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Where are you seeing reference to 3% -- document, page number, and exact quote? My understanding is that FABU completely spun out LSYN and there is no remaining link between them.
Summary for the week: flat with heavy trading. Closed at 40 cents, which was unchanged from last Friday's close.
The stock was teetering on an all-out collapse as it was in the mid-30s much of the day, but clawed back to 40 cents at close.
Concern about CEO Christopher Spencer, CFO John Busshaus, and board of seeming cronies continues as they have taken no steps to ensure that reported financials are not fraudulent and recently pocketed $1.5 million in compensation on a net income of $3 million. Also, quarterly financials have not been released over four weeks after close of the quarter and the company has been silent about release date.
Continuing to expect that this stock will go below 20 cents while Spencer, Busshaus, and the current board are in place.
Summary for the week: flat with thin trading. Closed at 40 cents, which is up 2 cents from last week's close at 38 cents.
Many may have lost interest and decided to move on to other investments after the recent major sell-off that appears to have been driven by concerns with a CEO/CFO/Board that may have a seemingly criminal history, appear to have no knowledge or experience in Libsyn's business, and do not seem to be doing anything to grow the company.
With a stagnant Q2 as a major warning sign of things to come, bad news in the upcoming earnings release may trigger the other shoe to drop with a major sell-off and possibly fresh securities litigation.
Based on this week's news, I'd avoid this stock and sell any holdings. I would only start to consider it if it's well below 20 cents.
Summary for the week: 24% decline from 50 cents to 37.99 cents.
A lucky few took profits last week but now we're in uncomfortable territory where people who relied on wishful thinking to buy into LSYN are starting to realize that they are holding a lemon. Heavy volume today as some threw in the towel and cut their losses. Feeling bad for those who haven't gotten out yet.
Libsyn is valuable and could be trading at dollars instead of pennies if it were not controlled by this CEO/CFO/Board who have a nasty history of fleecing shareholders. Under the current set-up, 20 cents is a fair price since there is such high risk of getting ripped off. Until this management is gone or the share price falls below 20, I'd say sell any shares and hold off on buying.
Are you talking about the LA lease obligation? That is a long-standing obligation that is a drain on the company that carried over from FABU. There is no indication that Libsyn is doing anything with that space and the filings made it clear that it was something that the scam Chinese company committed to. Hopefully they have found a way to get out of the lease or sublet it to offset the approximately $300k annual obligation. If they are actually paying that money out, it's probably going someone's cousin collecting bogus rent checks.
From the filings:
FAB was the guarantor on a lease agreement for office space in Los Angeles, CA, which was originally entered into by a US based company held by a Chinese entity with which FAB had a Variable Interest Entity agreement. The US based company held by the Chinese entity has no business purpose or relationship with Libsyn. As the guarantor, FAB has assumed the liability of the lease obligation. Effective with the spin-off, Libsyn will assume the responsibility of the lease obligation as the guarantor.
On valuation, take a look at my post from 8/9 here: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=124413657
Current assets: .20
Cash: .17
Current assets net of current liabilities: .16
Cash net of current liabilities: .13
I'd only rely on the last number and would give it a big discount for risk of management putting paws in the cookie jar. Call it .06-.07.
Until these guys prove they are not stealing investor resources and demonstrate that they are generating sustained growth, hard to see this stock being worth much more than the hard assets. I said .20 to be generous with a 3x multiple on hard assets as to the max price where I'd even start to consider buying.
I'm not saying the value of Libsyn as a company is 20 cents. It's clearly worth more. The problem is that you can't just rely on the value of operations. You have to account for governance and ask yourself how much of the value will flow back to investors versus the CEO/CFO/Board taking it for themselves. It's naive to do a spreadsheet exercise to come up with a valuation of the company and then fail to account for the important question of how much of that value investors can get.
The CEO/CFO have a terrible track record where they took Libsyn's previous parent company (FABU), bundled it with a Chinese shell company that had made-up numbers, and pumped the stock price up before they personally profited by dumping shares immediately before the scam was exposed. I still have not been able to get a good answer as to why Christopher Spencer (CEO), John Busshaus (CFO), their accountant, and possibly the entire Board are not in jail for their shenanigans. The best-case story is that they were stupid.
Now they are paying themselves $1.5 million annually on $3 million operating profit all while they own less than 2% of the entire company. Even if the stock price goes to $5, how much upside do they have in light of their limited holdings versus the value they are extracting in the form of unjustified cash compensation? Where do you think their incentives are? Their own behavior says a lot. If they had an ounce of decency or respect for their duties to shareholders they would give those salaries back to the company or would never have taken them in the first place.
