Did Any1 catch this
We received several copies of the unsolicited e-mail between September 22nd and 24th, each identifying the sender as “Catchuptoday,” but originating from different e-mail accounts. Who is the mysterious “Catchuptoday?” The e-mails we received offered no further clue of his or her (or their) identity. And, except for that “teaser,” they said nothing about potential airline safety.
They did, however, have a good deal to say about the “prospects” of a company called Cal-Bay International, Inc, a Nevada corporation that became public through a reverse-merger with an unsuccessful music company in March 2001, and whose shares now trade on the Pink Sheets under the symbol CBYI. Cal-Bay is principally a manufacturers’ representative that distributes products made by other companies, within a limited territory that typically includes California, Nevada and Hawaii. Its assets are insubstantial – less than $16,000 in the bank as of April 30th, according to the most recent report filed with the Securities & Exchange Commission. And its revenues have been modest; commissions totaled just $174,000 in 2000 and $46,000 for the first four months of 2001.
Such limitations, however, did not deter the e-mailer from making bold predictions – in equally bold print – including the following:
Cal-Bay International, a leader in safety monitoring, has committed resources to thier (sic) “smell technology” division to help make our nation a safer place. Review recent news to see why Licensed Investment Advisors are NOW recommending you buy stock in Cal Bay.
That statement is misleading and exaggerated. Is there any basis for characterizing Cal-Bay as “a leader in safety monitoring?” Or for the subsequent representation that Cal-Bay is “one of the FASTEST growing companies in distributing environmental and safety equipment instruments?” The e-mail offers none, and nothing in the Company’s disclosure would suggest such an exalted status.
In its SEC disclosure, Cal-Bay says that it distributes other people’s products to the “process, environmental safety and laboratory markets” of California, Nevada and Hawaii. And while such products may indeed contribute to a safer environment, are there any facts that justify the implication that Cal-Bay is a “leader” in efforts “to make our nation a safer place?”
Then there is that reference to “Licensed Investment Advisors,” suggesting that several analysts have endorsed the Company. In fact, as best we can determine, the only published analysis of Cal-Bay comes from Meehan Capital Management Group, of Orlando, Florida, and appears on the Meehan website (www.mehancapital.com). As we will see below, the anonymous e-mails do not accurately or completely reflect the contents of that report. But why let details get in the way of aggressive stock promotion?
Fast and Loose
These misleading references to Cal-Bay are followed by the meaningless headline “FOR IMMEDIATE RELEASE” – evidently an attempt to suggest that the information that follows was actually “released” by a credible source. Instead, however, the e-mail proceeds to misstate, and distort, the Meehan report.
For example, the e-mail states that “a registered investment advisor just released an investment opinion” indicating that Cal-Bay would “achieve earnings of approximately 25 cents per share by 2003.” Evidently, the e-mail publisher has a problem with decimal points. The Meehan report actually projects Cal-Bay’s earnings for 2003 at one tenth of that amount - 2.5 cents per share.
The e-mail also offers “quotations” from the unidentified “registered investment advisors” (presumably Meehan). Some of those citations are inaccurate, while others are simply taken out of context. A few examples:
• The e-mail offers the following quote from “the investment advisors,” with no reference to its context: “A positive long-term investment opportunity exists with CBYI.”
Placed in its proper context, however, that excerpt from the Meehan report takes on a somewhat different spin. Here’s what Meehan says:
Although several scenarios must develop before becoming a common name in the equity markets, we believe a positive long-term investment opportunity exists with Cal-Bay International, Inc.
• The e-mail offers the following “quotation” from those “investment advisors”: “We anticipate that liquidity will increase as well as coverage by additional analysts.”
But the Meehan report offers instead this far more sober view:
With the limited coverage currently given to this stock; analysts' estimates for this company are not readily available from other sources. We must qualify our recommendation by acknowledging that our forecasts are based heavily on the estimates of the company's management based on current market conditions.
• The e-mail quotes the “investment advisors” as saying that Cal-Bay “has developed a network of strategic alliances that are designed to assist the company in obtaining a DOMINANT MARKET SHARE
That’s certainly different from the tone of the Meehan report, which states:
The company has developed a network of strategic alliances that are designed to assist the company in obtaining a dominant market share in those areas that the company specializes.
Meehan, it is worth noting, does not capitalize the words “dominant market share,” and instead places that phrase in its proper context.
In some instances, the e-mail does not merely shift the emphasis of the report, or ignore the contest of the analyst statements. Sometimes it simply omits significant qualifications in the Meehan report, or misstates Mehan’s conclusion. Take this, for instance:
• According to the e-mail, the “investment advisors” said that “[t]he current market in which Cal-Bay operates is currently estimated to exceed $900 million. Estimates calling for $25 Billion in sales by the year 2003.
Just how misleading is that “quotation?” Compare it with this complete excerpt from the Meehan report:
The current market for sales of environmental, process-control, safety and laboratory instrumentation in which Cal-Bay operates is currently estimated to exceed $900 million. And, while estimates are not completely reliable in a burgeoning industry such as pattern recognition analyzers, there have been ballpark estimates calling for $25 billion in sales by the year 2003. Not having firm numbers to rely on, we anticipate a far lower number will actually occur and would be open to revising numbers upward at a later time if our lowered estimates are proven too pessimistic.
