August 22, 2011: The promotion de jour is a first timer on the watch list but we promise you not a last timer. Today we look at a reverse takeover that got the fudge out of the confections business and into a line of business that is de rigeur with the Pump & Dump touts: the smartphone applications business. And "voila" you have Bitzio, Inc. (BTZO), the latest in a series of Pumps & Dumps in this sexy high tech arena.
The change in business came with the acquisition of the Rocky Mountain Fudge (RMFI) shell by Canadian penny stock veteran, Gordon Campbell McDougall, in an undocumented transaction. The only record we can find of any security interest in BTZO by Mr. McDougall is when he granted himself 5,000,000 options on July 1, 2011 at 25 cents. Six days later he filed a registration statement revealing that he suddenly owns 5,000,000 shares. How did he get these? We'd find it difficult to believe that he wrote a check for $1.25 million because he could have completed an IPO for about about $100,000. Unless, of course, he was in a hurry. Even so, 5,000,000 shares would be about 12% of the company, certainly not a control position.
We are concerned for the apparent lack of transparency of Mr. Campbell's interests. Might there be stock socked away in some cloak and dagger scheme? After all, if the stock is not in your name, then you don't have to disclose any sales, right? We'll also try to avoid pointing an accusatory finger as we note that in the 10-Q for the quarter ending June 30, 2011 and filed late, just recently, Steve Moulton, who was the President of Rocky Mountain Fudge, was still listed as a director. Just two weeks later and we have today's announcement of the new Board of Directors, which does not include Mr. Moulton. Suspiciously, the announcement coincides with Day 1 of the Pump & Dump,
We also note that there is no record of Mr. Moulton or his stepson, 22 year old Colby Jacob, himself a former officer of RMFI, having divested themselves of any stock in the transfer of control of the shell. Now we're not saying that this is the case here, but it would not be the first time that shares would be sold into a Pump & Dump for a current officer by a former officer(s) who suddenly has no further obligation to report sales. Still, it is possible that the father and son were allowed to maintain their stock, after some dilution, as payment for the shell.
To add to the confusion, on August 8, the company filed an 8K, which supposedly reported events that had taken place on June 23. First of all, the 8K is about 6 weeks late, but only if one were to observe the rules. The 8K revealed the issuance of 750,000 share for that old favorite, services rendered. Within that same filing, the company gave notice of the August 8 issuance of 5,000,000 more shares, which were given to Shah Amish towards the July 27 acquisition of Bitzio Corp. That notice should have been in a separate 8K filing for August 8, 2011, not June 23, 2011. But again, only if the SEC forces you to follow the rules.
The 5,000,000 shares was payment for a transaction that should keep heads spinning. Bitzio Holdings supposedly acquired Bitzio Corp., currently known as Bitzio, LLC, and paid for it with stock in Bitzio Inc. Now see if you can say that out loud three times without getting tongue tied. Why there was a need for a complicated transaction involving four companies with the same name is anybody's guess. Furthermore, the agreed upon conversion of Bitzio, LLC to Bitzio Corp has still not taken place, even though the deal was supposedly consummated on July 13. The conversion is bound to be a problem since the Secretaries of State would not permit the incorporation of the same name twice within their own State. We found Bitzio, Inc. in Nevada and California while Bitzio, LLC is registered in California. We're not sure how Bitzio, Corp. will ever come to exist or why it even needs to exist. Aren't there enough subsidiaries at Bitzio? Couldn't BTZO or one of it's already many subsidiaries just buy the assets of Bitzio, LLC without acquiring the company? Furthermore, Bitzio, LLC is only 9 months old, so we wonder what it was that Shah Amish actually gave up for that 5,000,000 shares with a value of over $2.5 million. At a minimum the whole thing looks dubious.
The blueprint of a Pump & Dump is all over this thing. As of June 30, this company, with a ridiculous $20 million market cap, had $2,731 in the bank. In the meantime, and to add to the complexity, another BTZO subsidiary, Empire Holdings, has made a commitment to pay $200,000 for three months starting July 31, 2011 for the acquisition of something called The Empire Group, LLC. We'll assume that the first payment was late. We're guessing it will be paid in the next day or two and we'll let you guess where the money is coming from.
Continuing with this spider web, on August 3, 2011, another BTZO subsidiary, Digispace Holdings, entered into yet another agreement with Shah Amish, to purchase Digispace Solutions LLC. This bargain cost BTZO $575,000 in assumed debt, options to buy 1,000,000 shares and 12 monthly payments of $200,000, starting on August 22, 2011. We wonder where that money is coming from.
So in summary, BTZO has to come up with at least $3,000,000 over the next year just to pay for acquisitions. Then there's operating costs to consider. BTZO has 2700 bucks in the bank.
HELLO PUMP & DUMP!!
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