Thanks for stating the obvious. Yes, I'm active on both boards trying to get information and share what I know.
I might not argue with the general observation that insiders generally don't seek to drive down share price. But, insiders do leak to help friends out inappropriately and because they are incompetent. Inappropriate behavior and incompetence are defining features of this CEO/CFO/Board group.
As for your theory about the market-mover at spinofflist, there were two trades today at his 72 cents and they were for 2500 shares. Even if we take the whole week, there were 10-15k shares traded at that price. Assuming he's a real person who is telling the truth about his investment activity, his behavior does little to explain the 45k shares that traded today and knocked down the price. Maybe he has an army of disciples who immediately change up their investments based on his every post, but that seems unlikely for someone whose site is ranked below 15 million in global traffic on Alexa. Also, it would not explain the drop down from 89 cents to 72 cents before he announced his exit.
His original post on September 15 was lukewarm and not a ringing endorsement that would drive herds of investors to stampede into LSYN. LSYN was trading at 68-69 cents in the days leading up to the 15th and then on the 15th went up to 82 cents. Even we assume that all gains on the 15th and beyond were attributable to this one obscure guy, what explains the drop down to 50 cents on strong volume today?
Likewise, his negative note was posted today. What explained the drop from 89 to 72 cents during the first four days of this week?
If you look closely at the quarterly numbers from recent filings, you'll notice that Q2 2016 was soft with a lot of deceleration y-o-y vs Q2 2015. That may be a set-up for some really bad news in the third quarter. That could explain this week's collapse if insiders have started to leak out the bad news.
Summary for the week: 44% fall from 89 to 50 cents. Congrats to the profit-takers who got out while the getting was good. This is a company with CEO/CFO that dumped shares at a market high immediately before the parent company got delisted in a scandal and last year paid themselves $1.5 million on $7 million revenue and $3 million net income. It seems the $1.5 million is for no-show jobs. Both guys are also CEO/CFO of another public company (Future Healthcare of America) and the CEO runs some sort of holding company/investing operation in Florida (yeah, he lives in Florida while the HQ for this 16-person company is in Pittsburgh). Oh, and did I mention the accounting arrangement? All of these public filings everyone is relying on were audited by a one-man shop in Utah that seems to have only this CEO/CFO as his primary client and (wait for this) was the same auditor who was in place when Libsyn's predecessor parent company (FAB Universal) was discovered to be a fraud. How about the Board? A bunch of nobodies who are long-time cronies of the CEO/CFO. One of them who appears to run some sort of print shop as a home business.
Come on folks, let's get serious here. Libsyn is a known brand in the podcasting niche and is a real operating business. But, this CEO/CFO are more likely than not just looking to extract value out of a business that they don't know the first thing about operating. Based on the filings, they don't even own many shares of the company. They certainly don't appear to be taking any steps to grow the company or protect its market position. As long as they continue to lead the company, I'm putting a 20 cent value on LSYN. If it goes below that, I'll consider it worth the risk. Anything above that is wishful thinking. If you're stuck with shares you bought above 50 cents, your best move might be to get in touch with the SEC, Justice Department, or some other party that can put these guys in jail or otherwise get rid them and free up Libsyn to generate its full value.
Looks like we are descending into a full rout. I've long been skeptical that LSYN has real value with the current CEO/CFO/Board in place and with their lack of efforts to grow the company. A fair value with this management is right around $0.20. But, I wonder what is driving the price down suddenly. Did everyone wake up and realize that their money is invested with leadership whose best-case upside story is that they are simply incompetent? Did insiders leak some very bad news about the third quarter?
Legal deadline is 45 days from end of fiscal quarter, which would put it at November 15 if September 30 was the last day of Q2. They could release it earlier. Their last 10Q came 35 days after the end of the quarter.
True to form, they have provided no information to investors about release dates and don't have any online investor resources or earnings calls calendared as far as I can tell. It creates a situation that is ripe for SEC rule violations where preferred individuals get wind of news before everyone else does.
Stock is tanking this week. It's an unusual situation since this is a small company without any major news and with a quarterly report that has not been filed yet. Is there an inside job in the works? If so, are the insiders dumping to take profits after pumping this close to $1 or are they trying to drive it down to grab more shares?
Either way, hoping it all works out for you. You put a lot of thought and effort into this investment.
Sounds like your broker may have screwed you. While the record date was July 20th, selling FABU after that date (but before the August 1st distribution date) does not necessarily mean you kept your rights to the LSYN dividend.
See the info below from the prospectus. Your broker may have elected to sell your FAB common stock with your entitlement to LSYN common stock, rather than without the entitlement.