Begging to Differ
The discrepancies between the e-mail recommendation and the actual Meehan research report have not been lost on Meehan. That firm has now inserted the following paragraph at the beginning of the Cal-Bay report that appears on its website:
Important Notice: It has come to our attention that an email was spammed that referred to our company and a recent equity report on Cal-Bay International, Inc. Meehan Capital Management Group, Inc. did NOT sponsor or endorse this action in any way. Additionally, we have spoken with Cal-Bay management and they did not send the email either. Information in the email was based on the equity report that follows this notice and some of the information that was located in the email was incorrect. Please note that the report below are the "correct" numbers. We apologize for any inconvience (sic) that the email may have caused, but we want investors to know that our firm did not have anything to do with the mailing.
Exploiting More Than One Crisis
The e-mail publisher was apparently not content exploiting public fears engendered by the terrorist attack. After providing those selective quotes from the Meehan report, the e-mail proceeded to point out that Cal-Bay is engaged in a “Rapidly Growing Industry” – in bold print of course. Here is what it said:
Hold on tight for the largest Oil and Natural Gas expansion in U.S. History. Demand for Energy is at its highest level putting tremendous pressure on Scientific & Technical Instrumentation companies like CBYI. There is rapid expansion in the energy industry with the need for more power plants and cheaper fuel. CBYI is a major benefactor of this growing need because it supplies specialized “Smell Technology” analyzers for industrial applications in Natural Gas production and transmission.”
Is it accurate to characterize Cal-Bay as a “Scientific & Technical Instrumentation” company, or as a “major benefactor” of the need for “more power plants and cheaper fuel?” Will the next e-mail say call your corner newsstand a “Newspaper and Magazine” company, or a major benefactor from the public desire for more news and information?
Cal-Bay certainly doesn’t characterize itself in such lofty terms. The Company says it has plans to develop “new analytical technologies and/or products in the future including a new multicomponent analyzer using pattern-recognition technology.” But there is no evidence it has done so yet.
And while the Company’s Form 10-SB reveals plans to acquire, develop and market a “pattern recognition” technology that might have various applications, including the detection of explosive materials and airport security, there is no indication that Cal-Bay has acquired the rights to that process, that the technology has been fully developed or that it is adaptable to such applications. For now, the Company remains principally a manufacturers sales representative and distributor.
Meehan denies knowledge of the e-mails, and says that Cal-Bay does not know from whence they came. If neither Meehan nor the Company distributed the misleading e-mails, who did? And why? One clue to the motivation – but not the sender’s identity – can be found in the “disclaimer” which has carefully been buried at the end of the e-mail, separated from the “recommendation” by four blank pages and therefore likely to elude all but the most diligent readers. That disclaimer concedes that
This [e-mail] is an independent electronic publication that was paid $27,000 in cash from a “non-affiliated, third party consultant for the electronic dissemination of this company information.”
Who is that unnamed “consultant” consulting to, and why did he or she pay $27,000 to “pump” Cal-Bay shares? After all, that’s almost double the Cal-Bay bank account. Could it be that the consultant was looking to “dump” enough Cal-Bay shares to make $27,000 seem like a bargain? Selling would certainly seem to be on someone’s agenda. Consider the following statement that appears in the e-mail’s “disclaimer”:
The owners of this publication may already own free trading shares in [Cal-Bay] and may immediately sell all or a portion of these shares into the open market at or about the time this report is published.
Déjà vu All Over Again
What has Cal-Bay been saying about this spam campaign? The company has not yet issued any press release commenting on the latest situation, but it did respond to an earlier series of spam e-mails. Those e-mails, issued in mid-August told recipients to watch for “Strong Buy Recommendations” from analysts and several advisory newsletters picking Cal Bay.” Could it have been referring to the Meehan report, which was issued on September 5th?
It didn’t say, but it did offer several unsupported and inaccurate statements, like these:
CBYI has HUGE growth potential and has recently filed to be listed on NASDAQ…Acquire shares today because share prices historically increase when companies get listed on NASDAQ.
It certainly may be true that share prices increase once companies gain NASDAQ listing, but that has little relevance to Cal-Bay at the present time. There is nothing to indicate that Cal-Bay ever applied for NASDAQ listing. That’s understandable. The Company doesn’t meet NASDAQ’s initial listing requirements.
Still, the August e-mails continued to tout Cal-Bay saying:
CBYI is undervalued in comparison to other companies and is poised for explosive growth.
and
CBYI is one of the FASTEST growing companies in distributing environmental and safety equipment instruments.
The e-mail didn’t name those other companies, demonstrate the basis for predictions of “explosive growth,” or provide any survey or statistics that would establish Cal-Bay’s speedy growth. But that didn’t stop it from imploring investors to buy Cal-Bay shares, with predictions that the stock, then trading at around $1 per share, would increase to $4 or $5 in the “near future.”
And, as in the later e-mails, the publisher disclosed (in a disclaimer that was separated from the text of the recommendation by four blank pages) that it had been compensated for spreading the word on Cal-Bay. This time it had received $5,000 from an unidentified “third-party.”
On August 27th, Cal-Bay issued a press release disclaiming any association with those anonymous e-mails. The Company insisted it “was not responsible for any recent SPAM e-mail messages regarding the investment potential of its company.” Cal-Bay said that it “had no prior knowledge of these SPAM e-mails,…no affiliation with the sender,…does not know who the sender is, and does not condone the use of SPAM e-mail messages to promote the company.” But if Cal-Bay did not know the identity of the spammers, how could it possibly be certain that they had no affiliation? In any event, the Company said it had instructed its attorneys to take appropriate legal action.
Has Cal-Bay identified the spammers or initiated any legal action? The Company has yet to issue an update or address the latest wave of e-mails. Clearly, the spammers have not been deterred by the threat of a lawsuit. They are still out there, exploiting the horror of the terrorist attacks and an ongoing energy crisis with empty promises about “airplane safety” and “smell technology. The odor is palpable. To put it bluntly, it stinks.
AI
