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So he was convicted in March. What's taking so long for the sentencing?
Everyone should read this:
Saturday, July 02, 2011 7:28:40 PM
Securus Law Group, P.A. Public Company News June 26, 2011
Securus News: Penson Crack Down on Stock Prices Accepted Cause Companies Upheaval
Penson Implements a $.10 Rule for
Stock Clearing; Evaporates Public
Company Stock Movements and Sales
By Craig A. Huffman, Esquire,
Managing Partner,
Securus Law Group, P.A.
Craig@Securuslawgroup.com
The Ten Cent Problem
Companies whose stock trades below $.10 per
share may quickly find themselves in an illiquid
position, unable to raise capital, for
shareholders to sell shares, or in any way
deposit shares through many brokerages.
Penson Financial Services, Inc. (PSFI) made a
significant policy change that public companies
should be, or may already be aware of in
regards to the pricing of securities for deposit
through their clearing system. PSFI is the third
largest clearing firm in the United States
(Pershing and Fidelity are #1 and #2
respectively). PSFI’s clearing actions of stocks
being deposited to brokerages has a significant
effect on penny stock companies. Their actions
just became devastating to micro priced
stocks. On June 1, 2011, Penson released a
new policy whereby they will be restricting
deposits of shares of any kind, whether they
are made by physical certificate, DWAC, DRS
(Direct Registration System) or ACAT. Penson
will no longer accept deposits of equity
securities traded on the Pink Sheet or OTC
Bulletin Board markets priced below $0.10.
The amount of companies affected could be
staggering. This also affects a great deal of the
284 brokerage firms that clear through Penson,
but not all since some will be able to clear
depending upon status of accounts with
Penson. Penson reasoned that somehow
stocks at these low prices were more suspect
to fraudulent activity than higher priced stocks.
Penson related their reasoning as:
“Also, the regulatory community has recently
become more focused on the deposits of
physical certificates, particularly those that trade on the Pink Sheets or OTC Bulletin
Board. The securities industry has experienced
a significant spike in fraudulent transactions
related to reduced valuations or non-existent or
fraudulent transfer agent services for sub-
penny securities. In addition, the potential for
the use of these types of securities for money
laundering or investor fraud are also of serious
concern. As a result, the regulators have
increased their scrutiny of transactions in these
types of securities.”
Interestingly, Penson does not name any of the
supposed “Regulators” who have these
concerns. None the less, Companies below, or
even near this price point now find themselves
at ultimate risk. Having a public trading market
that many of their shareholders can not utilize.
They can not sell or even deposit their
legitimate shares of companies they invested
in. While they can try to “broker shop” the
solution very well is at the Company level.
The Dreaded R Word Solution
While no one wants to contemplate being
forced into a reverse division of their
outstanding shares, the actions of the market,
and in this case the actions of a clearing firm,
can force this solution on a company. Reverse
divisions (splits) should be done when there
are strategic reasons to do so. The actions like
Penson took as to stock prices just made that decision a lot easier for companies to make.
Expansion of your business operation on a
national level is a good reason. There are
others reasons and movements of some of
your subsidiary businesses or new business
relations that I am sure exist, would be
adequate and solid reasons to declare a
reverse.
A stock reverse is a function of state law. In
some states (Delaware for instance) it takes a
shareholder approval which could necessitate
an expensive and untimely shareholder
meeting. For these companies control of the
share voting power is therefore essential.
While in other States it is a matter of board
resolution (Florida, Nevada). Articles of
incorporation or bylaws also have to allow for
reverse divisions. There are numerous matters
that have to be completed during this process.
The process should take 30 to 45 days on the
outside to complete all matters. The most
important factors are a law firm who works
through the list of to dos and a clearing agent
with a good relationship and responsiveness.
FINRA is responsible for the action of the
shares being reflected on the market to show
the reverse. They are also in charge of
approval of all of the paperwork which they
issue for this, and for the giving of a new stock
symbol as applicable. Working closely with
FINRA is essential by the transfer agent and to
make sure that all documents going to them
are correctly done, and supplied in a timely
fashion.
The numerous items that have to be completed include: 1) getting a new Cusip for the new
post-reverse shares 2) having the transfer
agent involved to do the transfer agent
notification form, and other documents to
FINRA, 3) having a cover letter completed with
a complete corporations history 4) having the
transfer agent make sure there are sufficient
stock available, 5) supplying FINRA with the
issuer form, along with notarized copies of the
corporations standing documents from the
State, notarized articles of incorporation from
the State, notarized resolution by the board of
directors for the reverse, and notarized
shareholder approval document if required.
