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These private equity firms who work with OTC issues make me nervous. I work at an OTC listed company and the sales pitches and attempts to get restricted shares is relentless. Not to paint all of them with the same brush but quite a number of sales pitches from firms promoting their IR services like to produce stock charts of companies they have 'promoted', mostly through email, targeted phone calls (read boiler room). When you look at the stock charts, they are spikes. Straight up, and then straight down.
Not what a long-term strategy focused company should be looking for.
I hope CKGT hasn't fallen into that trap. Management has seemed more interested in executing their strategy than churning out press releases, which I kind of appreciate, to be perfectly honest.
This just confirms for me that Equi-Trend was not hired for typical IR activities. The fact they admitted to receiving shares is another red flag they could be more interested in pump and dump or pursuing PIPE financing, which can be good or bad depending on how much dilution results (PIPE financing).
There appears to be more shares trading as others have noted.
A real PR firm wouldn't have shot from the hip with those answers. IMHO.
Management needs to explain their long range plans for financing and for what purpose this firm was hired in greater detail than what has been disclosed. If they issued restricted shares (what the guy said is typical, 6 to 12 months for OTC stock), this will be disclosed with the next 10Q. I doubt they're free-trading shares but I guess we'll see.
I don't think this is a traditional IR firm. Looking at their website they appear to be investment bankers specializing in PIPE and other financings for small companies.
When CKGT said 'investor awareness' I wonder if they meant in terms of this company contacting select groups of investors to raise capital? Not investor awareness in attracting buyers of already free-trading shares.
I sold 1/2 my position about a week ago. Frustrated with dead money. Hopefully this turns around soon.
I know the PR said this firm is doing IR. When I checked their website, they looked more like a financing, boutique investment banking firm. PIPE financings, etc.
Is the awareness they're talking about for purposes of drumming up more financing? What kind of IR firm doesn't have email or respond to investor questions? Perhaps they're getting up to speed and unable to return calls. I don't know.
I've been holding this stock for awhile and more than a little frustrated that it's dead money when the rest of the market has been going up.
Yes, I should probably sell if I'm not in it longterm. I see the potential, just not really understanding what management's true objectives are in hiring this firm.
No expectations whatsoever. I hold less than 10,000 shares now, have taken my losses. The rest of it can go to zero, it's a drop in the bucket.
In hindsight, I should've bailed when the CFO resigned. I knew better. And prior to that, I questioned why they kept holding out as examples American Idol game cards when I couldn't find any evidence they were being marketed or used (maybe they were in the UK). Seemed odd to be talking about launch of a product for a hit show that was coming into it's 5th or 6th season.
Wonder if the company was defrauded unwittingly and management and board were not sophisticated enough to prevent it. Or certain members of board/mgmt were crooks. After the forensic audit performed, they should have some answers. With no money and no one to pay for those reports, perhaps they will never be released until presented as evidence in court.
Frustrating.
CPA firms have been using engagement letters and management representation letters to successfully shift liability to company financial officers and CEOs. Anything short of a colossal screw up and the CPA escapes liability.
I suspect that may happen here too. I hope not, would like to recover some of my losses from somewhere.
I wonder if we'll ever know the truth. It may be years before anyone is prosecuted. If books were cooked, that will happen.
Well, fortunately I 'only' lost about $10 k. Had made a killing when it ran up and I sold most of my position, then made the painful mistake of buying back because I too was excited especially with the prospect of ChinaLot. So my losses wiped out all of my gains and left me in the hole about 10 k. Nothing compared to the big players like your friend.
I'd also like to know how Timothy Sykes decided to short EGMI when he did. Pure genius or did he know something the rest of us didn't?
There was a lot of share dumping prior to the release of the non-reliance on prior audits 8K.
A few days ago I emailed Kevin Donovan. He had always replied promptly to my emails. Didn't get a response. Guess he was busy packing his bags.
Yes, I was taken in by the huge cash and no debt on the balance sheet. Never thought for a second that cash or ownership of the cash could be faked.
My gut is they never had it, at least legally anyway. What blows my mind is the fact Boyne and Cole filed statements asserting the cash and assets were there. That makes me wonder if they didn't believe it to be true and maybe they were duped when the subsidiary was first created. If not, then they are truly arrogant fraudsters to be that bold as to make additional false statements after purposely filing false financials for two or three years to boot.
I'd really like to know exactly what happened. I lost a ton of money and I've emotionally moved on from the loss. However, it's like being a hit and run victim. What was I run over with? Who was driving? Was it an accident, or attempted murder? Really, I want to know.
