@JasonCoombsCEO
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LVVV was launched in 2008 and not only does it still exist today, despite the global financial market meltdown, which lasted for nearly 5 years, but it chose to become a public company rather than remain private. For some startups this transition from private to public opens up new opportunity and new access to capital. If LVVV had gone public in a forward IPO rather than a reverse merger with a shell then the company would have ceased to be a development stage startup company because it would have raised substantial capital from the public offering and would now be expected to perform with its capital.
There is nothing wrong with becoming a public company prior to conducting an initial public offering. The old story of fraudulent shell companies and reverse mergers is an out-of-date stereotype from past experience in the marketplace that existed prior to today. Things are changing, and LVVV has an opportunity to be a leader in the new marketplace where the public is allowed to invest in startups and other companies that are still in a development stage ... Development does not mean solely R&D, it also means attempting to develop a market and profitable business processes to successfully commercialize a product or service.
See:
http://techcrunch.com/2013/07/10/sec-general-solicitation-ban-lifted/
Even otcmarkets.com indicates that LVVV is still a development stage company.
See:
http://www.otcmarkets.com/stock/LVVV/company-info
LVVV is clearly a startup company, still in development stage and attempting to pioneer or discover new markets for the products it attempts to sell. Successful sales in the past of a small volume of product does not constitute becoming "established" it only shows the extent to which LVVV has already tested its business model and test-marketed its products.
The idea that a company must either become profitable or fail entirely and give up trying after a certain number of years is not consistent with what happens in practice in a startup company. Nobody should be confused about whether it is lawful or legitimate for an emerging company to be publicly-traded -- there are formalized rules for conducting public offerings of startup companies in the United States. The statute that LVVV has relied upon, the 1934 Exchange Act, is not reserved exclusively for already-profitable well-established companies that seek to list their securities on an exchange.
For reference:
http://en.wikipedia.org/wiki/Startup_company
http://en.wikipedia.org/wiki/Securities_Exchange_Act_of_1934
It does not appear to me that investing in LVVV is any different from investing in any other startup company, whether private or public. As long as LVVV complies with Federal Securities Law, the company deserves the benefit of the doubt just like any other company that obeys the law and attempts to grow.
If there has ever been any deception or fraud committed by LVVV, its executive officers or directors, or anyone currently in control of the company, then I would like to know the details. To suggest that the company is doing something wrong merely by existing and continuing to attempt to grow would be absurd, and the fact that LVVV is publicly-traded and 1934 Exchange Act-registered does not imply that the company is profitable nor that it has emerged from the startup phase to become a low-risk, high-quality investment security.
LVVV is still a startup company, and it should be evaluated as such by anyone considering buying or selling its shares.
Now that the quarter has ended, we will all soon see whether the next quarterly report is forthcoming in a timely manner, and what it reveals.
As with any trade in any financial market anywhere in the world, sometimes you have to add to your position when the price moves against you unless you're ready to exit.
If LVVV is growing and plans to stay in business until it achieves profitability then the market cap presently is average for any startup company. See:
http://fundersandfounders.com/how-startup-valuation-works/
Would you rather be holding a 50% unrealized loss on Apple or Facebook?
If you double the size of your position when the price falls 50% you're still holding an unrealized loss of 25% -- by comparison, doubling the size of your position after a 90% decline leaves you holding a 45% unrealized loss.
Clearly, the cost of buying shares today to average down your cost basis is low enough that the original risk anyone took buying LVVV last year will not increase substantially by adding to the position now, and doing so would position the shareholder in exactly the same unrealized loss position that AAPL and FB investors now have if they bought near the high, which for FB you will recall was on the day of the IPO when for most people the shares first became available for purchase at all.
Comparing the trading strategy and market position of an LVVV investment to the strategy and positioning of an Apple investment is a rational and experienced quantitative assessment -- what more needs to be said? The qualitative difference that you call attention to, namtae, is that nobody who buys AAPL or FB needs to worry about whether the company is engaged in fraud. There is obviously concern that LVVV is engaged in fraud, but if not then the investment risk here is normal and expected, and so is the price fluctuation.
What is not normal is an emotional overreaction to the whole process of investing, even in the face of booking losses and trading around a position that one chooses to take in the shares.
All stocks are inherently of uncertain value. Have you seen AAPL over the last few years? Fell almost 50%
http://www.mercurynews.com/business/ci_23530395/apple-stock-dips-again-below-400
After the dot com bubble burst, some companies, such as Amazon and Cisco, fell 90% or more before rebounding in the 13 years since 2000.
http://en.wikipedia.org/wiki/Dot-com_bubble
The NASDAQ composite index fell almost 80% from the 2000 high.
It is fundamentally incorrect to blame the LVVV price rise and fall on the pump-and-dump spam promotion. If LVVV is a legitimate company with growing business partnerships and growing sales then its reasonable value is hard to determine at the startup stage, before the growth kicks in. A range from $0.20 to $0.02 is not unusual for ANY company, on a percentage change basis, and the future will bring similar extremes to all stocks -- this is not a surprise to anyone.
LVVV appears to be fundamentally capable of growth. The question is, will it secure capital and start climbing an uptrend? If so, we will probably see volatility to the upside, too, even without a pump-and-dump scheme. At the current price, a couple cents per share of movement in EITHER direction is meaningless. Why not trade down to half a penny? That would be a buying opportunity, perhaps, if the company is going somewhere in the future. The market creates buying opportunities on a similar scale in most companies' stocks over a time horizon of decades, and everyone knows this already. Why is LVVV any different?
I contacted Bill and asked that he update otcmarkets.com with transfer agent and float information.
I also asked him to authorize the transfer agent to disclose the share structure to anyone who asks.
My question about why this was not done already was not in relation to the requirements at otcmarkets.com for achieving "Current Information" status -- my question was why LVVV chose not to disclose this information. What is the reason for the lack of transparency? Without the ability for the general public to contact the transfer agent and independently verify share structure, including the size of the free-trading float, and to keep track of that information over time as the company issues new shares and as restricted shareholders rely on Rule 144 to have those restrictions lifted for resale through a broker, there is no way for investors to evaluate whether the company is using its shares as a form of currency for creating value for prior shareholders or whether the company is just giving away shares as a substitute for cash currency because the company has more shares than it has money.
