********Rufus, It might be time to hire a lawyer!****************
http://www.stocklemon.com/
July 26, 2006
Stocklemon Reports on Fronthaul Group, Inc. (OTCBB:FHAL)
Rufus, It might be time to hire a lawyer!
Stocklemon Reports on Fronthaul Group, Inc. (OTCBB:FHAL)
Rufus Paul Harris, CEO of FHAL appears to have run amok of every conceivable securities law at once. He has created the perfect storm of violations.
The recent run in the stock can be attributed to the July 19 Press Release where the company states that they are going to convert all of the current shares for new shares worth $15 a share. http://biz.yahoo.com/prnews/060719/clw531.html?.v=25
ROF,L ROF,L!!! Where is this money going to come from Rufus? You can’t just change the symbol and make your stock price higher. Rufus has presented to the marketplace a lot of meaningless mumbo jumbo that has no basis in reality and utterly no consideration for security laws whatsoever.
Among these delusions and violations is a slew of quotes that Rufus has made over the past week. It is the opinion of Stocklemon that today’s quotes will end up as tomorrow’s evidence. Here is a sampling of some of our favorite Rufus quotes that seem to have no basis of reality.
“15 dollars a share is just the beginning…”
“We have bought up all the float…”
“Our target range for three months trading was in excess of $100 a share, which is what we were shooting for, with the cash and the contracts that we have.”
“Okay, we’ll make a billion dollars in profits over the next 10 years and pass it through to the shareholders in the forms of dividends.
“If I was in your shoes and I knew what I knew right now, I would buy every damn share I could get my hands on because - I would, physically. If I could resign and buy, I would buy.”
“I think you've been playing a little bit too long in any stock to ask that question on a company that's going to have 500 million in liquid assets to include 300 million in cash in the bank.”
Are These Supposed to Be Financials????
Rufus has presented to the public what he calls “audited financials” … yet there is one thing missing … an auditor! A few funny things about this financial statement.
1. Notice the misspelling of “receivable” … (just a side show)
2. Reference to non-existent footnotes that might offer clarity to value of bonds and nature of the “multi-hundred-million dollar” asset that appears out of nowhere
3. The company has $9,416 in cash.
http://www.waatle.com/1095244.html
It is the belief of Stocklemon that these financials would not hold water with an auditor. If an auditor did sign off on them … please step forward and identify yourself.
Same Ole Story Rufus
This is not the first time Rufus has played this game. Harris has a track record of dealings using the same type of valueless asset. In 2002 he and his nominees became officers and directors of nearly bankrupt Broadband Wireless (BBANE) using a claim of a $100,000,000 corporate paper asset that could be used to raise over $50 million in new financing for the company. And look what happened: the company had to get a temporary restraining order against him and FHAL COO Ben Stanley:
http://www.sec.gov/Archives/edgar/data/12388/000107704805000489/bban-63005_10qsb.htm
“On May 12, 2004, we filed suit in Nevada District Court against Enhancement Holdings, LLC, Paul Harris, Benjamin Stanley and John Walsh for fraud, negligent misrepresentation, breach of contract and rescission. The suit was removed to the United States District Court for the District of Nevada on May 19, 2004. The lawsuit arises out of an agreement between the Company and Enhancement Holdings, LLC pursuant to which Enhancement Holdings, LLC had agreed to provide a guaranty to facilitate the acquisition of a line of credit for the Company. On June 8, 2004, the court entered a temporary restraining order enjoining Paul Harris, Benjamin Stanley and John Walsh from holding themselves out as officers and/or directors of the Company and prohibiting them from selling or transferring any shares in the Company. According to the special meeting held on December 9, 2004, we announced the removal of Paul Harris, Ben Stanley and John Walsh as Directors of the Company effective December 16, 2004. …After the removal of Paul Harris, Benjamin Stanley and John Walsh from our board of directors and due to the fact that they have no assets to attach, we decided it would be in the best interest of the Company to dismiss the case without prejudice”
What About the Convertble Debenture?
Massive dilutive convertible financings held by AJW Partners, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd., and New Millenium -- the same operators in notorious "home anthrax test kit" fraud Vital Living Products (VLPI).
http://www.stockpatrol.com/article/key/anthrax
As filed with the SEC in Dec of 2005, look at how the company just gave away stock.
http://www.sec.gov/Archives/edgar/data/757563/000114420405040479/v031809_sb2.htm
“The notes bear interest at 8%, mature three years from the date of issuance, and are convertible into our common stock, at the investors' option, at 55% of the average of the three lowest intraday trading prices for the common stock on a principal market for the 20 trading days before but not including the conversion date.”
With recent intraday prices of FHAL at or below 10c, the $2.5m convertible debt raised by this “financing” is legally convertible at 5.5c per share. That translates into 45.4 million new shares. Then there’s the preferred, which converts into 50 million more new shares.
By our count, the totally fully diluted share count, as detailed by the transactions in the company’s filings, is now 174 million shares (a calculation not provided in the filings. )
Honestlly, folks, where do you believe all the cash is coming from to buy all these shares for $15 apiece ? That would require over $2.5 billion dollars … from a management team deemed to have no assets worth attaching just over a year ago!
What this company really is !!!!
Beyond being a stock promoters dream and a figment of Rufus’s imagination, FHAL/CVSU seems to have a slew of meaningless subsidiaries. Rufus states “90 to 95 % are going to succeed successfully without any problem.” He plans on spinning these companies off and taking them public. Below are three of the wonderful deals that Rufus brings to the table. Most of the subsidiaries have not a trace of an operating history.
http://www.runbylove.com/ - Seko Management
http://people.aol.com/people/article/0,26334,1150365,00.html -Brittenum Brothers
http://www.ambassadorsofamericanculture.com/rockyroadr/index.html -Rocky Road Records
Conclusion
If any investor believes they can buy stock shares for $1.30 apiece, and then have Rufus wave his magic wand over them and have them be worth $15, then I guess you deserve what might be coming to you. As much as we believe SEC intervention should be imminent, it is not the responsibility of the government to protect people from their own stupidity. Just remember the one rule we all learned in kindergarten, “If it seems to good to be true, it probably is.”
Cautious investing to all.
Disclaimer:
Stocklemon.com does not guarantee in any way that it is providing all of the information that may be available. We recommend that you do your own due diligence before buying or selling any security. At any times the principals of Stocklemon.com might hold a position in any of the securities profiled on the site. Stocklemon.com will not report when a position is initiated or covered. Each investor must make that decision based on his/her judgment of the market.