December 29, 2011: Having found their massive Pump & Dump on Amwest Imaging (AMWI) unexpectedly derailed earlier this month, the criminals behind AwesomePennyStocks.com and its sister promoters have taken on North Springs Resources (NSRS) as their latest scam. And what a scam.
The company has a total asset value of $60,589 according to their last financials filed for October 31, 2011, including $16 in cash and mineral properties they value at $59,990. That means that they feel that their mineral properties have no intrinsic mineral value whatsoever. And yet, the stock current has a market cap of $300 million. Seriously what is wrong with the public, the SEC and all of these criminally intended predators these days?
The big beneficiary of the average sucker's desire to make a few hundred dollars (most of whom will fail), is NSRS President and CEO Harry Lappa who has quickly become a zillionaire. Let's look at the lucky turn of events that has Harry laughing all the way to the bank.
On June 1, 2010, Aurum Resources filed their S-1 statement as their first step towards becoming a publicly traded company. That company's CEO, Danil Shpeyzer registered 2,500,000 shares for which he paid $2,500 or one tenth of a penny per share. This is a common procedure done over and over again by individuals who incubate public shells which they then sell to scum like Lappa. Pretend mineral assets are used to create these shells, as the turn around time to bring these companies public is shorter than if one was to bring say, a pretend technology company public.
Aurum Resources filed the required 10-Q financials as Shpeyzer sought a buyer for his shell. This disclosure generally showed that the company was in the business of doing nothing, as illustrated by its report of zero revenues and a few paltry dollars in expenditures, mostly in administrative costs. Remember, that this shell was only created for the purpose of selling it.
Harry Lappa acquired the 2,500,000 shares originally created by Shpeyzer, now representing about 72% of the stock in the shell, on March 15, 2011. According to the 8-K filed on April 12, 2011, Lappa paid Shpeyzer $306,196.34 for his stock, about the going rate for a clean bulletin board shell with no liabilities on the books and 72% of the free trading stock available.
Newly installed President Lappa, then filed an 8-K on July 21, 2011 with notification of the change of the name of the company to North Springs Resources, and a 100 for 1 forward split. For some reason or other, Lappa felt like the 250 million share he now owned were still not enough, so he did another forward split, this time 2 for 1, as noted on an 8-K filed August 15, 2011. Not so coincidentally, this was done on the same day that NSRS filed an 8-K noting that it had borrowed $35,000, in a phony transaction, from a phony lender based in Panama, at the exorbitant rate of 10%. We are guessing that Mr. Lappa couldn't find a legitimate bank to loan him such a paltry amount on a pretend mineral deal. We also note that the principal is payable on demand, when of course, we expect that the company will find itself unable to comply and issue a whole bunch of new stock to satisfy.
So at the end of business on August 15, 2001, Harry Lappa now owns 500 million free trading shares of NSRS. Anybody want to guess why there is a Pump & Dump currently going on?
And what is this Pump & Dump hanging its hat on? A phony deal to acquire the on-existent mineral rights of a pretend gold property. Looking at the 8-K notification of the acquisition, NSRS committed to $400,000 in payments over 5 years on a property that has no indications of having been explored and in fact is stated by NSRS to be untested. The property's only claim to fame is that it is located in the "prestigious Mineral Ridge Mining District, Esmeralda County, Nevada". This is hardly a guarantee of a gold bonanza, never mind a $300 million valuation. NSRS is not required to complete the payment schedule (and won't), but in turn for the right to use the property as a shill, Lappa gladly gave the property's owners, Mountain Gold Claims, LLC Series 15 and Lane Griffin, a million shares of intrinsically worthless stock.
What is interesting about the lease is that property owner, Lane Griffin, owns his own OTCBB shell, Rarus Minerals, Inc (RARS), also purportedly in the mineral exploration business and in which he own practically all of the stock. So we wonder, if this gold property has enough potential to make NSRS worth $300 million, why wasn't it vended into RARS?
We also wonder why NSRS, with the rights to this marvelous property, worth $400K in lease payments, as well as one million shares of stock to its owner and worthy of a market cap of $300 million, only lists $59,990 in mineral property assets on its books.
Further indications of bad acting at NSRS, was Lappa's selection of Carrillo Huettel, LLP as corporate counsel. This firm, who has a history of connections to Pump & Dump schemes, earlier this year was ordered by a Federal court Judge, to turn over its bank records in the course of an investigation of an alleged stock fraud conducted by Skymark Media Group, Ltd., a known associate of NSRS promoter AwesomePennyStocks.com. The Carrillo-Skymark-AwesomePennyStocks.com connection is a dubious distinction to say the least.
Today's action in NSRS stock, was fraught with phony stink bids throughout the day. A stink bid, is a bid that is placed, usually under the highest bid, in hopes of giving the illusion of strong support in the stock, in order to keep the sellers at bay and induce buyers to buy before prices would seemingly go higher. Today's NSRS stink bids were so blatant, it was as if the Lappa & co. were thumbing their noses at the public and the SEC. Here are some examples from this morning. Keep in mind that this type of phony bidding went on all day.
The photo below shows what the Level II on NSRS looked like today at 10:32 am. Note the 2 million share and 523,500 share bids by market makers WDCO and AUTO respectively, both at 38 cents, half a penny below the highest bid. The best offer was at 38.99 cents. Near the top right hand corner, you will see that the total trading volume at that point was 13,557,463 shares.