That reverse merger 8-K dated August 31, 2011 doesn't tell us what the free-trading float is today.
If the transfer agent, today, is still the same as at the time of the reverse merger then why isn't this reflected as current information on otcmarkets.com ?
Transfer Agent
Our transfer agent is Continental Stock Transfer & Trust Co., 17 Battery Place, New York NY 10004. Tel: (212) 845-3218 and Fax: (212) 616-7615
I will ask Continental if they are allowed by LVVV to confirm the current share structure and float.
Who is the transfer agent for LVVV? Has anyone contacted them to verify the current share structure?
How many free-trading shares are there in the float? These data points are missing here:
http://www.otcmarkets.com/stock/LVVV/company-info
Looks like LVVV needs to raise capital. What equity or debt financing arrangements have they formed so far, other than those related party loans that have covered the operating loss to date?
The accrued liabilities and deferred salaries are just an accounting reality -- to keep track of the value of the services and sweat equity investments made by insiders. Surely you don't think $1.2M has been going out the door to insiders based on $17K of quarterly sales and some loans coming into LVVV from those same insiders.
How much do you believe a company is worth after you invest $250K of your own money into it but before it becomes cash flow positive or begins to produce net profits for you?
At some point the market value of LVVV stock may become the divisor in an equation to convert the $1.2M of liabilities into newly-issued shares. When and if that happens, the market sets the conversion price, unless there has been some other formalized agreement (which should be disclosed already or will be in a future SEC filing). If the present liabilities convert to Common stock at $0.0351 there would be approximately 35,000,000 newly-issued shares required.
Even if LVVV at some point has 200,000,000 shares outstanding, it only needs to generate $2,000,000 per year of net profit to achieve Earnings Per Share of $0.01 .... What P/E ratio would then be reasonable? 10 or higher?
A P/E of 10 with 200,000,000 shares outstanding and $2,000,000 of net profit would give a share price of $0.10 and a market cap of $20,000,000 ... So, bottom line, what is the problem here? With the international and nationwide distribution channels that LVVV now has why do you believe it will never produce at least a couple million dollars of annual profit on a sustained basis?
The fact that LVVV is unprofitable today is meaningless. You cannot value an unprofitable startup company at zero or you condemn the entire world to perpetual global economic Depression.
Please explain why this company should be valued at zero.
Regards,
Jason Coombs
JCoombs@HomelandForensics.com
Namtae, if you compare LVVV with its 81 followers, a growing number, to ADIA with its 57 followers, a shrinking number, and look at the correlation between trading activity and message board activity, you will see that there is something of potential value to be discovered from the existence of an engaged community of owners.
To remain on-topic, please try to avoid insulting either buyers or sellers.
Every post in support of LVVV appears to originate from a long-term investor, or at least a long-term iHub user. What you are wondering, out loud, is whether the community can pump up the price beyond reason just by posting messages. That is entirely a question of relative valuation -- compared to owning some other asset in the universe, would you prefer to own shares of LVVV and if so at what price?
The bearish case is a big zero, perhaps the shares will go to zero and you'll lose three cents.
The bullish case is hundreds of times larger. It doesn't take a rocket scientist to see that big potential upside with limited downside. What we do need your help to investigate is whether there is anything improper or illegal happening here... Is there any reason to believe that the company will fail to create value for shareholders?
Many companies only create value for insiders, as you know. Buyers and sellers both need some way to evaluate where the tipping point is between insider value creation and shareholder value creation.
Even a THUMBS UP recommendation from a crowd of people can provide a clue that at the current price people see shareholder value creation.
As with any stock, the most bullish thing it can do is go up in price.
Please continue your research, keep up the bearish drumbeat -- especially if you suspect any fraud or see anyone engaging in market manipulation. The price discovery process of any quality company is a two-way street. Without your periodic warnings and bearish sentiment my own assessment of LVVV would be far more apprehensive. I want to know what the bearish argument is. But it needs to be communicated absent the insults. Thanks.
Sincerely,
Jason Coombs
JCoombs@HomelandForensics.com
Also amazing in this instance is the fact that when you compare LVVV with its $17K per quarter of historic revenue to Foursquare, the future potential valuation of LVVV looks like it is $96M as a 10X multiple of earnings (Foursquare has no earnings yet, either, FYI) or maybe LVVV could be valued as high as $300M as a smaller multiple of revenue (the way Foursquare was apparently valued).
Capital markets, and the machinery of enterprise and equity ownership of the means of production in the economy, do have the potential to be valued this highly in the future. There is no intrinsic limit to the importance of being a public company. These things are evaluated relative to everything else, so if everything except companies, food, energy, and houses are going to fall in value for the next 100 years, what is the upside for a company like LVVV?
Who are you accusing of dumping cheap shares given to them by the company, if not Mr. Weed?
How exactly is it deflecting attention away from the issues with this stock for my messages, which are not yet completely responsive to each one of your points made in previous messages, to emphasize the issues of:
1. This company engaged in a highly-questionable inadequately-transparent reverse merger with Mr. Weed's shell company,
2. It makes no sense for the revenues to fall subsequent to this reverse merger, even though it would make sense for profits to fall because it is ridiculously expensive to be a 1934 Exchange Act-registered company,
3. If the company was in fact responsible, as you have asserted repeatedly, for the runup of its share price in a pump and dump scam, then this company should probably have its stock suspended or have its registration terminated, or both, and,
4. Each one of your other good and valid concerns which were previously being censored here because you kept violating the TOS in the content of your previous posts.
There is no deflecting going on here. I am telling you and anyone else who reads this board that if you actually have evidence of the kind of wrongdoing and impropriety that you have alleged, share it and I will make sure that LVVV has a trading halt right away. Otherwise, be more clear and precise in the criticisms that you raise, because there is every appearance that this company's management are not the people responsible for the events or circumstances that have offended you. If they are not at fault, then most of your criticisms have been unreasonable misrepresentations that have exaggerated a fear of criminal fraud.
The confusing thing about trying to discuss this with you (and the reason most of your prior messages got removed) is that you seem to become extremely irritated very easily, and make unfounded accusations even at people who are agreeing with you. (Me) Why is that? Are you not aware that your complaints and whistleblower intervention can be provided to the SEC and other authorities who will take your report seriously and do something to investigate? Posting here won't even help protect anyone if the company is publishing false information or begins doing so in a pattern of fraud and deception.