The matter must be announced by a press
release and/or an 8-k, which would be positive
in message stating why the strategic reason
was made for the reverse. In this instance, it is
to allow shareholders to trade the stock. And
just how many stocks really should be below
$.10 per share anyway. The timing for
completion should be within 30 days. Under
FINRA rules you have to give them at least ten
days notice before execution. The execution
date will actually be dictated by FINRA when
they choose to effect it. Usually they only give
one day’s notice, usually at about 2-3:00 EST
that the reverse will be effective the next day at
the start of trading, so you should have a
canned press release ready to issue at a
moment’s notice the afternoon you get the word on the effective date for the next day’s
trading.
I totally agree. Something is going on and it's not good for us. I cannot get over the fact that all those sales professionals did not produce one sale in more than a year. Unbelievable!
Has the crook been sentenced? It was supposed to happen on June17.
Do you know if the judge can order that all 850 million illegally issued shares be retired? TIA
That one sale to Barnett was a direct sale as a result of the agreement. What I do not understand is why such a large, supposedly professional sales force was unable to produce any results so far. There must be a reason behind the failure, there always is.
Yeah, goes to show again that past successes are no guaranty for future accomplishments. Maybe they just got lucky with E Research.
Would be nice to prove us wrong and be even more successful with this one but I'm not holding my breath; mainly because of their lack of clearly communicating progress, or rather lack thereof, and steps to be taken to improve performance.
Some on this board have called us longs "a bunch of whiners", that fail to see management's goal of reaching profitability and self-sustainability in 2-3 years. A lot of us blamed Garza and Goldman for getting into this in the first place. However,Garza was just an interviewer conveying information from Laky and Goldman an analyst giving his opinion based on information at hand and mostly forward-looking statements. Probably everybody from Laky to the partners to the casual investor was overly optimistic.
It's been 15 months since they announced the partnership with Salesconx. Still posted on their website, the comments from Evan Sohn, CEO of Salesconx: "We are excited about the opportunity to deploy 15 medical technology sales representatives in high-potential targeted territories throughout the U.S. We expect to meet and exceed our objective of $1 million in new business per territory in the first year of deployment. We look forward to increasing the number of representatives to as many as 75 as MedClean extends its product line with the introduction of another low-end product to address the needs of over 200,000 small medical waste generators later this year."
He expected to meet and exceed the 1 million/sales rep/year objective. Obviously if that had happened, the pps would be way above the 40 cents predicted by Goldman. For a company like Salesconx to have potentially 75 professional reps not producing one single sale in 15 months it's baffling. We certainly do not know why nobody is buying the products and I'm afraid neither does Laky. Is it the bad economy, decision makers not willing to take a chance on a company that has no employees and does not produce or install the equipment, 25% savings not justifying replacing existing equipment and relationships? Can't really blame Laky for trying to adjust the business strategy on the fly but whatever the reasons it's apparently not working.
Unfortunately, at this point it seems the only way we will ever make money on this is by some miracle or dumb luck. Hope I'm wrong and that good products and sound business strategy coupled with market forces can still produce results in this day and age. Otherwise, we have better odds just buying lottery tickets.
Val Kazia, O2 CEO, expects all positions to be filled by Sept. 1. He also expects employment to double to 80 by September of next year.
I'm not holding my breath but, I would really, really like to be pleasantly surprised.
For the record, I do own stock in OTOW and I would like to see it appreciate substantially sooner rather than later. However, at this point, this company is still a one-man operation and there's only so much a person can do.
Random excerpts from Jan's compilation:
Wednesday 07/07/2010 @ 8:30AM
"Our objective is to acquire 10% of this market within 3 years".
Since it's been almost a year since this PR, I suppose OTOW now has only 2 years left to capture 10% of the DR market.
Mr. Kazia continued: "Our initial goal is to build the infrastructure to provide service to five smaller rural cities. Our subsequent target is to be on air in the first city by February of 2011, with the other 4 cities coming on-line shortly thereafter".
Four months after that target date we're not even close to starting erecting towers, let alone be on air.
Monday 08/23/2010 @ 9:45AM
OTOW enters into agreement to acquire fifty percent of a well established Financial Institution in the Dominican Republic.
Earthcom Service Inc. has signed an agreement to acquire 50% equity interest in a 30-year-old Dominican Republic Financial Institution, and is scheduled to close early September 2010.
Did this ever materialize?
Wednesday 08/25/2010 @ 10:15AM
OTOW retains Vertical USA, LLC, to provide master build-to-suit services in the Dominican Republic.
OTOW has entered into a Master Build-To-Suit Services and License Agreement with highly acclaimed Vertical International S.A., a subsidiary of Vertical USA, LLC, a tower building company, to provide the construction of the wireless tower facilities pertaining to the wireless project being launched in the Dominican Republic.
The project is slated to build 450 towers over the next 5 years, saving the Company a substantial amount of capital over having towers built incrementally.
Again, that would now mean 450 towers in the next 4 years. That is, if they start building now; otherwise we might get into 450 in 3 years and so on...
