SEC halts Vancouver-linked Imogo Mobile Technologies
2014-02-20 11:31 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-IMTC) Imogo Mobile Technologies Corp
by Mike Caswell
The U.S. Securities and Exchange Commission has halted Imogo Mobile Technologies Corp., a Vancouver-linked OTC Bulletin Board company that went to 83.8 cents from four cents in a five-week span earlier this year. The SEC says there are questions about the accuracy of publicly available information on the company's business, revenue and assets. The regulator has provided few specifics, but a recent paid tout sheet boasted that the company was developing software that could rival that of Microsoft Corp.
The halt comes about three weeks after Imogo suddenly began trading heavily. The stock went to an 83.8-cent high on Feb. 3, 2014, up from four cents on Dec. 27, 2013. Daily volumes rose into the millions, with the stock trading 6.7 million shares the day after its 83.8-cent high.
Around the same time, a paid tout sheet called the Wall Street Revelator strongly urged investors to buy the company. The sheet, dated Winter 2014, contained nonsense typical of such publications, beginning with bold print stating that Imogo could "eat Microsoft alive!" The sheet said Imogo had products that rivalled those of Microsoft, and that the company is "poised to unleash a full frontal assault on Microsoft." The report assigned Imogo a long-term target price of $21. In the fine print at the bottom, the Wall Street Revelator said an entity called Fenvo Enterprises Ltd. paid $3-million for advertising, plus $10,000 to the Wall Street Revelator's editor, Andrew Carpenter.
For its part, Imogo denies having anything to do with the tout sheet. The company's president, Stewart Irvine, claims to have never heard of the Wall Street Revelator. He attributes Imogo's trading activity to a news release the company issued on Jan. 30, 2014, in which it said it was developing a platform that would enable people to buy and sell Bitcoins. He says he has been inundated with Bitcoin-related queries since.
Mr. Irvine would not identify anybody who would pay for a $3-million advertising campaign. He says that the company's shareholders are widely dispersed. He speculated that the company could be the victim of a third party that was paying to promote and perhaps then short the stock. The SEC's concern, as he describes it, is with a recent Form 8-K the company filed. He says the company should have the matter resolved shortly.
Whatever the reason for the halt, the company's financial statements show little to justify its current price. Imogo's most recent balance sheet, dated Aug. 31, 2013, shows no assets and $143,947 in liabilities. The company also lists its outstanding share total at 73.5 million. This gives it a $41.5-million market capitalization based on its last close of 56.5 cents.
Wednesday's halt is not the first attention the company has received from the SEC. On Oct. 10, 2013, the regulator complained that the company changed auditors without disclosing problems with the prior auditor, Stan J.H. Lee (not to be confused with Vancouver accountant Stan W. Lee). Among other things, the company did not say that the Public Company Accounting Oversight Board had revoked the registration of Mr. Lee's firm. (The PCAOB claimed that Mr. Lee improperly created, altered and backdated audit documentation in 2007. On June 19, 2013, the board permanently barred him and ordered him to pay a $50,000 fine. The PCAOB did not name the company for which he had backdated documents, but there was no indication the action had anything to do with Imogo.)
The SEC's halt is also not the first time a regulator has suspended Imogo. On Feb. 14, 2012, the B.C. Securities Commission issued a cease trade order against the company's predecessor for failing to file its financial documents in SEDAR. Imogo later made the required filings and the cease trade expired.
Although the company lists an address in the Seattle area, it has connections to Vancouver. Its predecessor had an office in Vancouver and its president, Mr. Irvine, is from the Vancouver area. He had an address in Maple Ridge until recently.
The SEC's halt will last for 10 business days, expiring on March 4, 2014. After that, brokers in the U.S. wishing to trade the stock will face an onerous burden. They must keep up-to-date information on the company's financial status and on the company's insiders. They must also have copies of the company's prospectus, its most recent annual report and any subsequent quarterly reports. In addition, brokers must maintain current information on the company's name, address, state of incorporation, number of shares outstanding, the name of its transfer agent and the nature of its products. Brokers must also know if a price quotation is from another broker or from an insider. They must provide this information to anyone interested in trading the company.
