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Cal-Bay (CYBI) to Cambertire? Not So Fast!

September 17, 2013 (editor's note): Until now, we have not had Cal-Bay International (CBYI) listed on our Watch List of Dangerous Stock Promotions because it had not been promoted under one of the criteria that we track. However, there can be no question that CBYI is undergoing a Pump & Dump campaign, initiated by a lot of hype about a lot of nonsense. The source of this hype is social media, mostly the message boards at InvestorsHub.com, a well noted cauldron of speculation and unsubstantiated rumor.  Investorshub itself has a well documented criminal background and has been cited for Pump & Dump schemes.  It is still widely speculated that employees and shills of InvestorsHub deliberately create a stir in intrinsically worthless penny stocks in order to generate ill-gotten bounties for a select few.  As a result, and effective immediately, we shall track and list suspected Pump & Dump schemes that are concocted through the social media, including InvestorsHub, Twitter and Facebook, among others.

The following advisory was reprinted with the gracious consent of Promotion Stock Secrets.

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September 16, 2013: Authored by Janice Shell

On 19 November 2012, Cal-Bay International (CBYI), a dormant Roger Pawson shell, made an exciting announcement: the company had “signed an acquisition Letter of Intent with a US tire manufacturing company for the controlling interest of Cal-Bay-International.”

It was awkwardly worded, but CBYI seemed to be saying a reverse merger was in the works. The announcement was made by “Larson Coleman”, who was called a “company spokesperson.” The descriptor was a bit strange, given that elsewhere Coleman was said to be CBYI's sole officer and director; he'd been casually introduced as “interim CEO” on 21 March 2012, having replaced Kevin Denniston, who hadn't been heard from since 2011. Coleman made the cut as official CEO and (apparently) chairman of the board on 16 April, when he improbably stated: “Before the Real Estate meltdown of 2006, Cal-Bay was a $65M real estate holding company. I see no reason with the current market opportunities why we cannot rebuild beyond that in relatively short order.”

He'd changed his mind by mid-November, noting that “Cal-Bay shareholders and Investors along with most of the company's Real Estate Investment Corporations have not witnessed the expected turnaround in the Real Estate sector, thus it seems prudent for Cal-Bay to take advantage of the opportunity to transform into a sector for automotive manufacturing generating consistent annual revenues and significant profits.

But it doesn't matter what Coleman supposedly said, because there's no evidence he ever existed.

The press release, while not naming the tire company, assured shareholders—many of whom had been waiting years to see a profit—that the company would soon undergo a name and ticker change, and that a new board of directors would be appointed.

A month later, a new press release announced the name of the company: it was Cambertire. Investors were also informed that the definitive agreement between the two companies was in its “final stages of completion,” and that a new investor relations firm, The Nabors Group, had been hired. More news followed in early January. A definitive agreement had been reached between Cambertire and Cal-Bay. No particulars were disclosed.

Nothing more was heard from CBYI until August, when Coleman, still referred to as a “spokesman,” issued a PR explaining that the company had completed the necessary paperwork for the name and symbol change. That presumably meant that it had filed a corporate action request with FINRA. Coleman added that “no past or present Offices [sic] or Directors of Cal-Bay, will be assigned to the newly-appointed Board of Directors.” By then Blaine Nabors of the Nabors Group had made his exit. He explained to a shareholder who contacted him in March that his contract had expired in January, and he'd heard nothing more from CBYI.

Shareholders, perhaps inured to disappointment, did not respond to the occasional press releases about the forthcoming reverse merger with enthusiasm. The stock traded infrequently until July. When the action picked up a little, stock price did not; it was stuck at $0.0001 by $0.0002. Finally, though, traders began to pay more attention to Cambertire than to Cal-Bay. When news appeared announcing that John Scott, Cambertire's founder and driving force, would be keynote speaker at the Future of Tire Technology 2013 convention in Charlotte, North Carolina at the end of October, their interest was piqued. The stock price began to move quickly off its base at $0.0002, reaching an extraordinary intraday high of $0.0049 on 9 September. Volume was 220 million shares. The achievement was all the more amazing given that CBYI's outstanding is 3.11 two billion shares, and its float 2.638 billion shares.