So, although it's always good to be optimistic and I believe OTOW will do well in the long term, some of the posts on this board are more akin to wishful thinking than based on real business hard facts.
Thanks Gregg. Hopefully, things will work out fine for all of us longs.
Did they file the 10-K yet? The deadline already passed.Or maybe a NT-10K?
O/S increased from 920 millions to 984 million. Is this data from the new financials?
Does anyone know how many employees this company has?
Potential market of 38,000 households? Are you saying that OTOW will be the only supplier for the entire city of Palm Coast? Don't they have cell service now?
Not to burst anybody's bubble but, as per Form 10, they are at least one year and $6.5 million in additional funding away from Ovax PhaseII trial results. After that, more years and at least $50 million in funding for final approval of either Mvax or Ovax.
So, this reaching over $1 anytime soon is unrealistic IMO.
What do you base your pps predictions on? I would like to know what valuation model do you use, because if this company is going to reach $1 in September, that will mean a market cap of almost 1 billion. I don't see that happening even if the DR project is successful;there is simply no fundamentals supporting it.
Great insights. TIA for the DD.
Yeah, I realize now that whoever entered the data at Scottrade misplaced the coma by one order of magnitude. Thanks for clarifying that.
Yes, I have. What confused me is that Scottrade still has the O/S at 13.56 Mil.
Does anyone know what the actual # of O/S for BLGW is? Some sites list 13 Mil ,others 120 Mil??? TIA
No, I haven't yet. Like you pointed out, I too suspected it was the Southridge deal. Google Finance only lists 726 million,in the 10-Q they had 764 million on Sept.30.
If enough revenue does not come in soon and they have to continue putting shares out there, once they get to 1 billion a R/S will be unavoidable.
Slyder, have you noticed the increase in O/S? My Scottrade account now lists 809.7 million, whereas before it was somewhere around 765 million. Any idea where the additional shares came from?
How about management canceling 200-300 million of their own shares since they own 70% of the company. That should give a boost to the pps and get more investors interested. When real revenue and income will eventually show up on the financials, then and only then, they can reward themselves by getting those shares back. Considering their YTD "performance", they definitely do not deserve 500 million shares.
The only ones making money are Bianco and and his acolytes. Unfortunately for regular investors, soon enough Bianco will do a R/S, 1:10 or even 1:100 and the cycle will start again.
Thanks, "lefty", let's hope there will be no more suspensions and that the results will be great.
Yeap, almost 50 million shares traded on 2.2 million of O/S.
Is that a neat trick or what? They must be pulling those shares out of a hat, or the R/S didn't actually happen, or it did happen and then Molen issued another 50 billion shares.
That's why I asked the question in the first place, after seeing yesterdays volume. 50 million shares traded in 2 days on 2.2 million O/S. Ridiculous!
How is it possible to have 31 billion O/S after a 300:1 reverse split? What did it have before the split, 9 trillion?
Some brokerage houses, like Scottrade only list 2.2 million as O/S.
????????
OK, thanks "lefty"!
When are the results supposed to be made public?
Could someone please explain how can this stock have a trading volume of almost 30 million shares on 2.2 million O/S?
TIA
Will do!
Flashback to December 1st, 2009
This is only my second post on this board but with all the discussions about the management I would like to remind everybody about a Laky quote in the Garza interview: "Our manufacturing and installation bandwidth is running at full capacity," says David Laky,President and Chief Executive Officer of the company,but that's a nice problem to have and we're actively making changes to accommodate more orders."
Now, I believe that any existing and potential investor reading that took it as a factual statement. Since only one contact came through in the ensuing 8 months,either their manufacturing bandwidth has a maximum capacity of 1-2 orders/year or it was a deliberate misrepresentation on the part of an officer of a publicly traded company. Maybe Laky would care to explain what happened to all the backlogged orders he was alluding to.
Any new thoughts? The merger is complete, the symbol has not been changed yet, the number of O/S has increased by 11 million, no idea what the next move might, if any!
Thanks Drax, very informative. Like you said, somebody gets revenue from those wells. It's frustrated to be an investor in a public company of which one cannot find any pertinent news, either good or bad.
Does anyone have any new information about this company? The stock still trades but do they still exist, do they have any operations,revenues, employees, anything?
Do you have any info from the SEC concerning the investigation?
Yeah, I know, but the PR machine really needs to get the word out now,to attract more heavyweight buyers.
Hello to all!
I am new to this board although I've been holding MCLN stock for quite a while.
Totally agree with "pack 10's" post. With only 1300 or so shareholders, we are practically trading among ourselves and the PPS cannot increase to levels that would accurately reflect the real progress and potential of this company. Furthermore, if management does not divest of some the 70+% stake, institutional investors will not be able to get into it, unless it's through direct dealings that could imply new issuance of stock or warrants and thus dilution.
Hope things will improve markedly sooner than later.