Q:
If I sell my shares of FAB common stock on or before the Distribution Date, will I still be entitled to receive shares of the Common Stock in the Distribution?
A:
If you hold shares of FAB common stock on the Record Date and decide to sell them on or before the Distribution Date, you may choose to sell your FAB common stock with or without your entitlement to our Common Stock. You should discuss these alternatives with your bank, broker or other nominee.
Wow they may really be turning a corner. This is the first ticker out of three that does not give an up-front statement that they are going to screw investors.
Now all they need to do is stop stealing the cash in the form of unjustified executive compensation, not steal the value of shareholder equity with the 5 million shares they set aside for employee incentives, and start taking the most basic steps to grow this business in a real way.
Where did you see the announcement about the ticker change?
This first item does seem like boilerplate, especially since in the prospectus there is a sentence stating "Other than FAB’s lease obligation for office space in Los Angeles, already included in the financial results, we do not know of any other obligations that FAB will retain that may become the responsibility of Libsyn." Full excerpt below.
The second item is a possible concern and something that I also noticed. The financials with balance sheet information are for end of Q1 or Q2 depending on the documents referenced. So, between June 30 and August 1, FAB could have sucked out the cash and we would not know. Also, the piece you quote discloses that cash distributions are a regular activity. I would personally want to get a clear picture of where the balance sheet stands today. If we are being safe, then should not rely on that cash in thinking about the company's value. I wrote a previous message about that. Relying on balance sheet for more than $.06-.07 of the stock price is wishful thinking.
I would guess they didn't take the cash out. They explain the transfers as "Each month, the cash balance of each subsidiary is reviewed and the cash used for maintaining normal operations is transferred to the Parent." Based on their own disclosures, there has been a long history where "normal operations" does not mean a few million dollars in a single month. So, if they suddenly took out a few million dollars within a month, they would expose themselves to a lot of scrutiny. If they are running a con game, I think they are too greedy to wrap it up this early and get themselves tied up in new litigation. If they just had their eyes on only the cash, they could have just kept overpaying themselves $1.5 million a year for a couple of years without even filing disclosures.
Excerpt from prospectus
The Spin-Off may Expose us to Potential Liabilities Arising out of State and Federal Fraudulent Conveyance Laws and Legal Distribution Requirements.
The Spin-Off could be challenged under various state and federal fraudulent conveyance laws. An unpaid creditor or an entity vested with the power of such creditor (such as a trustee or debtor-in-possession in a bankruptcy) could claim that the Spin-Off left FAB insolvent or with unreasonably small capital or that FAB intended or believed it would incur debts beyond its ability to pay such debts as they mature and that FAB did not receive fair consideration or reasonably equivalent value in the Spin-Off. If a court were to agree with such a plaintiff, then such court could void the Spin-Off as a fraudulent transfer and could impose a number of different remedies, including without limitation, returning our assets or your shares in us to FAB, voiding our liens and claims against FAB, or providing FAB with a claim for money damages against us in an amount equal to the difference between the consideration received by FAB and the fair market value of us at the time of the Spin-Off.
5
The measure of insolvency for purposes of the fraudulent conveyance laws will vary depending on which jurisdiction’s law is applied. Generally, however, an entity would be considered insolvent if either the fair saleable value of its assets is less than the amount of its liabilities (including the probable amount of contingent liabilities), or it is unlikely to be able to pay its liabilities as they become due. No assurance can be given as to what standard a court would apply to determine insolvency or that a court would determine that FAB was solvent at the time of or after giving effect to the Spin-Off, including the distribution of our common stock.
From and after the Spin-Off, we will be responsible for the debts, liabilities and other obligations related to the business or businesses which we own and operate following the consummation of the Spin-Off. Although we do not expect to be liable for any of these or other obligations not expressly assumed by us, it is possible that we could be required to assume responsibility for certain obligations retained by FAB should FAB fail to pay or perform its retained obligations. Other than FAB’s lease obligation for office space in Los Angeles, already included in the financial results, we do not know of any other obligations that FAB will retain that may become the responsibility of Libsyn.
Meant to say "It's NOT as if a qualified person who faces consequences for being wrong put themselves on the line to put a stamp of approval on LBBS."
Here is the market tiers link http://www.otcmarkets.com/learn/otc-market-tiers
It's primarily form over function. It's as if a qualified person who faces consequences for being wrong put themselves on the line to put a stamp of approval on LBBS. Still, it a step up and therefore a positive development. May add more liquidity if some people screen out pink but include QB as part of their investment approach.