What is LVVV fundamentally worth if it is a law-abiding quality public company? That is a core issue. Do you have any answers to any of my questions? They are not rhetorical, and they are not distracting attention away from any material issues, I am hoping that you do have answers and will provide them. You know how to contact me directly if you do not wish to post the information publicly.
Other than the resignation of Mr. Weed in January, which may be interpreted as an indirect acknowledgment that the company made a legal error of judgment or some mistake that Mr. Weed should have prevented, has LVVV published any statement that directly or indirectly relates to the pump and dump spam that was sent by those third-party stock promoters in December?
I noticed the Form 4 filings by Mr. Weed, but they only show that he sold 500,000 shares at a 50% loss, shares that he reportedly purchased back in 2012. That sale earlier this year might have violated Federal Securities Law, but even if it did the amount of money involved and the fact that he was realizing a substantial loss when he sold the stock make it unlikely that anyone cares. Namtae, where is the evidence that Mr. Weed sold millions of "cheap shares" given to him by LVVV -- such as in the form of S-8 stock -- in violation of insider trading laws or in connection with the pump and dump spam from December? If this happened as you have claimed it did, then somebody should file a complaint with the SEC.
Everyone should read these SEC web pages:
http://www.sec.gov/news/press/2013/2013-108.htm
http://www.sec.gov/investor/alerts/ia_pumpanddump.htm
Investor Alert—Don’t Trade on Pump-And-Dump Stock Emails
Lower profits after reverse merger with a shell company would be expected, but if reverse merging with a 1934 Exchange Act-registered shell company causes REVENUE to plunge, then clearly LVVV should immediately deregister with the SEC and stop reporting. The company can even ask the SEC to suspend public trading of its securities. If being a private company brings back the revenue, then go private.
Considering that LVVV's products are almost exclusively sold in retail convenience and grocery stores, what reason is there for sales to drop just because management is busy with reverse merger and 1934 Exchange Act legal procedures? Did LVVV not bother to restock its distribution channels because they were busy trying to sell shares?
Your assertion that people should have anticipated a decline in revenue doesn't make sense. Is the product just sitting on shelves? What's the real problem that caused retailers to not place orders during the quarter?
Foursquare had 30 times LVVV's revenue last year, so does this mean that LVVV should be valued at one-thirtieth the value of Foursquare? Looking only at numbers we can compare Foursquare's $2M annual revenue to LVVV's $70K annual revenue and search for insight, even though we would be comparing apples and oranges. This is a valid thought process, but mostly because it illustrates what people should never do, and why, when deciding to invest in a company at a particular valuation.
That numbers-to-numbers comparison would translate to a $20M valuation for LVVV.
http://www.businessweek.com/articles/2013-04-11/foursquare-gets-41-million-investment-time-to-grow
Nobody would use Foursquare's valuation to decide on a valuation for LVVV in reality because Foursquare has a much bigger potential, not to mention a dramatically larger existing scale of operations and number of customers. But remember that the only people in the world who have valued Foursquare at $600M are the people who have invested in the business at that valuation. If the company grows and produces ten times more revenue ($20M per year) and then forty times more revenue ($80M per year) in a reasonable period of time (say, within 10 years) then the decision to invest today at a $600M valuation would clearly be vindicated in hindsight as a wise and profitable investment. People would see it as a success, even those who refused to invest or who criticized those investors who did.
At $80M per year of revenue, the $600M valuation is 7.5X revenues. Assume a 20% net profit margin and you get $16M of net profit, or a P/E ratio of 37.5 and that's not even the real point. The point is that when a quality company reaches that kind of scale and market penetration, how hard is it to just become twice as profitable? With quality management and loyal customers it is not hard, and now we're talking about a P/E ratio under 20 which is only slightly above the long-term market-wide average P/E when all of the apples and oranges are compared to each other on the numbers alone.
If LVVV is a quality company with quality management and investors who are willing to provide capital at a valuation that is multiples of revenue before there is revenue, looking forward to a time in the future when there will be multiples of earnings, what metrics would be most reasonable to use in the forward-looking analysis? What companies (not Foursquare) are most directly-comparable? What are their metrics today, and do we know what valuations their early investors gave them when they invested?
Can LVVV sell an average of $1.00 worth of product to an average of 1% of Americans every month, within the next 10 years? That would give (back of the envelope math) 4,000,000 monthly customers and $12M per quarter / $48M per year in revenue. Assume a 20% profit margin and you get $9.6M of annual profit. If you are conservative and only allow a P/E of 10 that gives you a forecast market capitalization of $96M so which of these assumptions is wrong? What part of the investment narrative is going to fail, entirely, to manifest in the real future that LVVV is reportedly trying to create?
If they aren't trying to create anything other than an artifice to deceive (the appearance of a public company but no intention to ever try to make a profit but instead a fraud designed for the sole purpose of tricking people into buying shares that are worthless from the start if the management is planning to stop doing business when their personal bank accounts are big enough from stock sales) then they should be stopped. That is a crime and they should be prosecuted. All it would take is a complaint to the SEC that shows proof of such fraudulent activity and this would be brought to a halt very quickly. Namtae, do you have any such proof?
According to the seekingalpha post about LVVV in December, 2012 the stock promotion was going to be paid for by a third party non-affiliate. See:
http://static.cdn-seekingalpha.com/uploads/2012/12/5786461_13561012469006_rId32.png
What matters here, now, is whether LVVV management are law-abiding ethical business professionals who are building a real business.
What mattered in December, 2012 was whether there were false statements made, and insider involvement in, the stock promotion. From my knowledge of the civil and criminal law that governs this whole public marketplace, it would not be illegal in any way for a non-affiliated third-party promoter or investor/trader to accumulate free-trading shares and then pay a promoter, selling the shares if the promotion attracts new buyers.
Not even the author of that seekingalpha post was able to identify any fraud or criminal act. Did Mr. Weed sell any shares? We can make assumptions that he did, but until we know the truth those are just assumptions.
