Costello’s other businesses must be inspected more closely in order to determine whether they are valuable enough to warrant the drastic price increase GRNF/DCGD has experienced over the last few months. However, a quick look at the GRN Funds (2) and the GRN Holdings (3) websites will reveal little to no information. This has not always been the case. On August 8th we published the second part of our report on DCGD and we took several screenshots of GRN Funds’ website because at the time it contained information about Mr. Costello’s other supposed business ventures. GRN’s website stated that they are “proud to manage an overperforming portfolio of brands” but they only 5 were listed on their website; One Source CBD, Pacific Media Group, Pacific Merchant processing, Seed Science CBD and Soulshine Full Spectrum CBD.

One Source CBD’s website seems to no longer exist as the domain name is currently up for sale (4). Seed Science’s main website page clearly states that their products have not been evaluated by the FDA (5).We have been unable to find Pacific Media Group’s website. Soulshine’s wide spectrum CBD’s website (like Seed Science CBD’s) states that the statements on the website have not been evaluated by the FDA in a disclaimer at the bottom of their website’s main page (6).Pacific Merchant Processing’s Instagram page is currently inaccessible (7). Their Facebook currently has 57 likes and 59 followers despite being up since 2017 and it only used to have 4 likes and 5 followers three months ago (8).

One would think that if GRN Fund’s investments are “overperforming” they would present themselves competently or at least have a better online presence. And it would appear that GRNF/DCGD now agrees with us as their main websites have been under maintenance for the last month or so meaning that the above “businesses” are no longer featured on it. It is almost as if they were trying to cover their tracks. This theory becomes more plausible when one realises that GRN Funds is not even registered as an investment adviser with the SEC as revealed in a Seekingalpha article by White Diamond Research (9). Hardly what one would expect to find when having a look at the investments of a fund that claims to manage over $1 billion and have $600 under deposit (this information has also disappeared from GRNF’s websites, luckily, we got hold of a screenshot). This is undoubtedly suspicious and raises many questions about the legitimacy of GRN’s portfolio and business as a whole.

Mr. Costello:
Now we move on to the CEO, Justin Costello. He is a self-proclaimed multimillionaire/billionaire and supposedly the man to take GRNF/DCGD from the pink sheets all the way to the New York Stock Exchange… or at least this is what some accounts/profiles on twitter and other social media sites would make you believe (10) (11).However, there are a few reasons to be sceptical about Mr. Costello. Firstly, it would appear that he has links to twitter promoters, a quick look at GRN Holding Corporation’s twitter account (@IncGrn) will confirm this account mainly follows penny stock/pumping accounts as opposed to cannabis industry accounts. The main one being @LlcBillionaire who has been incessantly promoting DCGD for a few months now and even met Mr. Costello in New York City recently (11). It could be argued that it was simply a CEO meeting a shareholder, but it does seem very curious that it happens to be a shareholder who spends most of his time promoting/pumping OTC stocks. Furthermore, Mr Costello spends a lot of time engaging with potential GRNF shareholders on Facebook and Ihub. How does the CEO of “billion-dollar” fund have enough time at his disposal to spend the bulk of it on social media? In our opinion a CEO of a pink sheet company/shell exhibiting this kind of behaviour is a massive red flag and strong indicator of potential illegal activity.

And there is more. Mr. Costello has also been caught lying. A look at GRNF/DCGD 8K filing from June 25th 2019 will reveal that Mr. Costello is Harvard Business School Graduate (12). This claim was proven as false by White Diamond research, who contacted Harvard Business School only to find out that Mr. Costello had never attended this institution (9). This put Mr. Costello in a very compromising position and he reacted by posting a long letter on the grnholding.com in which he states that he never attended HBS and claiming that he attended Harvard University instead.Mr. Costello didn’t react well to being exposed as a liar as he went on to issue cease and desist letters to SeekingAlpha, Eli Hoffman (the owner of SeekingAlpha) and White Diamond Research claiming that the article which exposed him was “false” and defamatory (13) (14) (15). Which is ridiculous when one considers that Mr. Costello conceded that he had lied on the 8K filing as he acknowledged that he never attended HBS. This shows that he is willing to be dishonest about his credentials on an SEC filing, is willing to cover up his false statements and is also willing to threaten legal action however baseless and contradictory it may be.