The auditors must have believed the company holding the cash was a 100% owned subsidiary of EGMI. Either LC and LB purposely misrepresented it as such (they reported the assets on a consolidated basis, which would be correct if it were a true subsidiary) or they were complete idiots and believed themselves this was a properly structured subsidiary/parent entity and it really wasn't.
Legal snafu, incompetence or fraud, it doesn't really matter because the end result is the same. Shareholders got screwed.
My belief is that Donovan, Christianson, and maybe Houssels were the white hats in all this. When Donovan brought in a legitimate CFO (who turned tail immediately), the issue was brought to light.
Wish we knew the real story.
Anyone know how the new IR firm is being compensated? Let's hope it's not in stock. I've heard way too many sales pitches from pump and dump promoters concerning the company I work for. These guys are relentless in their pursuit of clients with .ob and .pk. Many of them are interested in getting their hands on as many shares as possible.
Perhaps this is why the selling is taking place. I hope this firm is legitimate and not promoters via email and fax.
Hamburger. That's about what my investment in EGMI is currently worth. A single. No cheese.
Anyone here think ALIF will be a content provider for the new TVs Apple is involved with?
Or that Google would be a potential buyer of ALIF?
I noticed Overstock.com TV commercials are using something that looks like Opus M. Anyone else notice that?
Thanks. I already own an oil/gas penny. No gold though. Owned AGT for awhile, looking at it again but I have quite a few penny holdings as it is. CKGT and ALIF are the largest.
Hey Pontiac...like the hunting analogy. Here in ND we like our hunting and our guns. Just kidding (sort of).
Everything's fine. Hubby's doing well at sergeant major school. Will be home over labor day so looking forward to having some family time.
Was tempted to jump in and buy more EGMI but short on cash. Been taking a beating on some of my other China pennies. Good long term holds so I don't want to sell right now.
The increase in volume is interesting. I think there's news coming or maybe just speculators trading. Been thinking about sending KD an email but I know he can't say anything so seems pointless.
Does the corpse have some life, or is this just an involuntary muscle spasm? News around the corner and someone knows something? Or just day traders. Hard to say. But it is interesting, considering EGMI hired consultants to develop a strategy which could include selling the company. Don't know if there's another company that would touch them but maybe if their patents and technology are really worth something. And the liability would be limited.
Speaking for wives everywhere...the answer is 'yes'.
Joking aside, what the hell happened today? The last gasp dump? Who was buying?
Maybe there's news coming.
Ha ha...day trading. Tempting, but not for me. Instead, I wagered a few thousand on Vivus. Two days before an FDA panel review that didn't go as planned. That one blew up too, although odds of recovery much better than EGMI. Took my beating and moved on. I wonder if anyone would consider subscribing to a new stock newsletter? "Here are my investments. Don't buy what I buy".
I've found more IED's in the market than my husband's entire battalion found in Iraq.
Good luck to your son in his military career. I'm sure he will do well. Sounds like it is in the genes.
You have a great weekend too.
Thought about contacting KD again and asking if there could be any information they can share with stockholders in the near future. Given the state of affairs, I realize he can't say much but it would be nice to know if there's any kind of info on the horizon.
Personally, I'd love to see a follow up letter from LC explaining his press release touting 'no change to net assets'. I blame him and LB and perhaps a director or two who were obviously asleep at the wheel.
I was tallying up the damage today. My EGMI losses wiped out all of my 2009 gains. Ouch. I want justice. And maybe a couple pennies per share for the few thousand I'm still holding, assuming the lawyers recover something and there's a few shillings left after the fees.
A girl can dream.
I'm happy they're not selling other cigarettes. It would seem to contradict their company mission if they chose to deviate from healthier cactus-based products.
The cigs and animal feeds will be key to getting institutional investment if they can accomplish an uplisting somewhere along the way IMO. This stock has been a painful short-term holding but hopefully the long-term payoff will be significant.
He's communicated with me via email too. The last time I talked with him was to offer encouragement to lead the company through this mess. Guess he replied because it wasn't hate email, which the company has probably received a lot of (justifiably).
I didn't expect him to say anything, knew he couldn't so I didn't ask.
The truth of this fiasco can't come out fast enough, we all need to know what really happened (or maybe just those of us with morbid curiosity).
I've moved on to other investments, but still holding a few thousand shares worth about one round of golf on a good course. Maybe not even that much...