Did LVVV management exercise poor judgment when they got involved with Mr. Weed's shell company? Probably. Are they still involved with him? Reportedly not. We would all like to know, and hopefully LVVV will provide more transparency about its past mistakes of judgment and explain what it has done to investigate and to distance itself from Mr. Weed. The company should care that its shareholders, and the investing public, are adequately informed about such material issues. Affiliation with Mr. Weed today or in the future would be material information, and under the 1934 Exchange Act the company would be required to disclose this information if it were to rekindle that affiliation -- however, it is my understanding that LVVV is no longer affiliated. Does anyone have any information to the contrary?
Thanks,
Jason Coombs
JCoombs@HomelandForensics.com
The truth is the only alarm possible.
When you raise alarms based on something other than the truth it is not called "raising the alarm."
Sometimes it is called slander, defamation, or libel.
What has been interesting about your detailed analysis of LVVV has been the parts that have been true, and the awareness of material facts and circumstances that your analysis helps to create.
When you make this point, for instance, this is true:
"A company can cooperate with penny stock promoters intending to pump a stock to valuations wildly in excess of reasonable levels while generating increased volume to allow the dump of cheap CHEAP shares into the hands of gullible, naive investors duped by such behavior."
However, it is not at all clear in this case that LVVV cooperated with penny stock promoters in the way that you suggest. And the statements of culpability for the dumping that you have made single out the company and assign blame to it where it doesn't seem to me blame is warranted. At least you have not shown any reason for anyone to believe that the company did any dumping of shares. Are you specifically fixated on Mr. Weed when you suggest that "the company" cooperated or dumped shares in this way?
Also, you are not very specific about how you think "increased volume" was generated in this instance. Are you alleging secret insider buying in cooperation with penny stock promoters? Who are you referring to when you use the word "intending" as you did above? There are multiple parties and people at issue in the subject of your statements, and you seem to lump them all together and attribute wrongdoing to everyone. Please be careful not to do that -- it is possible that everyone is guilty, but more often the truth is not so black and white. You have been painting everyone involved directly or indirectly with a single brush, it is called "guilt by association" and this is something you are honestly not legally allowed to do unless you are happy to defend yourself in civil court at some point by producing proof that your statements were true rather than being false accusations.
You wrote:
"A company just might provide press releases for which promoters hype it to the moon to facilitate the scam."
And a company might publish press releases, truthful ones, legitimately providing news that it believes will be of interest to the press and to the public. After the company does so, promoters may hype it to the moon to facilitate a scam. But what you have, perhaps recklessly, asserted is that the company "provided" the press releases to "promoters" in order to "facilitate the scam." That might be true, but you have offered no proof that it is. If you misspoke when you used the words "provide" and "the" instead of using the words "publish" and "a" then you should publish a retraction of your baseless false accusation. But please continue your good analysis, I am not trying to discourage you from your valuable work by pointing out that you have apparently made false statements when trying to create alarm. That is absolutely NOT the same thing as "raising the alarm."
You wrote:
"Something like LVVV issued during its run up of its shares."
Again, your wording here is problematic. You are implying that LVVV was running up its shares. You are accusing the company of a wrongful act, possibly illegal, maybe criminal. You are alleging market price manipulation with the intent to defraud. You are throwing around very serious accusations. What I think you have been trying to say is that during THE runup of its shares, LVVV issued press releases. When you use the word "its" when you should have used the word "the" you turn a reasonable warning and valuable insight that people should heed as an alarm into an accusation of specific acts born of likely criminal intent.
Please be more careful with your words when you heap criticism and express your bearish opinions. Your opinions and observations and your ringing of the alarm are each very valuable, but without precision in the way that you communicate your points those points actually cross the line of reason and may expose you to personal civil liability. This legal complexity, and differences of interpretation under law in various jurisdictions, are the reason that the investors hub TOS read the way that they do and are at times counter-intuitive.
Sincerely,
Jason Coombs
JCoombs@HomelandForensics.com
Namtae, I am working through the good points raised by your post, trying to take them one at a time so they can be discussed in depth. You assert that nobody is concerned about the possibility of criminal intent on the part of management, but it is just such criminal intent that you keep alluding to when you assert that there are, or were, pump and dump tactics being used to defraud naive investors. You have made numerous assertions of criminal intent, if not specific past or present criminal activity being engaged in by LVVV when it merely exists as a public company and tries to promote itself.
I would like more information about what you perceive and why. This is the topic of interest to many, and it goes straight to the question of valuation. Only the nationwide / international distribution channels that LVVV has formed, and only the manufacturing capacity and/or infrastructure of LVVV or its suppliers who perhaps own and operate that infrastructure so that LVVV products can be produced with the LVVV brand names attached can contribute to the value of the company, wouldn't you agree? None of the potentially-criminal or fraudulent activity can possibly add any value, so if the company's intent is to do anything other than create actual value then the shares they have issued must be worthless.
"Maybe thats why several of my more enlightening posts have been deleted." -- you have your chronology wrong here... Your older posts containing your many good points and various accusations of wrongdoing and conspiracy were removed before I became a moderator.
After being in business for five years, since the second Great Depression began in 2008, having only $17,000 in quarterly sales indicates to you that LVVV should have a public market capitalization of only about $700,000 and even that is probably too high. Correct this restatement of facts if you think I did the math wrong.
So in your view, LVVV is going to produce $70,000 in annual gross revenue and this makes the company worth 10X revenues, is that a reasonable summary of this point about reasonable fundamental valuation?
Namtae, there are so many things incorrect about what you just wrote that it will take some time for me to reply to every point.
Please read the Terms of Service, there is a link to the document just to the right of the message entry / edit box when you post a new message.
It is expressly against the TOS to refer in a post to the motives of any other user. When you make an issue out of why somebody is posting, your post violates the TOS. When you make an issue out of the moderators or why they moderate again you make your post off-topic and this is true even if that is only a single sentence at the top or bottom of your message it makes your entire post off-topic. This is the stated, published operating policy of the investors hub website.
I understand that the TOS are confusing in this respect. It makes sense that you should be allowed by policy to write a lengthy and informative and on-topic post containing important information and insight, and then at the end of the message you should be allowed to add an off-hand remark that insults another user or calls the moderator a pawn or puppet of the company, or just assert that you really like ice cream. But when you add that one off-topic off-hand remark, the owners/operators of investors hub end up removing your post and they won't restore it even with the one off-topic remark edited out. I have tried to get your older posts restored, but after two days a volunteer moderator is unable to restore deleted messages.
