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I was introduced, by phone, to two guys in Dallas who are using shells to get companies to either the AMEx or NASDAQ. They came out of Solomon Brothers and Merrill Lynch and had been very active in the real IPO markets when those existed. For whatever its worth, their firm is Pegasus Funds and they seem to be very legit. I think they also have PE investments.
I have first hand experience with NIR's structure and the problem, from my perspective, is the structure itself. Putting aside the fact that most of the companies NIR and, for that matter, Yorkville aka Cornell invested in were really bad bets, the very structure of the financings prevented any chance of success. In other words, the structures were killers for both the investor and the company. The idea of these ratchet down structures worked for a while as long as there was some liquidity in the companies shares. The fund managers would immediately short the underlying shares of the borrower company and profit as the shares inevitably moved south, based on the discounted conversion. Take a look at the SEC action against Gryphon Investments in Dallas and its principal Bucky Lyons iV. The problem with NIR and Cornell, is that there was almost never an underlying market to short so they were always dependent on the company's management to perform and generate increasing interest in the stock. In the absence of that positive scenario, the NIR structure forces the company to issue more and more stock, ruining the capitalization of the company as well as any chance for NIR to get whole. Rumors have been out there that NIR was a money laundering scheme and, because of that, they didn't care whether the investments paid off or not. No way to tell except to say that, with so many of their companies trading for pennies and no volume, there is no way NIR can ever get out. However, they should be in a unique position to work out favorable restructurings for those companies that do have viable business models.
Thanks for the heads up. This is just the tip of the iceberg with this guy. He really should be run out of the public markets.
AMEN. A total dupe. McLaughlin will make good use of guys like this and be nowhere around when the you know what hits the fan.
I certainly understand your point and appreciate that electric cars are going to be a growing segment. The market will be the ultimate judge of the technology and that will be reflected in sales/revenues. Until the market validates it, I just have no way of knowing what valuation is appropriate. Felt the same way in 1999 with tech. Good luck.
Check out the Citron Research report on ENER1. Just released this morning.
Assuming the LNG business is valuable, the only reason McLaughlin would do this was to transfer the asset to a company (PNG) in which he owns a bigger stake. Can't believe the independent directors of EBOF would green light this without extensive disclosure/ fairness opinion etc. Clearly a related party deal.
YOU MUST BE KIDDING. If pointing out the obvious represents "bashing" to you then, by all means, PAY NO ATTENTION TO THE MAN BEHIND THE CURTAIN (Dennis McLaughlin) . By all means, don't do any homework about this company or this guy. Believe everything they are "leaking". Pay no attention to the fact that he is trying to take the company private but refuses to release financials. Pay no attention to all of the other companies he secretly controls and has domiciled in the same office building. Pay no attention to the backroom deal he used to acquire the LNG business from EBOF by moving it to a shell (PNGX) he controls. GOOD LUCK!
Dennis McLaughlin strikes again. He sold the LNG sub to himself now that he controls PNGX and has moved it back to the same office building in Dallas where Mac Group. Earth Bio fuels, Blue Wireless and Data and Apollo Resources are all located. All of the companies are DEAD. McLaughlin and his cronies will be selling into the market as fast as they can. WHAT A SCAM!
I have a home down there and am curious enough about this whole thing to run by and see the operation.
Good one. Only responding to Hoki's post that certain facts makes this look like a scam. I can tell you that the TA on this one has a history with companies like this. If LTDI IS a hoax, then you have to follow the money. I never hope that this is the case.
If you are right, I will forward to the guys in the US Attorney's office in Brooklyn. Helped them out last year and they have a task force focused on pump and dump scamsters. The Hernandez folks will LOVE these people. They put a lawyer from NJ away for the same type of thing. His name is John Surgent and made a bundle out of a gold scam. He was about 65 when he went in and he is in for >15 years.
Thanks for posting management's recent press release. The assertions in the press release are a joke. It is way too expensive for individuals to short stocks under $1, it requires too much capital to make it worthwhile financially. Only BD's can do it financially. Management teams will try to blame shorts for the problems they themselves create when they are as clueless as this bunch about managing its capitalization. As far as them denying plans for a stock split, only a complete idiot would consider taken this stock further to the right of the decimal point. They would be smart to reverse the shares and get this stock into a rational range allowing them to actually use the currency. Looks to me that this is another "lifestyle company" run for the amusement of the controlling family on the backs of shareholders. It is a shame, because they might actually have a decent product here but this group will probably find a way to mess it up. As it now stands, they can't use their stock for anything real.
That's GOOD!
Let me make sure I'm understanding this. You are saying that management of a company with public shareholders can legally make material misrepresentations in a press release as long as what they say is disclaimed at the end? Is this what your attorney is telling you? If this is true, Bernie Ebbers has some serious grounds for appeal.