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The new enthusiasm for CBYI may also have had something to do with the fact that in the 19 August press release announcing Scott's upcoming keynote speech, he was—incorrectly—referred to as “President & Founder of Cal-Bay's Cambertire division.” That was, in fact, the first occasion on which it was suggested that this deal would be anything other than a straightforward reverse merger. Who had decided Cambertire should become a subsidiary or division of Cal-Bay?

CAMBERTIRE


Cambertire is the kind of small business the JOBS Act was written for. Located near Milwaukee, Wisconsin, it was founded in 1986 by John Robinson Scott. Scott loves cars; he's owned—and sometimes raced—them since he was a kid.

The company website and some attached articles explain the exciting possibilities of tires with built-in camber better than I could. Back in 2010, Scott appeared in a video with car buff Jay Leno; his technology has been praised by experts. The tires are in limited production, and can be purchased from the company.

But that company is Cambertire, not Cal-Bay. The definitive agreement contains performance clauses; certain milestones must be met before the deal is signed and sealed. By the terms of that agreement, both parties to it have right of rescission. It must be finalized, or not, in October.

That's what Scott told me when I spoke to him on Friday. He's a friendly man who's passionate about his work and explains it well. Naturally he's believes going public would help him raise capital to grow Cambertire, but so far his arrangement with Cal-Bay has brought no palpable benefits. He became involved with the CBYI shell by accident. He has business dealings with a kit car company in Michigan. That company told a man called Bo (pronounced “Boo”) Linton about Scott's tires. Linton is an actor who's deeply interested in automobiles, especially Porsches; he's also a buddy and longtime business associate of Roger Pawson. His stock market ventures have not always gone well; in July his GDT Tek (GDTK) was suspended by the SEC for delinquent filings, and the Commission seeks to revoke registration through an administrative proceeding. His Clean Air & Power (KEPI) also got suspended and revoked by the SEC.

Bo Linton
Scott and Linton met, and hit it off. Linton, impressed by the technology, suggested that a friend might have just the shell for Cambertire. That friend was Pawson. The wheels were set in motion.

But perhaps they weren't properly cambered. According to Scott, Pawson's done nothing helpful. No funds have been raised, and Pawson is, he says, no longer interested in talking to him. He adds that neither he nor anyone associated with the company has bought or sold CBYI stock.



ROGER PAWSON

Pawson is a U.K. citizen in his sixties. He seems to be camera-shy, though online biographies are easy to find. In one of these, he brags about the public companies he's been involved with. All are dead or moribund: SK Technologies, Otc Wireless, Union Dental Holdings, TLCO Software, Commoncache, Curve Wireless, Pegasus Wireless, and of course Cal-Bay. Many of these companies quickly became shells that Pawson sold to private businesses interested in reverse mergers. Oddly, he was never actually associated with Pegasus Wireless; he merely sold Jasper Knabb his Blue Industries shell. Why even discuss it? Pegasus was among the biggest stock scams of the last decade. One of the few OTC companies ever to graduate to the Nasdaq, it was quickly exposed by journalists more familiar with Knabb's earlier antics than was the exchange. Embarrassed, the Nasdaq delisted quickly and the SEC later revoked the stock's registration. Knabb is now incarcerated at Terminal Island, California. He'll be eligible for parole in 2030.

BEHL Chart
Another notorious Pawson shell is Biocentric Energy Holdings, Inc. (BEHL). At BEHL, Pawson was the Man Behind the Curtain—as he is presently with Cal-Bay—helping to manage the pump and dump scheme that sent it flying in 2009. The pump was organized and executed by Dan Ryan of Pennystock Chasers, who has since been rather brutally sanctioned by the SEC. Ryan was assisted by his associate Dale Baeten, who worked as the company's investor relations representative. The SEC announced litigation against Baeten and others in connection with Zenergy International (ZENG) last month.

At the tail end of the pump, toxic financier Yossef Kahlon of TJ Management Group arrived on the scene to finish off BEHL. Involved with a number of other OTC companies at the same time, he fraudulently used both a federal securities registration exemption and a Texas securities registration exemption to dump enormous quantities of these companies' stock into the market. He was sued by the SEC in August 2012.