Please contact me directly by email so we can discuss this, so that you understand exactly why your older postings were removed. If you will take the time to re-post them, I assure you they will not be removed again.
I appreciate your tireless effort to raise the alarm.
Have you ever purchased shares of a microcap unlisted company before? Prior to every purchase the broker is required by the SEC to provide the buyer with disclosures that make it perfectly clear that investing in small, unproven companies such as LVVV is extremely risky and will probably result in a financial loss of up to 100%.
There is naive and then there is refusing to open your eyes and look at what you are doing. Refusing to read risk disclosures is not the same as being naive. Granted, nobody should be allowed to commit fraud or illegally manipulate or conspire to manipulate market prices. But stock promotion is not fraud nor is it manipulation.
When a team of people backed by investors spends years trying to build something new, honestly, and with skill and ethics, at some point in the process the team is probably going to require additional capital. Even profitable well-established companies raise additional capital (remember 2009). Unless we outlaw raising capital once you have gone into business with your initial investors, companies are obviously going to try harder to promote themselves when they need something (such as capital) than when their attention is elsewhere (such as trying to make profits using the capital they already have).
Do you have any specific suggestions for LVVV other than "give up and go home" or do you have any specific reason to believe additional unethical or potentially-illegal acts are now occurring in connection with the LVVV stock? Have you discovered any materially-false statements in LVVV quarterly or annual reports filed with the SEC? If so, then you should know that it is easier to report them to the SEC than it is to post to this message board.
At what price per share do you believe the LVVV stock represents a reasonable risk and a valuable investment opportunity compared to the (small) universe of alternative microcap investment options in the USA? I want to know where the floor is, just like everyone does. The only reason there might be zero value in the LVVV shares is if the company has criminal intent.
When you call attention to the possibility that cheap shares are being liquidated at a profit, doesn't it matter to you who got those shares, and why? In an S-8 stock plan the recipients are normally under-paid and under-appreciated employees who are holding on to unstable jobs and sacrificing other career opportunities and professional development in a better job in the hope that this company will go somewhere and they can make a difference to the outcome of their own financial future. When those people sell cheap shares at a profit it is the duty of investors to step in and buy them or the employees' children may not get medical care or food today.
Your concerns about the potential sales by Mr. Weed while he was still an insider are a very good point. Have you raised this concern with the SEC? Maybe the SEC will force him to buy back the shares, boosting the market price for the benefit of everyone who is not engaged in fraud. Maybe LVVV is not engaged in any fraud and deserves your help in this way. Maybe Mr. Weed was a snake in the grass and LVVV was glad to get rid of him. More transparency about these matters would help everyone understand this company and its management team better, and I hope you will continue to help with that ongoing price discovery effort!
If an issuer is controlling other people or illegally disclosing inside information to them and issuing shares to them for resale to new investors through unregistered illegal underwritings of new share offerings then you are correct, such an issuer DOES have control of those particular "other people" but that isn't "other people" acting in the free market that is the issuer and its nominee companies or co-conspirators acting in concert to defraud investors. What makes you believe that is happening in the case of LVVV? This is not a rhetorical question, I actually want to know.
My point was in reference to actual "other people" -- a company with more than a handful of closely held shares owned by a small number of owners is intrinsically an amorphous manifestation of civilization. For as long as the corporate form of legal entity has existed it has been complex, contentious, and fascinating. The convergence of economic value, animal spirits, law and social/regulatory policy that we perceive as a publicly traded company is always challenging to get a handle on and to govern or just to understand... When these things fail, they are noisy and messy. If anyone ever does a forensic investigation to unravel the complexity and attempt to discover the truth it can take as much time and money to analyze the disaster as it took originally to create it. Being pessimistic about a company's prospects of economic success is fine, but hate the player not the game.
Regards,
Jason Coombs
JCoombs@HomelandForensics.com
Thanks, namtae, that is interesting.
If you see more like that in the future, please share.
Remember that as a publicly-traded company, the issuer (LVVV) has NO CONTROL over what other people do with the public market for LVVV shares. In listed and unlisted financial markets, traders have the legal right to accumulate positions and to try to promote and make profits from the stock as long as they do so without engaging in any insider trading or deceptions.
The fact that somebody in the market decides to buy shares and promote the stock does not reflect badly on management. If anything, it is a positive sign that a professional trader would be willing to take a risk on the shares. Granted, the stock promotion your citations reference seems to have been done in connection with the reverse merger, but even that is not improper provided that the 1934 Exchange Act-registered shell company complies fully with its SEC reporting requirements.
Sincerely,
Jason Coombs
JCoombs@HomelandForensics.com
Investing in a company because it has a good product is a mistake. Products are easy, execution is hard.
In my work as an expert witness I have seen many times that products can appear valuable, and even attract customers, but in the hands of the wrong management team all value can slip through investors' fingers like so much sand... If there is value, making it accrue for the benefit of shareholders and achieving massive scale takes much more than a good product, it requires some empire building and market positioning to battle every barrier and make it across other people's defensive moats in order to enter and thrive in territory that is controlled at the onset by the competition and their business partners. Having something valuable to sell is nearly meaningless when you can't or don't bring it direct to consumers, and just like in the entertainment and software industries it doesn't help if your market is theoretically accessible at no cost directly, such as via the Internet, because if you can market directly to everyone in the world at no cost then so can everyone else, drowning your product in noise.
To invest in a product, buy a patent. If you buy shares, be prepared to help the company's management overcome impossible odds by giving the company your time, your social network, and your best ideas. Without this sort of help spreading the word and lowering barriers to market acceptance or capital formation there is little chance of meaningful success unless some competitor buys your lottery ticket from you to buy out the competition as the competitor does what you and the management team failed to do: win.
Regards,
Jason Coombs
JCoombs@HomelandForensics.com
Resurrecting the caveat emptor, consider this...
Posted by: namtae
Date:5/24/2013 1:50:16 PM
chance to read the truth!!
NO CASH
$17,000 sales for latest 3 months reported
Management salaries much higher than company sales
Company infested with penny stock promoters that have already made their money from unsuspecting shareholders that paid 20-30 cents per share
At a penny per share, if all 100,000,000 shares are issued and outstanding at some point, the market cap will be $1,000,000.00 -- that does seem reasonable as a valuation for LVVV and also for ADIA based on the reported sales of each company's consumer foodstuff products.