Furthermore, on September 15th 2019, Mr. Costello threatened to “send his people” after three separate employees of Salish lodge & spa. As a result of this incident, he was arrested by local authorities after which he proceeded to threaten and harass the officers in charge of his arrest (16). Although the case has already been closed, this type of behaviour should hardly be expected from a person at the helm of a multimillion-dollar business, particularly when it is clear this was not an isolated incident as Mr. Costello is named as a defendant in four other Washington courts cases over the last 5 years (17).It should also be noted that in 2017 Mr. Costello was trying to sell a group of twelve cannabis businesses for the sum of $60-$70 million (18), and it seems that there were no takers as no news have been ever published about the sale. This makes one wonder how much has changed over the couple of years and whether Mr. Costello is still trying to make money by selling his “businesses”.

Yet another concerning finding about Mr. Costello are the views he has previously expressed about penny stock reverse mergers. On an article published on November 2017 Mr. Costello stated “a lot of people are trying to do these reverse mergers and penny stock deals. That’s a big red flag. All they’re trying to do is make a play and make money on your business” (19). This statement is particularly worrying when one bears in mind that the number of unrestricted GRNF/DCGD shares has increased from 36.5 million to 47.4 million between August and November this year (20). It would thus appear that Mr. Costello himself is well aware that what he is doing is very suspect.

One more reason to be worried and sceptical about GRNF is Mr. Costello’s alleged links to Canal Capital Corp. (COWPP) which were referenced in pump tweets by the account @computerbux (another infamous twitter pumper who has been pumping GRNF/DCGD for months). These tweets have now been deleted but once again we have a screenshot as evidence. COWPP shares were suspended by the Securities Exchange Commission (SEC)on November 1st 2019 due to “concerns about the adequacy of information in the marketplace about the company’s operations and operating status, if any, and due to recent potentially manipulative trading activity” (21).

Mr.Costello’s dirty business partner
And last but not least we have what is arguably GRNF’s dirtiest secret. It has to do with Robert Leslie Hymers III, he is Mr. Costello’s managing partner at Microcap Advisors. Hymers is a CPA and a scammer/fraudster with a proven track record. His first legal ordeal involved Mets former centre fielder Lenny Dykstra, who after retirement experienced unlikely success by picking stocks. Hymers was his accountant. Dykstra ended up being accused of bankruptcy fraud, obstruction of justice, filing false financial statements and grand theft auto. Hymers was involved with it all and ended up being indicted with Deputy District Attorney Alex Karkanen stating: “He scammed everybody he knows. They faked pay stubs. They faked income information for the company. They made it all up on a laser printer at home”. Maria Ramirez, head deputy district attorney in charge of the auto fraud unit, said Dykstra’s company, Home Free Systems, “doesn’t even exist.… He’s hardly a financial guru.” (22). According to Reuters, Dykstra was sentenced to three years in prison and Hymers copped to a no-contest plea count of identity theft as part of plea bargain (23). This raises some serious questions about whether Microcap Advisors exists or is simply a fake business put in place in order to make GRN Funds supposed reverse merger into GRNF appear to have some substance. This is not Hymers’ first problems with the law. It turns out he was also complicit in Erick Hansen’s BlueStar Digital Technologies fraud case which was subject to an FBI raid in 2014 (22). Hymers was BlueStar Digital Technologies’ associate producer and production accountant which meant he was sentenced to probation despite denying he was complicit in BlueStars’ illegal activities (24).