The two bids, totaling 2,523,500 shares have simultaneously disappeared because those market makers show higher bids albeit for smaller lots.. A look at the volume shows that up to now, 13,688,702 shares have traded, an increase of approximately 131,000 from two minutes earlier, so certainly the WDCO and AUTO bids were not filled at any price. The best offer is 39 cents, hardly any change at all from the best offer of two minutes ago.
One minute later, at 10:35am, the WDCO bid is back, but this time for only 500,000 shares. Now the bid is 39.5 cents, just below the best bid of 39.51 cents. Well if WDCO was willing to pay more, then why not buy the stock at 38.99 and 39 cents that was available just a minute ago? Surely an investor sophisticated enough to bid for $200,000 worth of stock, knows better than to chase a stock.
The volume has increased in the last minute to 13,780,502 shares and the stock is still available at 40 cents.
At 10:38am, AUTO also steps back in with a 500,000 share bid, also at 39.5 cents, and gives the illusion of stronger price support.
The two big lot phony bids are in no danger of getting hit, as there are now three bidders of stock at slightly higher prices. Don't forget, market makers can add and remove bids much faster than you and I can. Furthermore, it is common to find that your order is not filled, even though you are offering stock at the bid price, as many frustrated traders can tell you. Trades on over the counter markets are only filled upon the confirmation of the market maker, who can take as long as he likes to hit the trigger or pull the bid/offer. Also, just because lots of 5,000 shares are shown by the higher bidding market makers, does not mean that that is all the stock they are willing to buy. They could be bidding for many more shares, but choose to show only a small amount to keep from discouraging sellers to give them their stock. The only ones who truly know how many shares are being bid/offered are the market makers. In this case, the small sized bid lots actually want the stock. The larger sized bid lots do not. A legitimate large lot buyer or seller will never show how much stock he actually wants to buy or sell. Note that the total volume is now 13,989,701 shares.
At 10:39, seeing that the bid and offer have moved up, the phony bids also move up to give the illusion that the stock has support at even higher prices.
WDCO and AUTO are now bidding phony 500,000 share lots each at 40 cents when just a minute ago, they could have had stock for a little less. The volume is now 14,489,610 shares.
At 10:43 the share price has moved up and so do the phony bids, this time with an increase in the phony lot size.
Over the previous four minutes that volume has increased to 16,103,124 shares. The WDCO bid has move up to 41.4 cents when just four minutes ago the phony buyer could have had stock for half a penny less. Why didn't he take it? Because he didn't want it, that's why. And since only the insiders had blocks of stock that large, the phony buyer knew he was safe from getting hit. Also note that AUTO and HDSN have stepped in with large stink bids. AUTO's bid is for 484,309 shares at 41 cents.
At 10:50am, the share price, bid and offer have all increased again. The WDCO stink bid has been "hidden" by a higher bid for a smaller lot. Volume is now 17,211,973 shares.
AUTO has increased its stink bid by one tenth of a penny to 41.1 cents, with a bid for a million shares. It is assumed that underneath this bid is AUTO's previous high bid of 41 cents for 484,309 shares.
At 10:51 am. AUTO's bid for 1,000,000 shares at 41.1 cents is still visible.
Total volume is now 17,236,891 shares traded. WDCO is still showing a lot size of 5,000 shares at 41.5 cents, presumably hiding the 500,000 share bid at 41.4 cents.
At 10:52am the share price, bid and offer all begin to fade. The volume is 17,440,228 shares, an increase of only 203,337 from the previous minute.
The size of AUTO's phony bid of 41 cents had shrunk from 1 million shares to 102,500. WDCO's phony bid of 500,000 shares bid at 41.4 cents had disappeared entirely. As the increase in volume from the previous minute was only a couple of thousand shares, it is obvious that the sudden disappearance of the bids for 1,397,500 shares was a result of those bids having been pulled rather than filled. In other words, those bids were not real bids.
Finally, remember that 2,000,000 share bid at 38 cents by WDCO at 10:34am? Well the stock closed under 38 cents and there was not a single 2,000,000 share block traded. There were three different one million share crosses at 41, 40.8 and 41.1 cents that were loans between between market makers. These took place later in the day, between 11:25am and 11:28am. These types of trades do not show up on Level II as they are private transactions (loans and repayments between market makers) and not actual trades. But if you want to believe that they were legitimate trades, it would not account for the many big lot phony bids that appeared before and afterward and yet were not consummated.
Post Script: As we were about to release this advisory, NSRS had issued a press release announcing the cancellation of 80,000,000 of President Harry Lappa's 500,000,000 shares. As we stress in our article, It's A Pump & Dump, the cancellation of shares, in this case involving Lappa's return of some of his common stock to the company treasury, is meaningless because Lappa has not given back enough stock to relinquish control of the company. As along as Lappa has control, he is free to reissue himself stock under a number of schemes. In this case, Lappa simply decreased the value of his ill-gotten booty from $200 million to $180 million. He was never going to sell all of his stock anyway and has probably already made off with $15 million+ of the public's money. We think he has already met his initial sales goals and is simply seeking legitimacy. It would be a mistake to look upon this gesture as magnanimous.