Details from the OTC Markets site:
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Don't know about others on management team because it's not clear who they are or what they do, but not a fan of the CEO, CFO, and Board for reasons that include:
CEO and CFO paid themselves $1.5 million in 2015 when the company had $7 million revenue and $3 million net income. So, their pay was equal to 50% of net income
Running Libsyn and its predecessor FAB Universal does not even seem to be a 100% activity for these guys. They also are CEO and CFO of another traded company with ticker FUTU and seem to have additional gigs
They dumped their shares in LBBS predecessor FABU right before the market found out the thing was a sham (reportedly the company made up $100 million in revenues in China that did not exist). They settled a shareholder law suit related to the sham for something the like $2 million
They have a one-man audit shop as the accountant behind the reported numbers. The one-man shop seems to have only them as a client and was also the auditor when the FABU sham was uncovered
They don't seem to be doing anything to grow the business other than coasting on overall industry growth. Q2 YOY revenue and profit growth were slower than Q1
Growth and valuation is a never ending treadmill. They grew EPS 133%. Glad they did that. But, what are they doing for shareholders now? We're talking about a Q2 that saw 2% YOY earnings growth and no indication that they will do anything to keep the growth going.
This company needs to 2x and 3x in order for the stock price to get to the levels you and others are talking about. These guys have given no signs of how they are going to 2x and 3x the company.
Great asset. Worrisome management and board that may be some combination of crooked and stupid.
As part of the healthy upside debate, it's worth also bearing in mind that there are downside scenarios where others gobble up most of this business within two years.
That's the right sentiment. Problem is that they are the biggest player in a commodity hosting segment. They do a good job eking profit from that, but hosting is not a 2X growth business and they don't have a lot of additional share to capture.
The advertising business looks promising based on its reported 2X growth over the past year, but Libsyn is on a $1 million annual run rate, which is nothing. That's probably 1% of the entire podcast ad industry even though Libsyn is perfectly positioned to insert and measure ads in the shows it hosts and Libsyn has an existing relationship with probably a third of all podcasts who matter to advertisers.
They don't seem to be taking any real steps to grow advertising. It's not even possible to identify who heads their advertising sales or if they even have a person responsible for ads. If I were an advertiser looking to work with Libsyn to advertise on a show they host, there is nothing on their web site or google that would give me the name and email of the person I need to talk to or provide basic information on how their advertising program works. Does that sound like a rocket ship business that is going to 25x its price?
This is a company that seems to be focused on taking 30% of a commodity $30 million hosting business and settling for 1% of a $100 million rapidly exploding advertising business. Even a half-stupid executive team and board would understand that is the wrong direction and would go aggressively after where the dollars are.
Your thought process makes sense on paper. But, once you have a view on assets and cash flows, you also have to account for a view as to how that gets passed through to investors. Even Apple's giant cash horde gets discounted in the company's market cap because of risk that management does stupid stuff with it.
In this case, we have a senior management team and board made of people who have previously shafted investors and have little by way of reputations to uphold. Also, it's an OTC stock, which automatically means a risk discount.
This conversation is not about the spreadsheet valuation of LBBS. This conversation is about how much of that value shareholders can realistically access. I have seen no steps by this team to give us confidence that they aren't up to the same old tricks.
Sorry for the bad math on the first post by the way.
Sorry for the bad math on previous post. Revision below.
Current assets: .20
Cash: .17
Current assets net of current liabilities: .16
Cash net of current liabilities: .13
I'd only rely on the last number and would give it a big discount for risk of management putting paws in the cookie jar. Call it .06-.07.
Trading price of .30 seems a healthy 5X multiple on hard assets. Until these guys prove they are not stealing investor resources and are generating sustained growth, hard to see this stock being worth much more than .30. I won't be surprised to see the stock tank closer to the .10 range as more people wake up and find that there is some value and liquidity in a spin-off run by the same people who fleeced them a couple of years ago. They will probably want to recoup when they can and be rid of these guys.
There may be real value here that is worth much more than .30, but can't see this board and management being smart enough or honest enough to get there.
Current assets: .20
Cash: .17
Current assets net of current liabilities: .13
Cash net of current liabilities: .07
I'd only rely on the last number and would give it a big discount for risk of management putting paws in the cookie jar. Call it .03-.04.
Trading price of .30 seems a healthy 10X multiple on hard assets. Until these guys prove they are not stealing investor resources and are generating sustained growth, hard to see this stock being worth much more than .30. I won't be surprised to see the stock tank closer to the .10 range as more people wake up and find that there is some value and liquidity in a spin-off run by the same people who fleeced them a couple of years ago. They will probably want to recoup when they can and be rid of these guys.