In our honest opinion GRNF/DCGD is a pump and dump scam as it ticks all the boxes. Majority stake in shell purchased for less than a cent a share by dubious unregistered hedge fund that has hidden all information on its websites (i.e. covering tracks), check. Massive social media promotion and drastic increases in share price and volume on the basis of a supposed reverse merger, check. CEO of hedge fund that lies about education, spends a large fraction of his time engaging with shareholders, gets in trouble with the law regularly, has dealings with people who have previously been involved with fraud, sends baseless cease and desist letters and has links to prominent twitter pumpers and to shares that have been suspended by the SEC, check.

We thus advise investors to stay away from GRNF/DCGD and believe significant profits can be made on the short side provided the SEC gets its act together and looks into this very dubious matter.


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United Health Products, Inc. (Pink: UEEC), numerous lawsuits, CEO and product have been unsuccessful for over two decades, Mailbox address, dubious accountants

A healthcare product manufacturer from Nevada, UEEC is in the business of producing a “patented hemostatic gauze for the healthcare and wound care sectors. The product, HemoStyp®, is derived from all natural, regenerated oxidized cellulose and designed to absorb exudate/drainage from superficial wounds and help control bleeding”. A noble cause no doubt, maybe this could explain the 120% share price increase over the last couple of weeks resulting in a market valuation well over $400 million. However, a quick look at their latest 10Q makes one wonder what could possibly be behind this recent occurrence. UEEC currently holds just over $500,000 in cash:
Revenue stands at just over $25,000 and losses exceeded $700,000 between April and June this year.

Concerns about the company’s sustainability are further reinforced when reading the “Going concern” section of the latest quarterly report (1):
“The Company has incurred recurring net losses and operations have not provided cash flows. Additionally, the Company does not currently have sufficient revenue producing operations to cover its operating expenses and meet its current obligations. In view of these matters, there is substantial doubt about the Company's ability to continue as a going concern. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements.”
This would certainly be concerning for investors, particularly if one bares in mind the company’s recent share price increase.
The Hemostyp has simply never quite taken off. And despite attempts to get it Class III approved for surgical markets by the FDA, which could represent a significant revenue stream, things are yet to change and one could hardly be blamed for believing the company’s financials will remain far from optimal in the future (1).

Something that stands out from looking at the company’s latest quarterly report, other than the financials, are the management’s legal disputes over the last few years. In 2017, former marketing vice president Steven Safran, filed a complaint for breach of contract, fraud and misrepresentation against CEO Douglas Beplate. Mr. Safran claimed he is owed over $240,000 in unpaid wages and loans. The matter is yet to be fully settled as Safran has requested a jury trial while Beplate has asked the court to dismiss the case. Another individual who has demanded a jury trial over contractual disputes with Mr. Beplate and UEEC is former CEO Philip Foreman. Mr. Foreman is seeking over $2,000,000 in money damages and over $10,000,00 in punitive damages. It appears the current CEO is not the most adept at keeping internal disagreements out of the courtroom. Unfortunately, disputes are not limited to former board members. On the fourth quarter of 2018 the Maxim Group LLC filed a complaint with FINRA seeking the release of a restrictive legend from a company stock certificate in the amount of 500,000 shares. In response the company decided to lock horns and filed an affirmative defense and a few counterclaims. Last but not least, in 2018 JEC Consulting, a third-party plaintiff in a lawsuit between FSR Inc and Korsair Holdings involving over 3,000,000 company shares, filed a third-party complaint against the company alleging that the company and Mr. Beplate refused to have the Rule 144 restrictive legend removed from the Korsair certificate held by JEC, fraudulently depriving JEC of the ability to sell the shares in the open market. All these legal ordeals are far from reassuring and raise questions about the current management, the CEO in particular (1).

