POTN - looked at this one a little bit tonight and POTN looks like one of the biggest insider enrichment schemes going right now. The Issuer has a super suspicious debt Note that looks like it is being used for all sorts of shady purposes.
The controversy is over a Note originally dated February 1, 2015 or June 2, 2014 (depending on which filing you are viewing) for $1,850,000 owed to somebody with the initials D.G.
Going back through the POTN filings we learn of a David Grey that owned debt in POTN starting way back in 2010.
On June 2, 2013, $33,120 of the debt owed to David Grey (D.G.) was converted into 138,000,000 free trading shares of stock at $.00024/share. Those 138,000,000 free trading shares of stock were split between David Grey and Robert Pike.
The financial report for the period ending December 31, 2014 showed David Grey (D.G.) being owed $51,591 as of December 31, 2013 but the balance being down to $0 by December 31, 2014. https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=132998
Yet according to the very next financial report for the period ending March 31, 2015, D.G. had an outstanding debt Note for $1,850,000 dated June 2, 2014 of which $1,395,161 was still owed. https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=137343
If D.G. was owed $1,850,000 from June 2, 2014 how come that Note was not mentioned in the financial report for the period ending December 31, 2014?
What changed starting at the beginning of 2015 is that the POTN shell got a new CEO/control person named Steven Buckner who appears to have been more than happy creating a $1,850,000 Note out of thin air, back dating it to June 2, 2014, and assigning the Note to somebody previously involved in the shell.
When the financial statement for the period ending June 30, 2015 hit the amount owed to D.G. was listed at $1,402,861 because of interest and we get a date of February 1, 2015 for the Note https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=144943
Umm wait??? Is it June 2, 2014 or February 1, 2015? Future filings will use the date June 2, 2014. It sure looks like the Note was back dated and in the June 30, 2015 financial statement they used the actual date of the bogus Note (forgetting to use the back dated date).
During the 3rd quarter of 2015 a small portion of the $1,402,861 Note (roughly $25,000) was converted into 370,000,000 shares of free trading stock ($.00006/share). According to the following POTN filing https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=147024
Midam Ventures LLC got 70,000,000 free training shares of stock and Micro Cap Equity Group got 300,000,000 free trading shares of stock leaving a balance owed to D.G. on the Note of $1,375,229 as of September 30, 2015 https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=147023
Micro Cap Equity Group LLC is a Florida entity controlled by Ibrahim Almagarby. In November 2017, the SEC charged Almagarby and his company. https://www.sec.gov/litigation/litreleases/2017/lr23992.htm https://www.sec.gov/litigation/complaints/2017/comp23992.pdf
According to the SEC Complaint, between 2013 - 2016, Almagarby/Micro Cap Equity Group was engaging in the practice of acquiring old debt and converting it into free trading stock (participating in a penny stock offering) without being registered as a broker/dealer. All total, the SEC said that Almagarby bought aged debt in 39 different Issuers selling more than 7.4 billion shares into the market reaping gains of $1,474,901,63.
Midam Ventures LLC is also a Florida entity that is controlled by Adam Heimann (a close associate of Jason Spatafora aka Wolf of Weed Street). Midam Ventures LLC wasn’t singled out by the SEC like Micro Cap Equity Group LLC.
When the financial statement for the period ending September 30, 2015 hit the amount owed to D.G. was listed at $1,375,229 and the Note was dated at February 1, 2015. https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=147023
The financial statement for the period ending December 31, 2015 showed the Note as being reset back to $1,850,000 (ignoring the previous conversions) and back dated again to June 2, 2014 then another $120,449 in interest accumulated since June 2, 2014 was tacked on making the amount due on the Note $1,984,000. Instead of D.G. the Note was said to be owned by S.N.D. https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=157344
S.N.D. stands for Sign N Drive Auto Mall Inc.
As you can see at the following link, Sign N Drive Auto Mall Inc is controlled by Charles Vaccaro. http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResultDetail?inquirytype=OfficerRegisteredAgentName&directionType=Initial&searchNameOrder=SIGNNDRIVEAUTOMALLINC%20L170002168351&aggregateId=flal-l17000216835-a4d96a9b-543e-4885-a5cc-f5b27d671c2b&searchTerm=Sign%20Gate%2C%20Llc&listNameOrder=SIGNGATELLC%20L170000689291
Charles Vaccaro was the old CEO of the POTN shell from 2012 until 2014 (back when David Grey was first converted debt into free trading stock). Vaccaro briefly left in 2014 but obviously re-emerged in February of 2015.