This $1,000,000.00 valuation per company does not seem reasonable if they are growing or are likely to grow rapidly when they successfully raise new capital. Such low valuations do not even seem reasonable as a cost of new capital, because as soon as the new capital comes in the valuation should be higher than a penny per share.
It will be interesting to see what both management teams do to resolve this catch-22 going forward.
Jason Coombs
JCoombs@HomelandForensics.com
Very impressive, very clear thinking about the origin of the penny stock promotions business. I hope we get to see more of that well-informed bearish argument in the future. Assuming that everything contained in the bearish argument is accurate, why would the shares of LVVVV be worth less than the current market price?
The reasons that I can think of do not revolve around naive management, because the insiders may only care about getting paid a salary by the stock promoters who may be pulling the strings behind the scenes. The management of LVVV may just be pawns, doing what they're told to do but never even trying to do real business the way one would expect. Everyone who has studied this systemic problem in the penny stock market knows that stock promoters can get away with buying hidden control of a company by giving management what they need in order to survive and also putting together all of the public-facing hype story that makes it appear that the business is growing when in fact all it is doing is sitting and waiting for the promoters to orchestrate the next move.
Naive management do not remain naive forever, if they are sincerely trying to figure out how to become a profitable business. What concerns me most in this case is not that the management of LVVV might be inexperienced or gullible, but that they might not be trying to operate a viable business in the first place. They might just be accepting money so that somebody else can do all the work and pull all the strings in hiding, to churn the stock and take money from stock promotions without appearing to violate Federal and State securities law by being the control person in the daylight, transparently, and complying therefore with limitations imposed on insider sales and purchases.
Naive or not, if LVVV management is honestly trying to grow a business then they will eventually throw out the stock promoters and show investors that they can be trusted to act in the best interest of shareholders. Where is the evidence to demonstrate that quality of management thinking so far? The LVVV stock is probably worth less than it is trading for today if management are going to let stock promoters tell them what to do, and LVVV is probably worth more otherwise because there will be new capital available to fund the company from here if there is a legitimate hard-working team of people following the consumer demand and forming honest agreements with other legitimate business people.
Did LVVV buy ADIA so that a competent, albeit formerly-naive, management team could instantly expand to Whole Foods and Albertsons stores? Possibly. Management should do more to give Discussion and Analysis to the public so we can understand how they think and make business decisions.
Jason Coombs
JCoombs@HomelandForensics.com
The bullish side and the bearish side always sound convincing, in every market. There are more than two sides, though, and people can switch sides. The only thing that matters in the case of a startup company such as LVVV or a former startup company such as ADIA is that the people who are in control can take everything of value for themselves if they choose to do so rather than share the value with holders of shares. Sometimes this taking of value is illegal, but not always. Most of the time the proof of illegal acts can't be uncovered, so that criminal charges can be brought against those responsible, unless a whistleblower comes forward with the evidence or the evidence is obtained legally such as through a civil lawsuit.
Who has the time or the money to fight those battles? Nobody, so the chances of getting caught and being prosecuted for white collar crime involving a public company are very small. If the SEC is reorganized and given expanded powers, including a law enforcement power instead of just a political regulatory power like the SEC has today ( the SEC must call the police if they ever find proof of criminal acts, they have no law enforcement authority they can only bring civil lawsuits and seek court injunctions against wrongdoers ) then it may become much easier for criminal fraud to be discovered and prosecuted in the United States. There is talk in Congress and at the SEC right now about doing precisely that -- reorganizing and expanding the powers of the SEC. The new Chairman, Mary Jo White, is the Commission's first-ever former federal prosecutor, so maybe this talk will even go somewhere!
The bottom line is that market conditions have changed and it is a very bad time in American history during which to try to commit financial crimes using "regulation" as legal cover to evade prosecution. Does that mean LVVV is more likely to behave ethically and to share the wealth that it produces (or even honestly attempt to create any) because the insiders are at unprecedented risk of not getting away with harming investors? I do not know. But I do know that there is a legitimate potential for these people to grow a viable business, and it appears that ADIA has decided to risk almost everything that it created with its new funding since 2011 on the bet that LVVV is going to do the right thing for shareholders. That says something, unless ADIA does not intend to create value for shareholders, either.
In a bizarre twist of American irony, neither company would be guilty of a criminal offense for failing to honestly attempt to share any economic value with investors, even if the end result here is that the insiders, promoters and control persons are unjustly enriched, provided that LVVV does not lie about the fact that it has no money in the bank when it in fact has no money in the bank.
Sincerely,
Jason Coombs
JCoombs@HomelandForensics.com
Correct, direct non-affiliate shareholders will often buy additional shares when the public market price of LVVV drops below the price they paid when they provided capital to the company. Public market prices don't even dictate the price of private offerings. If LVVV is successfully raising capital from private investors at $0.20 there is no automatic price adjustment for the free-trading shares to match the price of the restricted shares. If the company doesn't produce new value with the new capital then why should the free-trading price adjust?
The fact that a private direct investor may be willing to pay a higher price to give capital to the company than the investor could otherwise pay to give their capital to some anonymous holder of free-trading shares does not mean that the private investor is over-paying. It might mean that the seller of free-trading shares is mispricing their public resale offering. If the sellers on the public market are unethical shell company stock promoters then they might presume that the company is worthless and so they will accept any price, but that doesn't make their sales "the correct price" for the company's shares.
Furthermore, the private investors may not be able to bid for free-trading shares because of holding inside information gained under non-disclosure agreement with the company when their private placement due diligence was done. These lock-ups expire after a period of time or when the material non-public information is disclosed publicly, and perhaps the pool of private direct investors then start bidding for free-trading shares.
A public company is a marathon, and one that sometimes lasts for hundreds of years. Go slow.
