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Fresh Start Private Management (OTCBB: CEYY) Has Enough of a Past to Concern Investors
Posted on April 19, 2011 by Editor
Trying to figure out whether or not Fresh Start Private Management (OTCBB: CEYY) is legitimate can be a difficult task. While the company promotes itself as a “leader in the alcohol treatment and rehabilitation industry” its business summary on Yahoo Finance claims it intends to “operate in the re-manufactured bio-fuels industry,” possibly because the company was formerly known as Cetrone Energy Company and only changed its name to Fresh Start Private Management Inc. in July 2010.
So taking Fresh Start Private at its word, as “leader in the alcohol treatment and rehabilitation industry,” there is more confusion when looking at the company’s executives, most notably Armando Kiyoshi Narita, who served as an Officer and Director during Cetrone Energy days and prior to that was, according to the Cetrone 10-K of April 13, 2010, involved with financial business management with Brazil-based Daicolor do Brasil Industria e Comércio, a supplier of colorants, colored pellets and special compounds for plastic products.
This isn’t to say that an executive of a company claiming to be a “leader in the alcohol treatment and rehabilitation industry” has to be tied to the healthcare industry but involvement in company that generated no revenue (Cetrone) and a plastic products company based in Brazil (Daicolor) may throw up some red flags.
These issues don’t appear to be bothering investors though as CEYY has seen massive trading volume on Tuesday, pushing past the 22 million mark by mid-afternoon as shares have climbed more than 85 percent from Monday’s close and are moving around the 0.32 -0.34 range. Tuesday’s activity has sent shares past the 50-day moving average of 0.22 as well as their 100-day moving average 0.287.
Of course the activity hasn’t been based on any press release issued by CEYY but rather more promotions. This has been the pattern for CEYY and without any real substance it’s difficult to see beyond what the company’s auditor noted in their report December 31, 2010 published in Fresh Start Private’s most recent 10-K, “an opinion that substantial doubt exists as to whether we can continue as an ongoing business.”
That 10-K showed the CEYY to have cash on hand of $1,866. Not exactly the kind of money you would expect from a “leader in the alcohol treatment and rehabilitation industry” which, by the estimates of promotional material, is a $22 billion a year industry in the US. Now that cash on hand figure could change when CEYY releases their first quarter 2011 report and by all accounts it better. Over the past three months the company has been releasing information about partnerships for clinics, radio advertising in Los Angeles valued over $650,000 (they haven’t said what they paid), and recently thy announced that they were “processing over $1 Million dollars in insurance claims at its Orange Country clinic for the month of February 2011.”
Back in January the company announced their first clinic on the East Coast had opened, in partnership with Merit Management Services, which would be able to treat up to five patients a day with potential revenue of $10 million per year. Those holding their breath for a revenue update from that clinic may want to reconsider.
CEYY is putting all their eggs in their single-administration, licensed long-acting, Naltrexone implant procedure which is designed to significantly reduce patients’ cravings for alcohol. Naltrexone has been approved for use by the FDA within the US for the treatment of alcohol and it would appear that CEYY is on to something with their implant which centers on a slow release dose that lasts for a year rather than the oral formulations that must be taken daily.
Because Naltrexone has already been approved by the FDA the company has suggested that securing the backing of insurance companies shouldn’t be a problem, especially because many already pay for similar programs. In late February CEYY announced they had been working with a range of insurance providers including “Healthnet, Blue Cross, Cigna, Kaiser, United Healthcare, Aetna, Anthum, SSI, Blue Cross, Tri-West, MSI and Presbyterian.” Securing insurance company approval is going to be imperative as the cost of a typical treatment of Naltrexone carries a price of approximately $48,000, a figure CEYY is banking on insurance companies covering.
While the company is trumpeting the success of their Naltrexone implant there isn’t a single press release issued by CEYY that quotes a named employee. Everything is a “company spokesperson commented” and again that may not be a great concern to some but it goes a long way in establishing accountability so when that “spokesperson” says “The wonderful thing about our procedure is it is done on average 20 minutes and patients can go back to work the following day. The remarkable thing is that our clients are in and out quickly, without the stigma attached to being away from their loved ones for an extended period” it’s hard to take it too seriously.
What should be interesting to watch is the coverage initiated by New York City-based Prime Equity Research which issued a “speculative buy” rating and assign a FY12 $0.59 per share price target. According to this initial report from Prime Equity Research CEYY’s “goal is to meet its growth targets through partnership opportunities by promoting its product and services to existing medical clinics and treatment centers that will be charged a licensing fee and a percentage of sales.”
Investors shouldn’t overlook the fact that Fresh Start Private was founded in Australia by Neil Muller and Dr. George O’Neil in 2004 it O’Neil began treating patients with his proprietary Naltrexone implant2 during the mid-1990s with “more than 5,000 addiction patients (both drug and alcohol)” being “successfully treated.” This alone should cause some to scratch their head as all the promotions have documented how prevalent alcoholism is in the US as well as in the rest of the world yet Naltrexone has only been used to treat 5,000 alcoholics and drug addicts? If it was so successful it would make sense that those figures would be much higher. CEYY is careful to point out that their Naltrexone implant is only concerned with treating alcoholism.
A calm step back and a real look at what’s going on at CEYY and its clear there are some serious concerns about the company’s viability. Whether it ever becomes what it claims to be “a leader in the alcohol treatment and rehabilitation industry” is yet to be seen but for now they are certainly on of the hottest stocks on the OTCBB.