Prior to his involvement in the POTN shell, Charles Vaccaro had a shady past through his involvement in Team Trading (aka HLV Trading, Velez Capital Management, Team Trading LLC) - a company that left a lot of unhappy customers claiming that Vaccaro and his partners stole their money and ran http://investimonials.com/prop-firms/reviews-team-trading.aspx?page=3
And before that Vaccaro was involved in some shady broker named Gold Country Securities aka F1 TRADING.COM, INC as its President and part owner https://brokercheck.finra.org/individual/summary/2796589 https://brokercheck.finra.org/firm/summary/20375 https://files.brokercheck.finra.org/firm/firm_20375.pdf
Vaccaro was fined $30,000 and suspended because of some regulatory event and when his firm failed to pay the fine it was expelled by FINRA. More info at the following links: http://www.siliconinvestor.com/readmsg.aspx?msgid=9592773 https://www.elitetrader.com/et/threads/team-trading-llc-team-trading-extreme-llc.188389/
Sign N Drive is also a trademark that POTN applied for after acquiring Sunrise Auto Mall Inc in February of 2015 from Steven Buckner making Steven Buckner the new CEO.
Steven Buckner incorporated Sunrise Auto Mall Inc on April 3, 2014, but on February 11, 2015 less than a week after the POTN shell acquired the entity making Buckner the new POTN CEO, Charles Vaccaro took over as the president of Sunrise Auto Mall Inc http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResultDetail?inquirytype=EntityName&directionType=Initial&searchNameOrder=SUNRISEAUTOMALL%20P140000302990&aggregateId=domp-p14000030299-eea41579-f6e3-440c-b74a-446d5cfad809&searchTerm=Sunrise%20Auto%20Mall&listNameOrder=SUNRISEAUTOMALL%20P140000302990 http://search.sunbiz.org/Inquiry/CorporationSearch/ConvertTiffToPDF?storagePath=COR%5C2015%5C0219%5C69335873.Tif&documentNumber=P14000030299
It sure looks like that S.N.R. Note (formerly the David Grey "D.G" Note) is controlled by Charles Vaccaro, who is a POTN Company insider.
Just as disturbing is how all the prior conversions on the Note that took it down to $1,375,229 were ignored as if they never happened even though those conversions helped cause the stock to be diluted to 6,497,571,520 shares outstanding by September 30, 2015.
At the end of 2015, the same time the the Note was reset from $1,375,229 up to $1,984,000, attorney Gary L Blum took over as the CEO of the shell.
Gary L Blum even did the attorney letter for POTN at this time https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=153852
Gary L Blum did a large reverse split for the ticker In early 2016 but despite the much higher share price the subsequent Note conversions would still be made at a fraction of a penny.
The financial statement for the period ending March 31, 2016 showed a balance of $2,012,500 on The Note and the Note still being listed as an S.N.D. Note https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=157345
The financial statement for the period ending June 30, 2016 showed a balance of $1,941,000 on the Note https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=159394
According to the POTN filings (which has portions cut off), during the 2nd quarter of 2016:
$1,000 of the SND Note was converted into 1,000,000 free trading shares by Micro Cap Equity Group LLC ($.001/share)
$11,000 of the Note was converted into 2.750,000 free trading shares by Sign N Drive Auto Mall Inc ($.004/share)
$6,000 of the SND Note was converted into 1,500,000 free trading shares by Inet Cap Holdings ($.004/share)
$6000 of the SND Note was converted into 1,500,000 free trading shares by Beachwood Cap ($.004/share)
$6000 of the SND Note was converted into 1,500,000 free trading shares by SCA Capital Bty Ltd ($.004/share)
$50,400 of the SND Note was converted into 11,200,000 free trading shares by D.R,, P.U., ??, and K.R. ($.004/share)
$??? of the SND Note was converted into 1,555,555 free trading shares by W.T.
$38,000 of the SND Note was converted into 19,000,000 free trading shares by Rockwell Capital Partners ($.002/share) https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=159396
All total $124,400 was converted into 40,005,555 free trading shares of stock during the second quarter of 2016 but the Note balance only went down by $71,500. No way it could have accumulated that much interesting in 3 months.