A closer look at the CEO, however, raises further questions about the company’s prospects. Not much information about this individual could be gleaned (lawsuits aside) but what we have been able to obtain is not particularly reassuring. Between 1996 and 2006, Mr. Beplate was the CEO of a now struggling company known Emergency Filtration Products (EMFP) (2). As the name suggests EMFP was in the business of manufacturing various filtration products, most notably Nanomask/RespAide and Superstat. The Nanomask/Respaide was their first product, it consisted of a filtration mask which could be used in medical and other settings as a safety measure. Later on, they went on to develop Superstat, which according to their website (which is still up for some reason) is a “a hemostatic collagen with unique performance characteristics for surgery, trauma and burn wound management” (3). This sounds surprisingly similar to UEEC’s current flagship product the Hemostyp Hemostatic Gauze which is described in UEEC’s latest 10Q as a “collagen-like natural substance created from chemically treated cellulose”. Mr. Beplate left leave EMFP in 2006 and three years later EMFP changed its name to Nanomask, Inc. (4), which was later changed to NMI Health Inc. in 2013 which in turn has not filed a financial report in over 2 years (5) (6).

It thus seems that the current CEO and the Hemostyp’s technology have been around for over two decades, time during which neither has seen much success. This is more worrying when bearing in mind that the CEO sold 1,500,000 of common stock for a meagre $0.0752/share a couple of years ago. If little has changed in the last twenty years then it is certainly underwhelming to know that the CEO was willing to part ways with his shares for such price as recently as 2017 (7), as it could be an indication that the person at the helm is either forced to sell his shares in order to obtain some sort of remuneration or has little faith in his endeavours and the company’s future prospects.

Maybe, the current CEO and the company have turned a new leaf are now primed for success… but this assertion seems questionable in light that UEEC’s current business address is listed as 10624 S. Eastern Ave., Ste. A209, Henderson, Nevada. …which is a UPS mail box as a quick google search will show. How a business with a market valuation of over $400 million operates from a mailbox beggars’ belief.

Sadly, some of the company’s business associates are not much more reassuring than what has been mentioned so far. UEEC’s accountants are Haynie & Company, they received a far from glowing review from the Public Company Accounting Oversight Board (PCOAB) in 2017, which listed fraud risks as significant risks (8). Hopefully, this will have been resolved by now.

UEEC is puzzling to say the least. We let you be the judge.

1. https://www.otcmarkets.com/filing/html?id=13595293&guid=Gk3IUFgG6XLF-3h
2. https://www.bloomberg.com/profile/person/4148221
3. http://www.andrewsdesign.com/efp_website9/press_7.html#
4. https://www.sec.gov/Archives/edgar/data/1088213/000117935007000014/pr7.htm
5. https://www.prnewswire.com/news-releases/nmi-health-completes-name-change-and-1-for-10-reverse-stock-split-211008301.html
6. https://www.sec.gov/cgi-bin/browse-edgar?company=NMI+health&owner=exclude&action=getcompany
7. https://www.otcmarkets.com/filing/html?id=12126430&guid=v4yIUpETgo48wth
8. https://pcaobus.org/Inspections/Reports/Documents/104-2018-148-Haynie-Co.pdf

For other reports check out our website:
https://utopiacap.com/2019/08/22/united-health-products-ueec/

Discovery Gold Corp. (Pink: DCGD) Part 2, A closer look at main shareholder’s other investments

DCGD’s shares have been subject to a rather suspicious price increase for the last month or so. This has coincided with a promotional campaign on the pennystocks.com website which we pointed out yesterday. This website is not accessible at the present time, however the evidence remains thanks to some screenshots we took yesterday, follow this link for the proof (1).

As previously mentioned, DCGD was taken over by GRN Funds on June this year when it acquired 55.65% of the common stock. On the surface GRN Funds might seem like a promising firm with diversified investments in a variety of industries but upon closer scrutiny things seem strange. GRN’s website states that they “are proud to manage an overperforming portfolio of brands” (2) such as One Source CBD, Pacific Media Group, Pacific Merchant processing, Seed Science CBD and Soulshine Full Spectrum CBD. One Source CBD’s website is currently down (3). Seed Science’s main website page clearly states that their products have not been evaluated by the FDA (4) and their Instagram page is currently not accessible (5).

