Why do you care, you don't own any shares? I talked to Tom a few minutes ago, and everything is just fine, in case anyone is interested, just fine.
So what you saying is that Mortalmyth should call Tom the IR guy and get questions answered like you did...Maybe you could answer some questions here so others may decide to buy 0001 paper...
read below do you think Tom,You,or Adanac could shed some light on something things?
Thanks for the welcome.
First, I'd like to make it clear that I'm currently not a shareholder, and am someone looking into this company to see if I want to possibly make a potential investment.
Yes, I've done some DD, mostly in my first week here, when I evaluated the pros and cons of the 2011 Annual Report. Also, more recently, I've run down a couple of things and even tried sending an e-mail to David Shaw which unfortunately went unopened with no response. So, although I'm still doing my DD on this stock I find it's challenging, given the fact that there is little to no verifiable information available. And, no matter how much I ask, I've yet to see some of the stock board touts provide anything of use to confirm the company is anything but a scam. But, I'm still looking.
Regarding the 2011 Annual Report, you might recall the post #86581, made in this forum by playingthegame, who copied my RB post which summarized my evaluation and comments (I've attached it below for reference). I've also got some additional inputs from the last week or so that I'll post at a later time. I will, however, make one more post in a couple of minutes concerning potential questions for the upcoming webcast.
Anyway, thanks again for the welcome.
====================
playingthegame
Friday, March 23, 2012 8:46:26 AM
Re: None
Post #86581 of 89710
By: mortalmyth
22 Mar 2012, 10:08 PM CDT
Rating: Rate this post: Msg. 81898 of 81938
Jump to msg. #
Below are some highlights from the 2011 Finanical Report. I've also included some comments and opinions (both Pro and Con) regarding the subject matter. This effort was done as part of my due diligence process. And yes, I know about having opinions ... everyone has one. lol
The PROs:
1) From Page 5 - "... The Company intends to spin off Paychest, (Oregon) Inc, a wholly owned subsidiary, in the future."
COMMENT: Good that they still intend to spin off Paychest (Oregon) Inc.. It might be best if the spin off yields a cash infusion into the company to pay more bills versus getting restricted shares from the another company.
2) From Page 9 - "A. Officers and Directors
Peter G. Coorey – President & Chief Executive Officer and Chairman of the Board of Directors
....
Peter Coorey is currently paid $2500 per month until revenues commence whereupon the Board will increase his monthly remuneration.
...
COMMENT: It's good to see the President isn't gouging the shareholders on his current salary. I'm sure he is also receiving some perks, but all executives do. Will be interesting to see what salary he commands if this venture becomes the great success being envisioned.
3) From Page 14 - " ... However, as sales grow, the Company may exercise an option to acquire Xinpro to increase oversight and repatriate
profit."
COMMENT: Very good that the company defined an option to acquire Xinpro if this venture succeeds as planned.
4) From Page 22 - "In December 2010 the Company agreed terms with Xinpro Manufacturing of China for the set-up and operation of an exclusive production facility for the production of Flushaway®. This Agreement became effective in March 2011 upon set up of the production facility and the completion of the first film production machine."
COMMENT: Looks like Xinpro Manufacturing is a significant partner in this venture. Didn't find any compensation/funding or share issuance made specifically to Xinpro which is promising. However, if Xinpro is a partner, they will be getting a TBD percentage of the revenue stream (this will no doubt be identified in follow-on financial reports).
5) From Page 26 - "In June 2011 the Company completed a stock certificate audit with the Depository Trust Company. The audit identified an increase in the number of shares to be reported and an adjustment increase was made of 124,014,285 common shares, although no new shares were issued."
COMMENT: Good that the audit was completed to DTC satisfaction, but not so good that an error in company accounting was uncovered that ended up increasing the share count. Live and learn as they say.
6) From Page 26 - "NOTE 5. FUTURE STOCK CONSIDERATIONS
The general shareholder consensus is to avoid a reverse stock split. Management concurs because it reduces shareholder value and confidence. Management will not use a reverse stock split to consolidate the issued shares. The consolidation will be achieved through further negotiation, share swap, buyback and other positive means. However, a reverse split will be necessary when PayChest is ready to advance to a higher trading exchange, such as the Nasdaq.
COMMENT: Good that the company acknowledges in writing that they will not pursue a stock reverse split to consolidate shares, and only unless it is to get onto a bigger exchange.
7) From Page 29 - "SECTION 1. Shareholder Meeting. ... If the election of Directors shall not be held on the day designated herein for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as convenient."
COMMENT: The sentence is weirdly worded, but it implies (at least to me) that a shareholder meeting should occur annually.
=================
The Cons:
1) From Page 2 - "ITEM 2. THE ADDRESS OF THE ISSUER’S PRINCIPAL EXECUTIVE OFFICES.
1B Glamour Court
1 Discovery Bay Road
Discovery Bay
Lantau
Hong Kong SAR
P.R. China
Tel: +1 714 274 7206
Email: info@paychest.com"
COMMENT: Not considered very professional having a Corporate Office address in one country (especially at a condominium complex) and having the phone number from a different country.
2) From Page 5 - "In October 2011, LIG the group of investors arranged or led by Liani Holdings Ltd. exchanged $300,000 of debt for convertible preferred shares of the Company, convertible at $0.0001 no earlier than 12 months from the date of issue. The preferred shares were issued at a discount of 25% to compensate the LIG investors for a) a non-cash payment and b) the absence of a coupon."
COMMENT: This potentially means having another 3 billion common shares issued as early as this October.