Also interesting is that during the 2nd quarter of 2016 coinciding with all those stock sales, SND wired $79,000 back to POTN in the form of two new debt Notes both accumulating interest at 8%
And still more interesting is that POTN claimed to have a cash positive balance sheet of $738,424 for the year ending 2015. If they had an excess of $738,424 in cash why were they converting old debt into free trading stock at a fraction of the market price instead of paying off the debt with that excess cash? And why were they borrowing new money from the same suspicious lender with lopsided conversion terms if they had all that cash left over from their operations?
And another question is if they had a cash positive balance of $738,424 from business operations why did they only show $710 in cash on their balance sheet? https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=157344
So much just doesn’t add up.
Around this time POTN also changed its name briefly to SND Auto Group Inc
SND just like the new owner of the suspicious Note
The financial statement for the period ending September 30, 2016 showed a balance of $1.969,000 on the Note https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=161885
The financial statement for the period ending December 31, 2016 showed a balance of $2,033,283 on the Note and the owner was now listed as “Sign” still short for Sign n Drive Auto Mall Inc (Charles Vaccaro) https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=168249
Some time in 2016 Randall Goulding became the new legal counsel for POTN
Later in 2017, Randall’s brother, Richard Goulding took over as the new CEO for POTN with Gary L Blum moving into the role of Chairman.
It is unclear at what point, but around the same time the Goulding got involved the Note was given a set conversion rate of $.003/share.
The financial statement for the period ending March 31, 2017 showed the balance on the “Sign” Note at $1,956,186 https://www.otcmarkets.com/financialReportViewer?symbol=POTN&id=174826
Subsequent POTN filings give us all sorts of juicy details about new Note conversions.
During the first quarter of 2017 $117,000 of the Note was converted into 39,000,000 free trading shares of stock ($.003/share). It was during this time that POTN started to really get pumped for the first time as a higher tier type Cannabis stock and saw the price climb from around $.012/share to around $.05/share. “Sign” could have sold those 39,000,000 shares for over $800,000.
During the 3rd quarter of 2017 $246,000 of the Note was converted into 82,000,000 free trading shares of stock ($.003/share) during this time the stock traded between $.05 - $.10/share. “Sign” could have sold those 82,000,000 shares for over $5,000,000.
Also suspicious is the fact coinciding with “Sign” getting free trading stock and selling the stock into the market, “Sign” began loaning new money to POTN.
According to the POTN filings, during the second quarter of 2017, “Sign” wired $285,500 to POTN in the form of a new Note convertible into stock at $.003 with no interest. And during the third quarter of 2017, “Sign” wired $477,500 to POTN in the form of a new Note convertible into stock at $.003/share with no interest.
It appears that "Sign" was selling stock then using the proceeds to fund the POTN business operations.
Counting the new loans. “Sign” is now owed $2,418,624 by POTN as of September 30, 2017. At $.003/share that is 806,208,000 shares worth over $685,000,000 at the current $.85/share price.
In all honesty, it looks to me like me like the David Grey "D.G."/Sign N Drive Auto Mall Inc "S.N.D."/“Sign” Note is really a bogus back dated insider controlled Note and money being made through stock sales from the Note are being wired back to the company to fund the POTN operations and possibly even to create bogus revenues. It reminds me very much of what the SEC/DOJ said that Fusion Pharm Inc (FSPM) was doing https://www.sec.gov/litigation/admin/2016/33-10210.pdf
POTN claims in its most recent financial statement to have a cash positive balance sheet of $663,234 during the first 9 months of 2017 so why if they made $663,234 after expenses are they converting old debts at such lopsided conversion rates and borrowing more money from that same lender at such lopsided conversion rates?
Something isn’t adding up.
With all the volume (almost $30 million in volume traded on 1/26/18 alone), POTN could attract scrutiny from the SEC. I'm not so sure they would be able to survive if the SEC starts looking under the hood.
The current CEO of POTN is Richard Goulding brother of Randall Goulding who has a very very shady history in penny stocks going back to his old The Nutmeg Group LLC days https://www.sec.gov/litigation/complaints/2009/comp20972.pdf
Another Defendant in the SEC litigation against The Nutmeg Group LLC was David Goulding.
David Goulding has the initials D.G. just like the suspicious POTN Note holder “David Grey” which is a pretty interesting coincidence.