There may be real value here that is worth much more than .30, but can't see this board and management being smart enough or honest enough to get there.
Strong volume yesterday but price tanked. Are the best days behind us after that initial pop last week?
It's going to come down to how they are reporting ad revenue. A lot of ad revenue in a situation like this is passed on to the underlying podcaster.
Also, they don't have 55 million users. The podcasters they host have 55 million users.
Decelerating growth at this tiny size is a huge red flag. Do you think when netflix was below $10 million revenue, it as only at 20% annualized growth or that it was seeing decelerating quarterly growth?
This is a growing industry but hosting is subject to a lot of competition. That decelerating growth is a real problem for a company this size.
Thanks, you're right. That's a real concern. Did they just put some lipstick on this pig for Q1 and now its stink is starting to come out?
Revenue: 40% Q1 YOY growth vs 22% Q2
Net income: 15% Q1 YOY growth vs 3% Q2
If the numbers are true, looks like accelerating performance in Q2 vs Q1 when comparing respective YOY growth:
Revenue: 40% Q2 YOY growth vs 22% Q1
Net income: 15% Q2 YOY growth vs 3% Q1
If they do reply and you don't mind posting, I'd love to see what they say and how they say it
So, it was #1 and they are just incompetent. I think we need to wait longer before the thieving liars shoe can drop. They need to shovel many more pounds of BS and pump this thing higher first.
Nice working getting in touch. What was their response to your email?
Good move to get in touch. Sounds like you've got a direct line.
I think these guys fleecing investors is like an earthquake in a zone with high seismic activity: it's a matter of when the earthquake hits, not if the earthquake hits.
They don't seem too bright, but diluting everyone by 30% by giving themselves 8M shares at the outset like this would just be stupid because they can't sell those shares immediately and the market for LBBS is just starting to get established where a move like this would significantly affect investor confidence.
These guys may not be smart or connected enough to play a truly lucrative long con game along the lines of successful start-ups that hide rot behind growth. But, they seem at least smart enough not to go for a smash-and-grab when a purse is completely empty.
They need to do a little more pumping on this thing before they can pull the trigger on dumping. I'd expect many more pounds of positive BS before they start taking the wool off.
The % of shares owned by Busshaus, Smith, and Polinsky in that doc appears to be off by two decimal places. So, maybe the whole thing is a mess. That boils things down to two options:
1. Busshaus is incompetent and can't keep basic numbers on things like shares outstanding, float and insider ownership straight even 6 months after initiating this process
or
2. Busshaus and the rest of the board are unabashed thieves who diluted shareholders by almost 30%
What led to the sudden change of heart, given that you were such a big booster until now?
Whoa. Are you thinking they issued 8,302,003 to themselves after the spin-off?
If past behavior is any guide, we all know the saying: Fool me once . . .
Where are you seeing the 28.8?
Trading may not be possible until the distributed shares show up in accounts of shareholders who can then turn around and sell their securities. I haven't been able to find anything definitive like T+3 when it comes to how long it takes for transfer/distribution agents to complete the distribution and for brokers to reflect updates in accounts in a spin-off scenario. T+3 may not be a bad starting point. This site talks about a different scenario involving share transfers, which apparently take 3 business days for validation and overall about a week: http://www.finra.org/investors/understanding-brokerage-account-transfer-process.
So, things may be quiet for several days.
Wonder why FABU or Libsyn has not put out a press release confirming that the distribution was completed at 9am today? The prospectus listed 9am on August 1st as the time, but there was a loophole allowing the board to cancel. It would be good to get confirmation that the distribution actually happened.
From the prospectus:
Q:
How will FAB distribute shares of our Common Stock?
A:
Registered stockholders: If you are a registered stockholder (meaning you own your shares of FAB common stock directly through FAB’s transfer agent), our distribution agent will credit the whole shares of our Common Stock you receive in the Distribution to a new book-entry account with our transfer agent on or shortly after the Distribution Date. Our distribution agent will mail you a book-entry account statement that reflects the number of whole shares of our Common Stock you own. You will be able to access information regarding your book-entry account holding our Common Stock at Interwest Transfer Company Inc.
“Street name” or beneficial stockholders: If you own your shares of FAB common stock beneficially through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the whole shares of our Common Stock you receive in the Distribution on or shortly after the Distribution Date. Please contact your bank, broker or other nominee for further information about your account.
We will not issue any physical stock certificates to any stockholders, even if requested. See “The Spin-Off—When and How You Will Receive Libsyn Common Stock” for a more detailed explanation.
Anyone know if FABU actually distributed the shares today? Not seeing any indication from them that they actually followed through at 9am today.