Regards,
Jason Coombs
JCoombs@HomelandForensics.com
Not every company is a fraud just because it temporarily has zero cash. Berkshire Hathaway was originally a textiles manufacturer acquired by Warren Buffett in a hostile takeover that he engineered after the company agreed verbally to be acquired but then increased the price by a fraction of a dollar per share when they delivered the M&A documents to be executed. Out of anger, Buffett bought control of the company and fired the people who tried to up the price on him at closing. Buffett calls this his biggest failure in business, calculating the compounding losses from opportunity cost in the hundreds of billions... When Buffett ended up holding a publicly-traded shell company, the failed textiles manufacturer known as Berkshire Hathaway, he decided to turn it into his holding company for all of his other ventures. Read about this history because it shows the best-case scenario for a temporarily-insolvent public company that has somebody who cares about creating value for shareholders and building or acquiring valuable businesses despite a severe financial setback and the need to change course...
It is right and necessary to examine LVVV and ADIA carefully, to understand what is real and valuable and whether the management team cares, as Buffett did, about growing a real business out of the ashes of an insolvent one. If the answer is yes, the management teams care about building something and they each do what is necessary to communicate with investors and to raise new capital while growing a loyal customer base using a profitable business strategy, then there is value worthy of investment. But the shares are only valuable if the management teams operate with the goal of providing value for the shareholders to co-own with the insiders and VCs or investment bankers and other private investors who may be operating behind-the-scenes.
The less behind-the-scenes nonsense and self-dealing there is in LVVV and ADIA the better. Only LVVV has disclosure obligations, because ADIA is a non-reporting company. There are criminal prosecution risks for the LVVV insiders by virtue of being 1934 Exchange Act-registered, so give due consideration to the fact that these people have VOLUNTARILY risked prison for the privilege of attempting to form a public market for the LVVV shares. In the opinion of most investors that, alone, is worth something. It is fundamentally valuable, says conventional investment analysis, and justifies a higher valuation EVEN FOR A FORMER SHELL COMPANY WITH ZERO CASH compared to the value of a private, non-reporting company that is or has gone dark. If the public markets have any rational fundamental purpose, it is at least to help such companies form capital more easily in recognition of the intrinsic value of a management team that is willing and able to TELL THE TRUTH and accept the risk of civil and criminal legal problems or punishments if they fail to do so.
We shall see what comes of this company's efforts, and whether they care about shareholders or whether they are only interested in exploiting people for their own financial benefit. This is always a risk when investing in anything, and sometimes that risk pays dividends.
Sincerely,
Jason Coombs
JCoombs@HomelandForensics.com
My 5,000,000 shares of ADIA are restricted shares. They can only be sold in a private sale to investors who are experienced with investing in private companies where the securities are not marketable to members of the general public through a stockbroker.
I have requested a No Action Letter from the SEC seeking confirmation that ALL of the holders of ADIA restricted shares are in fact eligible to rely on Rule 144 to have restrictions lifted so that their shares can be resold through a broker. As of now, the staff attorneys at the SEC have declined to provide any formal written reply to my No Action Letter request, but the telephone conversations that I have had with them have been very productive.
When there is confirmation from the SEC that the shareholders of ADIA are eligible to rely on Rule 144 just like the shareholders of LVVV are already, then I will be selling at least some of my ADIA shares to raise capital for my other startups. Prior to that time, a private investor might purchase some or all of my ADIA shares in a private sale. I do not hold 10% or more of the ADIA stock, and I have not been a company insider since 2011, so I am not required to file a Form 4 when my shares are sold. If the company wishes to file a Form 4 anyway then I would support that, but this management team does not seem to value public transparency so my guess is they won't file one.
If you want to be contacted by me directly when my ADIA shares are sold, one way or another, you can ask.
Jason Coombs
JCoombs@HomelandForensics.com
There is some impressive analysis and critical thinking being displayed by the followers of LVVV. See:
http://investorshub.advfn.com/Livewire-Ergogenics-LVVV-23211/
One especially succinct summary of which is expressed in this post:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88118419
One would hope that the followers of ADIA would be at least as capable of understanding investment risk and the realities of corporate governance and business development. Both are hard and require dedication to the objective of managing risk and creating value FOR SHAREHOLDERS.
Why should ADIA create value for shareholders? It is easier to hitch a ride on somebody else's stock promotion.
Is that what ADIA is doing when it proposes to give everything it owns to somebody else in exchange for shares that might become liquid after a 6-month Rule 144 holding period? The complete lack of transparency and lack of communication from management as to the plan and current business conditions here is the problem, IMO.
Jason Coombs
The trimethylamine N-oxide byproduct of certain bacteria may be an important contributing factor in the development of heart disease.
See the Cleveland Clinic research, discussed on their website at the following URLs
http://www.lerner.ccf.org/
http://my.clevelandclinic.org/default.aspx
http://my.clevelandclinic.org/media_relations/library/2012/2012-07-12-cleveland-clinic-researchers-receive-478-million-grant-to-discover-novel-pathways-contributing-to-heart-disease.aspx
News article about the research:
http://www.cleveland.com/healthfit/index.ssf/2013/04/compound_in_red_meat_energy_dr.html
It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them. – Niccolo Machiavelli
Both Adia Nutrition, Inc. and Homeland Forensics, Inc. are attempting to change the order of things in our respective industries. If Adia is correct, good bacteria are one of the keys to human health and a long, disease-free life. Changing the popular conception of what it is to be human and showing people a new, better way to be healthy by balancing and nurturing one's symbiotic relationship with good bacteria is a new order of things. It is one worthy of investment IF IT WORKS in the form of product that Adia has devised and is marketing, and IF THE ADIA MANAGEMENT KNOW HOW TO CREATE VALUE FOR SHAREHOLDERS. One without the other is insufficient, and it remains an open question as to whether we have both in this instance.
Homeland Forensics, Inc. will change the order of things in the fields of security and forensics. We will successfully raise enough capital to form a team WHO KNOWS HOW TO CREATE VALUE FOR SHAREHOLDERS and with that as our starting point everything else will fall into place in due time because our products and services WILL WORK.
It is necessary for Adia to complete the spin-out of Homeland Forensics, Inc. in order to set this in motion for our collective benefit. If the spin-out does not occur, then you should take that as conclusive proof that this management team does not know how to create value for shareholders, IMHO.
Sincerely,
Jason Coombs
JCoombs@HomelandForensics.com
Homeland Forensics is worth more than Adia's probiotics business will ever be.