Precisely why I'm fascinated as well. I've worked in public accounting and for a couple publicly traded companies as well. None of this makes sense. They couldn't have botched three audits this badly (2006, 2007, 2008). The auditors, according to other DD on this board, had business relationships with other companies where some of the directors or officers were also directors and officers. Maybe there was a connection to the IR firm PR gal as well, can't remember all the sordid details. Find it hard to believe though, that any CPA firm in their right mind would collude with a publicly traded company after what happened with Anderson and Enron. Just too risky. Insurance doesn't usually cover law-breaking either, so no coverage if a firm is found to have engaged in fraud with their client. I don't think that's the case here, there's a lot more to this story.
The forensic audit must be well enough along for them to have released those preliminary results. I'm guessing the next step will be providing evidence to the SEC for purposes of prosecuting someone. At a minimum, even if this whole fiasco turned out to be one gigantic misunderstanding, there appears to have been serious deficiencies in required 8 K filings. Not to mention the catastrophic damage inflicted on the shareholders. Unbelievable. You're right, might make a great case study, perhaps a best-selling novel.
So, if the cash really did exist at some point, it was generated through revenues and profits or possibly by issuance of shares not included in share counts (Rawnoc first pointed out the share discrepancies, confirmed somewhat through LC's poignant, if not smelly disclosure). Share count discrepancies mentioned in the last company disclosure as well.
Another issue I can't wrap my mind around is that any subsidiary of EGMI, if greater than 20% owned, would have been subject to consolidation reporting. Meaning that any assets or cash owned by subs is includable in the assets of the consolidated entity. So if assets were 'sold' or transferred to a non-subsidiary, what was the consideration for doing so?
None of it makes any sense at all.
Are these lagging trades through partial fill orders (GTC)?
Does anyone know if LS made his $10 million investment via open market purchase or if he received new shares issued by EGMI? Forgive me if this has been discussed and I missed it.
What I'm wondering is if there was a one-time large cash infusion directly to the company. Then there's a chance the money existed, although now it would be subject to a tug and war scenario given the discovery of the mystery document transferring ownership.
Nothing would make me happier than to see criminal charges, the sooner the better! I'm still perplexed the auditors could miss overstated assets, faked cash accounts, and fictitious revenues. One maybe, but all three? The forensic report provided by Price Waterhouse will be very interesting.
Wonder how long before there's a bankruptcy filing.
Seemed like only yesterday. All the hype and excitement around China Lot. I was curious if they've posted any updates on their website. Nope. All I found was this old press release.
http://www.chinalotsynergy.com/en/pdf/CLS&EGC.pdf
Obviously this relationship and potential is toast too. Or we would've heard something by now. No one wants to partner with a company riddled with potential fraud, almost bankrupt, and being sued or about to be sued by 100's of disgruntled parties.
Oh let the fun begin. Can't wait for my mailbox to be flooded with the inevitable notices of class action lawsuits. If I'm lucky, I'll recover one penny for every $100 I had invested.
Yup, live and learn. Thank god I got most of my money out a couple weeks ago. That 80% loss is almost comforting after watching today's bloodbath.
Good luck everyone. Unfortunately I still own a few thousand shares of this dog.
Thanks Pontiac. I told my husband about your family's history and he was practically drooling. He loves that stuff.
Family's great. No divorce since I shot my hubby's money down the crapper on EGMI. He's a forgiving chap (thank god!).
Saw on the news that we lost 5 soldiers in Kandahar to a homicide bomber. There are loved ones with broken hearts today, sure makes it hit home when you have friends, family, and neighbors in the service.
I'll take a look at that ticker, sounds interesting. Don't do what I do though. Just lost my butt in CKGT, although I hope it's a temporary set back.
For what it's worth (and probably not much), I contacted KD shortly after the LC disclosure. As expected, he replied with a thank you (I was polite, probably unlike most of the hate mail he was likely receiving), and stated he couldn't disclose any more information as they 'worked through the significant and complex issues'.
After the website went down, I sold most of my shares. I doubt their business model is dependent on the website (if there is a business model left) but it just left me even more uneasy with the situation.
I've thought about emailing a followup to see if I get a reply (some indication he's still there, they're still working on the issues). After I sold most of my shares, this has become like one of those soap operas where you tune in years later and not much has changed.
Geez Pontiac, I hope this works out for you. You've got guts investing more into EGMI. I chickened out selling most of my position a couple weeks ago.
Been waiting for any sign of life before I jump back in. Getting my butt kicked in other stocks at the moment.
Good Luck. You're a brave soul.
Looks like October 2008 or around that time. There's a link on their news page to an article about signing EGC.