We are familiar with the practice. We call it illegal shorting. There was a case here recently involving a hedge fund called Gryphon (Dallas not San Fran) one of the principals, Bucky Lyon, was charged for shorting companies in which Gryphon held PIPe positions, at obvious discounts at issuance. The SEC investigation caused massive redemptions and ultimately closed the fund but Bucky beat the rap. Sure, BD's make a lot of money lending the same shares multiple times simultaneously but I have my doubts about the impact for micros. My partner and I take a somewhat different view of the hedgies, we think they "too clever by half". Take a look at the portfolios of firms like NIR Group or Yorkville Advisors (formery Cornell Capital). I reviewed more than 70 portfolio investments of Yorkville and found more than 40 trading at less than a penny. When we look at a stock/company, we are less interested in how we get in than how we get out. These funds may look like geniuses as they continue forcing the issuance of more and more shares but, in the end, the investors, in these funds want their money back through redemptions and that's when the "you know what hits the fan". Putting aside the companies that are operationally dead, I can't tell you how many I see with 500 million shares or more out, trading for less than a penny with <$10 million in total revenue. Both parties are dead. There is no way out and the NIR's of the world can report an accounting profit for a while, but eventually, the are toast. The smart guys will seek structures that enable the company to grow. We think there is a tsunami coming for these investors. By the way, I had missed that Bloomberg piece, thanks.
The capitalization of this company is INSANE. On the surface, it appears to have a market cap in the $750K range, not all that bad given the revenues and product but what is the point of being public? At this price, the stock can't be used by the company for anything. Can someone enlighten me please.
Not sure I understand. The dilution is borne by the operating business not the shell.
I certainly didn't intend to offend. Everyone has a different approach, I just never looked at buying stock as gambling and It does bug me when a promoter is obviously trying to put one over on me whether that promoter is inside the company or operating independently.
You know, it is fun playing the game but at the end of the day, there are real opportunities in the micro cap space and every so often, you can find one. We had a broker call recently about a micro cap and pitched us that there were only 40 million shares outstanding and based on that the price was a little cheap. The volume was a little low but we pulled some of the filings and found that there was really 140 million shares out between a convert and options issued to management. The broker didn't get it because he never looked. I read a great book years ago about Jesse Livermore it was titled (I think) "Reminiscences of a Stock Operator". Heck of a book and so relevant to buying stocks.
You are probably right although for a different reason.
I agree on your basic points on valuation however, let's agree that the complex present value calculation can be synthesized down to a PE ratio. When we value an operating business, we look at a number of metrics to come up with a public valuation. Keep in mind that we would only deal with real businesses with real revenues and quantifiable margins. In other words, companies that would have been good candidates for a regional IPO pre 2000. We can either take an average of the Russell index PE or look for specific public industry proxies. The reason we like shells is that we can structure the capitalization to achieve the post merger trading price we desire based on the relationship between the fundamental value of the business (whether a multiple of revenues or net income)and the fully diluted shares outstanding. As far as management goes, Coastal may have a great management team but, in the end, it will be the operating business and its owners and managers that will control the post merger company going forward. So it really comes down to pricing Coastal to be competitive as a shell vehicle and that comes down to price/dilution. My point is that shells have a rational value and when the market caps get too high, no REAL business will tolerate the dilution.
I understand but in my experience shells are worth no more than $250K with, at most, 5% of the post merger equity going to the legacy shareholders. My partner and I have led more than 75 conventional public offerings, including more than 45 conventional IPOs and are always looking around IH for available shells to use as shortcut IPO's. We would never consider a shell with a market cap of more than $250K (because that represents dilution to the operating business) and to us, there is no difference between pinks and BB. When I look at possible candidates, I attempt to back into the true market cap, which is sometimes difficult to determine because the people controlling these things often issue themselves ridiculous numbers of shares because no one is really watching. We always structure the capitalization, post merger, to achieve a trading price north of $1.00 as our goal is to position the merged company for a listing on the AMEX. Anyway, this is how I would look at these shells.
FYI, Real companies do not structure their capitalization to trade at less than a penny. What's the point? Real businesses will not accept your stock as acquisition currency and you can't finance/ borrow against it. I have been on IH for several months and do not understand the point of most of these posts. Would enjoy someone explaining how anyone comes up with a reasonable valuation for these companies.
There's way to much common sense in your post for this house of cards company.
THIS IS RIDICULOUS. Let me see, you are suggesting that individual investors call management directly and get non public info and make investment decisions based on telephone conversations with management. Is that what you are saying? Is that what "D." is recommending? This is almost as laughable as investing in a company whose business model is to de-emphasize energy in favor of California real estate.
I have also been following the posts but it has become clear to me that most of the "analysis" I have read on these posts fails on most fundamentals. By that I mean that today's volume is based on yesterday's chart which is based on previous days volume and so on. I have been on IH for about four months and have yet to see anyone discuss a stock's fundamental value. What is the value of a company which is a function of revenues and/or profit and shares outstanding. NO ONE knows anything about this company. I seriously doubt that management knows what it is doing. If they were really interested in creating a real business, they would, at the very least, post some critical info on Pink Sheets like primary shares, fully diluted shares, gross revenues etc. There are only two reasons for not doing this; they either can't or they don't want to.