I don't understand what "the fit" is to which you have repeatedly referred. Wen Peng and her team made specific promises and material representations -- they promised to conclude a spin-out of Homeland Forensics, Inc. and they are going to do so.
When the spin-out occurs, you are free to refuse the shares of Homeland Forensics that would otherwise be issued to you as a shareholder of ADIA.
PivX was never operated as a piggy bank for me. The headquarters was relocated from Newport Beach to New Zealand because I did not reside in Newport Beach and the company was completely insolvent. From 2006 to the end of 2008 the company's former commercial landlord in Newport Beach held all of the company's corporate records and tangible assets hostage in an attempt to get payment. There was no way to pay them, and after almost a year and a half of effort we finally reached an agreement and the landlord allowed PivX to move out of its former headquarters and finish violating its commercial lease obligations. Perhaps you would have personally paid hundreds of thousands of dollars in back rent and stayed in Newport Beach with an office where no employees worked, but that did not make sense to me so I relocated the office to my home in New Zealand. This was all described in detail in SEC filings, if you care to read them.
It is irrational for you to continue to express hostility toward the Homeland Forensics spin-out. Please take the hostility somewhere else, because your desire to extinguish everything of value that the PivX investors, founders and team members created is bizarre. You are welcome to call me to discuss your problem with the spin-out. I have been told by Wen that you sent her messages urging her to never conclude the spin-out, and I assure you that if you continue with your present course of action you will find it to be very self-destructive.
Sincerely,
Jason Coombs
831-241-4900
What is the growth strategy that would justify a 20X multiple?
A growth company with a 20X multiple usually develops a technology or has a business platform that benefits from the network effect... Suppose ADIA were to perfect a method that would allow everyone, everywhere to isolate their own good bacteria and replicate it safely on their desktop then add enjoyable flavoring and package the bacteria in an on-the-go drink mix made by, and for, consumers' own digestive and immune systems.
That would probably justify a growth company multiple valuation metric, and the multiple could reasonably be based on future market demand that would likely emerge when the technology is perfected ... IF the technology is perfected, and IF the market likes the idea of drinking its own good bacteria. Maybe the technology would turn out to be the key to life extension and everyone who buys the product would naturally live twice as long. That would be the best-case scenario, arguably, and a valuation of millions of times expected profits from the first profitable year might make sense.
From such a hypothetical starting point the variable that cannot be imagined with any degree of rational sensibility is whether or not the management team will honestly try to give the value of the company to its shareholders, or whether the management will operate the company as though it is nothing more than a piggybank for insiders... Today we have zero visibility or transparency in these matters of corporate governance, and with zero visibility in this area it just doesn't matter that the company might legitimately be holding the fountain of youth in its hands.
Jason Coombs
ADIA has been losing followers on this message board. Presumably this is a result of the low trading volume.
What is a growing probiotics company worth, particularly one focused on the nutrition niche ?
Assuming annual net profit of $1,000,000.00 the multiple of 10X would give $10M market cap. If 100,000,000 shares are outstanding at a $10M market cap that translates to a price of ten cents per share.
From this mental model you can adjust the multiple (maybe 5X is the most that could be expected?) which would point to a five cent per share valuation, or you can adjust the profit forecast (maybe $500,000.00 of annual earnings is the most that could be expected?) which would point to the same five cent valuation.
The million-dollar question here is whether there will be unexpected upside from successfully tapping into a growth market and a successful marketing strategy, together with enough capital to expand operations in that growth market using that successful marketing strategy. If the answer is Yes, Adia has big upside potential, then a multiple in excess of 10X and an earnings forecast of greater than $1,000,000.00 per year would seem reasonable, based on this simplistic mental model and investment narrative.
We don't know what Adia's own investment narrative is and we also don't know what Adia's earnings forecasts are, so nobody knows what the reasonable valuation is above current market price. Thus the trading volume is very low and when volume rises it is unpredictable which direction that volume will move the price.
Adia can solve these market uncertainty problems with more transparency, in my opinion.
Jason Coombs
Did anyone hear the live radio interview?
News like this (see URL) continues to verify that human health is fundamentally a symbiotic relationship with good bacteria.
http://www.bbc.co.uk/news/health-21965092
The only question is, can ADIA formulate a marketing message and build long-term customer and partner relationships to deliver probiotics that help large numbers of people maintain natural biotic processes which are financially-relevant to each customer's optimal personalized medical requirements?
The people who are most likely to buy ADIA products without a sales and marketing strategy that educates people and inspires them to make changes in health decisions on a daily basis are those people who already have a healthy internal microbial biome and already do healthy things to maintain that condition.
Maybe it will turn out to be easier to sell to the health-conscious consumer than to convince people who have unnatural biotics disrupting their health that they should combat those unhealthy bacteria with the help of ADIA products. If only healthy people use the product, is that a much smaller market? How much of the domestic market for probiotics is attributable to sick consumers versus health-conscious ones?
People who are healthy before they use ADIA products may not associate the continuation of their health with the continued consumption of the product. This is not an easy marketing challenge, and anyone who wants to increase investor awareness and explain the potential value of ADIA shares will need to be able to answer hard questions with proof that the company has a winning strategy that will produce dividends and substantial growth.
With only 800 shares trading today at $0.06 for a value of $48.00 it seems like a good time to revisit the issue of All Or None order entry -- when placing an order to buy or sell, remember that a partial fill such as 800 shares could occur unless the AON order type is specified. Partial fill of 800 shares incurs a broker commission, in most cases, although presumably you could ask your broker for a refund of the commission in a case where the partial fill results in a cost basis of $58.00 for $48.00 worth of shares... If you enter orders with AON then this partial fill issue will not add extra broker commissions to your trade executions.
It is also interesting to note that there are new rules for the Over The Counter markets, which went into effect on November 5, 2012, regarding minimum quote size that market makers must display when publishing bid and ask data. Up to $0.10 per share the new minimum quote size is 10,000 shares, double the previous minimum of 5,000 shares. Presumably it would be better to enter AON orders in 10,000 share blocks, or multiples thereof. If the price rises to $0.10 then the old minimum of 5,000 shares becomes effective again, and at higher prices the new minimum quote size falls below the previous minimum, creating an interesting new market making dynamic for the OTC marketplace. See:
http://www.finra.org/Industry/Compliance/MarketTransparency/OTCBB/Announcements/P146642