3) From Page 5 - "The Company has increased its outstanding Common Stock from 19,250,331,340 in December 2009 to 22,250,332,340 in December 2010 and 27,785,264,936 in December 2011. Class B Preferred shares increased from 600,000 on December 31, 2009 to 800,000 on December 31, 2010 and to 920,000 on December 31, 2011."
COMMENT: Looks like the company needs to issue between 3 and 5 billion shares each year to operate. Will be interesting to see if this number needs to increase appreciably this year due to the commercial production, marketing and sales efforts underway. I don't see any choice other than having to increase the authorized share limit to well above the current 28 billion.
4) From Page 5 - "The Company does not have pending, and does not anticipate any stock split, stock dividend, recapitalization, merger, or acquisition. The Company ... ."
COMMENT: No plans for a stock dividend, a merger or an acquisition (which is contrary to what is being repeatedly posted by some of the board spammers).
5) From Page 5 - "In August 2011, the British Columbia Securities Commission (the “BCSCâ€) issued a Cease Trade Order against Paychest, Inc. stock in British Columbia, Canada .... The Company refutes the allegations of the BCSC and their attempts at extraterritorial jurisdiction but immediately severed all ties with British Columbia. The Cease Trade Order expires one year after all ties are severed."
COMMENT: The company didn't identify the specific allegations, but only that they refute them. My cursory understanding is that the issue centered on having adequate number of directors on the company board, but please someone else in the know feel free to clarify for me. Regardless, this is a black eye and needs to be resolved, even if only by running out a clock.
6) From Page 6 - "Former management did not update the Articles of Incorporation and the Company will call a shareholders meeting in the near future to amend and update technical aspects of the Articles of Incorporation."
COMMENT: The company current management has had close to a 1-1/2 years to update the Articles of Incorporation. By now, this should have been done along with holding an annual shareholder meeting. This delinquency doesn't reflect well on the company management.
7) From Page 7 - "The Company has no full time employees."
COMMENT: I would think that this should be unacceptable to shareholders. It's unclear how the market and institutional groups could be expected to take the company seriously with only part-time management, marketing, sales, etc.
8) From Page 15 - "ITEM 20. PURCHASE OF EQUITY SECURITIES BY ISSUER AND AFFILIATED PURCHASERS
ISSUER PURCHASES OF EQUITY SECURITIES ...
Nov 15, 12 to
Nov 18, 12 ___ 100,000,000 ___ $0.1362 __ 100,000,000
Nov 22, 12 to
Dec 5, 12 ____ 100,000,000 ___ $0.10 ____ 100,000,000 ___ 100,000,000
Total ________ 200,000,000 ___ $0.1181 __ 200,000,000
The Share Buyback was announced November 14, 2012
* Subsequently in February 2012 the Company purchased a further 100,000,000 shares."
COMMENT: Many of the dates (e.g., those in the table and in the note below it, regarding the share buyback, are in error by indicating 2012 - should be 2011. Granted, these are minor errors, but should have been caught during the proof reading review. This is sloppy in an official document and may not speak well of the accuracy of the other various data within the document. They should amend the report and correct these errors as part of the impending attorney signed off version.
9) From Page 21 - "On February 1st, 2010 the Company issued a Convertible Note for $600,000 to Rich Capital International Enterprise Ltd of Hong Kong for services. The Note attracts 5% simple interest commencing September 1st 2010. Payments for interest and principal commence only when Company revenues reach $3,000,000. On or after September 1, 2012 the recipient can convert payments due into common shares at 75% of the market price at that time."
COMMENT: This market and sales effort needs to be successful soon, otherwise a stock conversion and issuance of an additional 6 billion common shares can be made as early as September. If realized, this would likely be a cause to drive the share price down into the four zeros range.
10) From Page 23 - "In December 2011 the Company paid Cardiff Bay Holdings Ltd $90,000 in Preferred Class B Shares as an advance payment to continue the licensing of the flushable products technology. The Agreement for this technology is reviewed in the first half of 2012."
COMMENT: Looks like more Preferred shares will need to be issued in the next few months to renew the licensing agreement. Too bad this couldn't be accommodated by a royalty percentage after sales have started.
11) From Page 24 - "New management has concerns over the book value of equipment, equity investments and the unrealized loss for prior years. Supporting documentation for this has not been located at this time."
COMMENT: Unclear how this financial report can be successfully audited by a third party without the needed supporting documentation. This should be a big issue and high priority to resolve.
12) From Page 26 - "During 2011 the Company paid $16,092 issued 160,919,311 common shares to reduce debt with part of the Lender Group. The Company also bought back and retired 200,000,000 common shares at prices ranging from $0.0001 to $0.0002."
COMMENT: Looks like close to a zero sum gain on new share issuance versus the publicized share buyback.
13) From Page 26 - "Under a 2011 agreement with LIG, the Company's lenders, and preferred shareholders converted 545,000 preferred shares at $0.0001 resulting in 5,450,000,000 common shares being issued. As part of this in September 2011 the Company increased its authorized common shares to 28,000,000,000. 565,000 new preferred shares were also issued, 400,000 of which were to various parties that collectively are referred to as LIG. The proceeds were used to bring down debt."
COMMENT: This looks like a vicious cycle where Preferred shares are issued, then they are converted to common shares (requiring boosting the Authorized limit), and then a reissuing the Preferred shares again for obtaining income to pay the bills. Seeing this it may very well be that LIG is the third party supplying the market daily with all the converted $0.0001 shares (and not from grant, sherriff, or the other posters pumping up the boards). This constant new supply, coupled with penny flippers churning the share count on high trading volume days, makes more sense than the unproven short share scenario.
(Voluntary Disclosure: Position- No Position)
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