We have been unable to find Pacific Media Group’s website. Soulshine’s wide spectrum CBD’s website (like Seed Science CBD’s) states that the statements on the website have not been evaluated by the FDA in a disclaimer at the bottom of their website’s main page (6) and their Policies website appears unfinished as it is filled with senseless paragraphs which make reference to a pharmaceutical product Gabapentin/Neurotin an anticonvulsant medication (7).

Pacific Merchant Processing’s website states that they share the same address as GRN funds, 3000 Northup Way Bellevue, WA 98004 (8). Their Instagram page is currently inaccessible (9). Their Facebook currently has four likes and five followers despite being up since 2017 (10).

One would think that if the firm’s in which GRN Funds invests are “overperforming” they would at least present themselves competently or at least have a better online presence. This is undoubtedly suspicious, we let you be the judge.

(1) https://utopiacap.com/xyxy/
(2) https://grnfunds.com/#portfolio
(3) http://www.onesourcecbd.com/
(4) https://seedsciencecbd.com/
(5) https://www.instagram.com/seedsciencecbd/
(6) https://soulshinecbd.com/#contact
(7) https://soulshinecbd.com/policies/
(8) https://www.pmpcredit.com/pacific-merchant-processing-contact
(9) https://www.instagram.com/pacificmerchantprocessing/
(10) https://www.facebook.com/pmpcredit/

For more reports,check out our website: https://utopiacap.com/

Discovery Gold Corp. (Pink: DCGD), paid promotion, majority stake recently purchased for $300,000

DCGD is less than meets the eye. As their last 10Q shows they hold $25 in cash, operating loss stands at $26,779, total current liabilities amount to $171,107, accumulated deficit stands at $8,603,892 and revenue was non-existent (1).

Furthermore, it is being promoted on a website by the name of pennystocks.com which makes it clear it produces paid advertisement (2) (3).

Finally, we have Justin Costello, the man behind GRN Funds, who became CEO and acquired a majority stake in DCGD (55.65%) on June this year by purchasing 139 million shares for the sum of $300,000 (4). Costello seems like a rather prolific entrepreneur as there are over 20 companies (mostly cannabis ones) with which he is involved in Washington state (5). Not suspicious… at all.

(1) https://www.otcmarkets.com/filing/html?id=13294923&guid=JIdIUe0BaFPGfth
(2) https://pennystocks.com/featured/2019/07/11/money-making-penny-stocks-gold-stock-up-over-2900-july/#m1
(3) https://utopiacap.com/xyxy/
(4) https://www.otcmarkets.com/filing/html?id=13520350&guid=HtdIUqs6zYQrbth
(5) https://www.bizapedia.com/people/justin-costello.html

Recently promoted for $180,000, CEO and lawyer with questionable links, assets made up entirely of recent inventory purchase, SEC issues over a decade ago.

A Nevada corporation, SMPP states its business model consists of acquiring farms for the purpose of producing hemp to be used in a range of cannabis products including CBD oil, creams, lotions and other products. Like other cannabis pink sheet tickers, SMPP has been recently promoted for the sum of $180,000 and has seen a 300% price increase between early June and mid-July 2019.
https://utopiacap.com/xyxy/

A quick look at their financials presented in their latest quarterly report OTC disclosure statement (they are yet to file SEC forms), shows that they did not generate any income during the first quarter of the year (1). Furthermore, it appears all of its $1,200,000 worth of assets were acquired through an inventory purchase in April 2019 (2).