I think your analysis is dead on. LC asserts KD overstepped his authority. When I read his letter (8K disclosure), it made me wonder if there wasn't over-stepping all around.
Even if he didn't agree with how the money was being spent, how can you rationalize shutting down an entire company to 'protect' it?
Doesn't make sense.
Surely you did not miss the sarcasm in my post? I was going to end it 'with protection like this...'
Didn't want to offend any LC fans out there.
I sold most of my position over the last week with the bulk of it sold yesterday. Still holding a small (comparatively speaking) block.
Tempted to jump back in with a few $ but not sure I have the stomach to do it.
Don't know what to make of the website being down. Ran out of cash to keep it going? Can't pay the IT guy to keep the hamsters running?
Just think. LC was protecting us poor shareholders by hiding the money. Maybe he will emerge as the lesser of evils here, but I have my doubts.
Termination of agreement should be great news, correct? Market not seeming to recognize that. Less dilution and the company is signaling they don't need the cash. What's not to like?
Good question. I too think they're in personal survival mode. Unless the consultants are keeping some of the focus on business strategy.
If there was a Chinalot agreement in the works, sure hope it's salvageable. The immense damage to the credibility of management can't be conducive to deal-making.
I'm hanging on hoping for a long term recovery in the share price. Long term being 6 months or until the financial statements are reissued. The headwinds are significant...they have to release statements that aren't massively restated and then reestablish listing criteria just to get on the BB? And right the ship, bring on credible and competent board members and the list goes on.
If the company has any value, it could be an acquisition target at fire sale price. The potential outstanding legal liability is a huge barrier to that happening.
Personally, I don't understand the need for hiring the investment banking firm for purposes of 'raising working capital funds'. That implies there's not enough cash. Even if LC took over the cash account to protect the company, how can you make that argument when you've crippled it to the point it needs an investment banking firm to raise funds?
Couple that with the auditors inability to confirm cash, and it makes me wonder if something didn't happen to the assets, such as being put into other investments that tanked, or invested with a firm that isn't reputable. Who knows. It just doesn't make sense.
As to KD's level of authority, hiring a turnaround company might fall under board approval, I don't really know. CEO's typically have a lot of latitude to execute contracts, but generally the board might have a $ threshold requiring their approval.
Doesn't sound like they have much of a board left anyway.
It will be interesting what comes out in the wash. We might learn more from the investor lawsuits underway once the subpoenas start flying. Will take a long time though.
Exactly. Failure to distinguish between cash and investments would be fraud unless unintentional and a mistake (I can't imagine how you would make that mistake).
LC's letter claims KD was not cooperating with the auditors. But if LC was the only one authorized to provide access to an account and he did not, that is serious obstruction.
I don't think any of them are trustworthy after reading those letters. It's just too bizarre. If the cash is there, it should be a slam dunk to have confirmed it.
My bad. I think I'm confusing the sales contracts for NEP which were fixed at a certain price to PetroChina or were subject to government control/price changes.
Regardless, CKGT is a solid company with great potential. I think they've barely scratched the surface in terms of growth.
I agree, it has almost unlimited potential for growth. One potential issue lurking for me is the question of when the Chinese government may decide they'd like to own CKGT. Although there are some state-owned companies that do well (NEP comes to mind, unless it has changed significantly since I owned shares about a year ago).
I like the products too.
It makes me wonder if there are any cactus producing companies in the US? We're so big on agriculture over here. I live in a state where ag is a significant sector of our economy. A little too cold to produce cactus year round but from what little I know about cacti, not much water needed.
I digress. Regarding the PE ratio, my only point was that I would never have found it because I routinely include low PE's in my stock screens, just to whittle them down to a manageable starting point for ROI, ROA and other criteria I look for.
Yes, an uplist would make sense. No reverse split BS though.
I'm still holding a boat load even though I sold a significant chunk. Haven't been brave enough to jump in until I see more volume and a turnaround. Although the letters revealed a lot more, it just calls into question how stupid, egotistical, and out of control the entire bunch of them are. Talk about dysfunctional.
If there's a stockholders meeting perhaps those of us who can attend should bring along name tags with our screen names so we can get together for drinks and therapy.
How 'bout it? Anyone want to start an EGMI support group? (I'm only half-kidding).
The PE ratios are being calculated using GAAP reported earnings per share, which after the FMV warrant charges, appear to be poor. Those PE ratios are what stock screens use to pull from. Any screens run based on PE of less than 100 will keep CKGT off the radar.
I'm just saying this doesn't help in terms of new investors finding this stock.