Board has NO credibility. This is a smokescreen and DM is a serial promoter. SEC doesn't "approve" valuations. The auditor has to sign off, period. THIS is a stall and I still believe that DM is between a rock and a hard place. He needs to get current but will have problems with any legit auditor in terms of what has been going on behind the curtain. Am willing to give the BofD the benefit of doubt. They may be as clueless as Morgan Freemen, one of DM's other directors in Earth Biofuels.
Let's see, the 06 K was promised on 4/30 (didn't happen). The 1st quarter Q for 07 was promised on 5/31 (didn't happen). The 2nd quarter Q for 07 was promised on 6/30 (didn't happen). Is there a pattern here? McLaughlin's 8K's are not to be believed. His convertible debt holders will not let him take this company private at any number he can finance. Besides, I am betting that he will eventually abandon the effort because he cant get caught up on his financials. Has probably been playing games that an audit won't miss.
That's very interesting. "You have seen some financials". I am REAL curious as to HOW you could see some financials. The company hasn't filed any and has not even released even unaudited numbers to pink sheets (which it could easily do). Who showed you the numbers? The CEO or the CFO. Could the rest of us see them? What can you tell us about monthly revenues? How about revenues per share? How about something moderately important like shares outstanding!
I know a great deal about this company/ponzi scheme. AOOR is controlled by Dennis McLaughlin (several scary articles on him in Forbes.com). He also controls 4 other public companies (all dogs) and they all operate out of different suites in the same Dallas office building. He is seriously in trouble and has to satisfy his $7 million personal guarantee with Yorkville Advisors (formerly Cornell Capital) . He is trying to raise cash and has his house on the market. Forbes says he is paying himself management fees (MAC Group) from these public companies. He is trying to take AOOR private but is being challenged by Yorkville and the SEC is telling him he can't do it until he files current financials. Anybody buying stock in any company this guy is involved with should be very wary.
Anybody interested in finding out more about the guy that really controls this company should check out the link
http://www.forbes.com/2007/07/12/earth-biofuels-bankrupt-biz-cz_df_0712earth.html
Done some additional research, looks like revocation did not occur. If you are having problems executing trades, must be related to something else.
Based on my experience, management continuity is not the issue. It relates directly to disclosure. Unless the company is specifically exempt from filing statements ie; de-registration of its shares, once the action is taken, I was told directly that the only way trading can resume is with the filing of a Form 10. Furthermore, I was also informed that the only way that option can remain available is if the authorized officer of the corporation (as confirmed by the SEC) executes an "Offer of Settlement" with the SEC (which I did). Even though I was recognized by the State of Delaware as authorized, the Senior Counsel actually confirmed the validity of my proxies. These things will have to be buttoned down far more than in the past. Hope this helps.
Unfortunately, I have first hand experience with this action. I had renewed a corporation in Delaware (following all of the rules) even getting proxies from the previous management team and shareholders. Had every intention of filing a Form 10 and moving to the AMEX. Trading was mysteriously halted one afternoon and I went to some effort to contact the appropriate people at SEC and they faxed the action to me. The registered agent was notified as well. Interestingly, the broker I used was clueless. Had to go to pinksheets.com to get the skinny. My partner focuses on the SEC enforcement pages but he is currently out. Can assure you that every revocation is listed somewhere on their site. Hope that is not what has happened but sounds way too familiar.
FYI. I have not confirmed this on the SEC's site, but I suspect that trading was halted due to SEC revocation under Section 12(j). They have established two task forces; one for "hijacks" and one for companies that have not filed financial info with the SEC for long periods of time. Once this action is taken, trading can only resume with the filing of a Form 10. The egistered agent will receive the paperwork notification. If Renegade pursues this, they can salvage whatever they spent in acquiring the shell. Otherwise, it is probably lost. The task force is targeting a dozen or so dormant companies every week.
Have been doing some research on Blue Wireless. Correction, Trey is the CEO but my research tells me that he is just a front for the guy really pulling the strings, Dennis McLaughlin. McLaughlin has a world of problems with all of his other public companies he controls, all located in the same building but behind different doors. Also understand that Blue has issued a ton of shares recently, want to bet they were issued to some of McLaughlin"s companies? Be very careful. Do your homework!
Not very encouraging. Looks like amateur hour.
Pink Sheets has posted a note saying they have not been able to contact the issuer (Renegade). Still can't figure out where this thing is legally domiciled. This is strange.
Have done more research and can't find out where this company is now legally domiciled. It is no longer located in Nevada. It appeared to have been in Washington and one point but is not domiciled there or in Delaware either. Would like to know where it is registered.