But this is not the most peculiar findings in this report. Mr. Randall Lanham is their securities counsel. Mr. Lanham, a California based lawyer, has been involved with more than one stock with a colourful history, including United Consortium Ltd (UCSO) and Lions Gate Investment Ltd in the past (3). He was also involved with Caribbean Pacific back in 2012, which ran into trouble with the Department of Justice in 2012 (4). Caribbean Pacific’s owner, Mr. William J. Reilly is a disbarred lawyer because of his involvement in penny stock fraud.

More importantly, their CEO, Mr. Peter Zompa owns 82% of SMPP’s common stock. Mr. Zompa is no stranger to companies with a colourful past either. He prepared some of the financial statements for China Intelligence Information Systems, Inc. (IICN) (6), a penny stock with links to H Wayne Hayes Jr., a rather infamous individual who has been subject to a permanent injunction by the SEC (5) as well as being criminally indicted for an oil and gas investment scheme (7).

And last but not least, SMPP themselves where subject to a SEC complaint which accused them of “Pump and dump market manipulation” back in February 2008 (8).

(1) https://backend.otcmarkets.com/otcapi/company/financial-report/222745/content
(2) https://backend.otcmarkets.com/otcapi/company/financial-report/217173/content
(3) http://promotionstocksecrets.com/united-consortium-ltd-ucso-nodummy-side-research/
(4) https://compliancex.com/first-jobs-act-fraud-case-reveals-weaknesses-jobs-act-sec/
(5) https://www.sec.gov/news/digest/1992/dig010392.pdf
(6) http://www.otcmarkets.com/financialReportViewer?symbol=IICN&id=180749
(7) https://caselaw.findlaw.com/us-9th-circuit/1180209.html
(8) https://www.sec.gov/litigation/litreleases/2008/lr20451.htm

Recently promoted, colourful past, shareholder with a track record of expensive lawsuit settlements

A recently promoted stock (1) TiVo Corp. describes itself as a “global leader in media and entertainment products that power consumer entertainment experiences and enable its customers to deepen and further monetize their audience relationships.” It came into inception on April 2016, when TiVo Inc. and Rovi Corp. merged through Rovi’s acquisition TiVo. Rovi’s is no stranger to controversy. In 2015, Christian Keller. Rovi’s vice president of corporate finance was sued by the SEC for insider trading for his dealings with John Gray (2), an equities researcher for a major brokerage firm. Keller and Gray were subsequently charged with conspiracy and securities fraud (3).

Then there are the numerous controversies surrounding Ameriprise Financial Inc. who hold over 8% of TiVo’s common stock (4). In 2018 the SEC charged them with failure to safeguard client assets because of fraudulent acts such as forging client documents and stealing more than $1 million in retail client funds over a four-year period (5). Ameriprise settled the charges for the sum of $4.5 million. This is not the only time Ameriprise has run into legal troubles. A few years ago, Securities America (an Ameriprise unit at the time) sold hundreds of millions of dollars in supposed medical bills receivables belonging to Medical Capital Holdings in what turned out to be Ponzi scheme (6). Medical Holdings when on to spend the money on a yacht and a Hollywood film. Ameriprise had to pay $150 million to settle the problem (7).

(1) http://www.icontact-archive.com/archive?c=925383&f=3061&s=47183&m=2637326&t=5e3aaaa6bc082a73cc05ab3b54e7dfdd61380804ac86e3cf57174cc5d9e72ca4
(2) https://www.sec.gov/litigation/complaints/2015/comp-pr2015-23.pdf
(3) https://patch.com/california/mountainview/rovi-corp-vp-pleads-guilty-insider-trading
(4) https://www.otcmarkets.com/filing/html?id=13225064&guid=bMuIUqF2LQ1lGth
(5) https://www.sec.gov/news/press-release/2018-154
(6) https://www.sec.gov/litigation/litreleases/2009/lr21165.htm
(7) https://www.thinkadvisor.com/2011/04/21/ameriprise-to-pay-150-million-to-settle-securities/