Pawson emerged from the BEHL mess unscathed.

Though the BEHL shareholders suffered great losses, Pawson, in fact, was doing very well. Though British, he lives in Arizona, where he bought a $2.2 million home in early 2010. Its price has since appreciated. Shortly thereafter, he purchased a second property, that one costing only $895,000.

CAL-BAY INTERNATIONAL

Pawson's interest in real estate is no secret. For much of its existence, CBYI was purportedly a real estate investment business.

Cal-Bay is one of the very few OTC companies that has never changed its name, though a change has been contemplated more than once. It registered with the SEC in 2001 by filing a Form 10-SB. The founders and sole officers were Robert J. Thompson and Charles A. Prebay. Pawson took over in January 2005; the course of events is explained in a later 10-Q. Once in charge, he executed a 1:25 reverse split and cancelled some shares, reducing the outstanding to a mere 1.991 million shares. That didn't last long, though; soon financiers became involved (they sued the company for failing to register their stock as promised), and Pawson granted himself preferred stock and options in return for “loans to the Company.” He had trouble keeping up with filings, or didn't care to do so, and on 13 April 2007 filed a Form 15 to relieve CBYI of its reporting obligations.

Pawson did not stop filing 8-Ks, however, although he should have turned in his Edgar codes. Two weeks later he resigned most of his offices, “due to health issues”, though he remained as a director. He was succeeded by Andrew Mercer. But less than a month later, he popped up again, announcing the appointment of new management and directors “next week.” That was not to be; on 21 May, Mercer resigned as CEO and president, and Pawson once more assumed those offices.

Bad luck, or something else, soon struck: in August 2007, Edgewater Homes, LLC, from whom Cal-Bay had agreed to buy a “multi-million dollar estate home,” had the company's assets frozen for non-payment.

Pawson disappeared. Or did he? A strange interlude followed. On 11 September, a peculiar 8-K hit Edgar. It announced that “Roger Pawson, the President of Cal Bay International, Inc. has been terminated as President and CEO effective September 06, 2007. Subsequent to his termination, Syed Hasan Rizvi, Director was appointed to the position of CEO and President. Mr. Rizvi's resume will be made available. Currently the company's contact information remains the same. The company remains fully operational and continues to maintain its property portfolio.

Rizvi's résumé never did turn up. But he continued to file 8-Ks. One of these presented an acquisition agreement, by the terms of which Rizvi, who claimed to be the 89.7% beneficial owner of Cal-Bay, sold the company to Lenox Corp LTD, a supposed Georgia company. How can Lenox have been a corporation and a limited company? And why is there no trace of it at the Georgia corporations website? Better yet, Rizvi claimed to be the owner of Lenox. Four days later, he announced a 1:1000 reverse split and canceled the acquisition agreement. He also filed a quantity of Forms 4 showing the purchase of a great deal of stock.

The reverse split was never executed.

And then he was gone, replaced by none other than Pawson, though he was said to be stepping down soon. A bewildered shareholder wrote to the company's generic email address. The following nutty explanation was offered for Rizvi's appearance and disappearance:
"Mr. Risvi illegally obtained the Edgar codes and is being investigated by SEC enforcement as a result of the company's complaint to the SEC. Mr. Risvi was never an OD of the company and at the time of his initial filing owned less than 1% of the issued and outstanding common shares of the company. The company is controlled by insiders with Preferred shares which have jumbo voting rights in order to prevent such an attempt of a hostile takeover. The company is also filing a major lawsuit agianst Mr. Risvi for theft and fraud, he will served immediately once his wherabouts have been established.Mr. Risvi never disclosed any of his true contact information in the filings he only used the company's CA information, which he never had access to!"

Seriously? Nothing more was ever heard of Rivzi or any SEC investigation.

By the beginning of 2008, 28-year-old Shaun Bailey had been appointed president. Under his stewardship, the company embarked on a series of unexpected new ventures. First, contact information for CBYI was changed at OTCMarkets (then Pink Sheets) to “info@beverlyhillschoppers.com.” That was never explained. Then Bailey told the world Cal-Bay was getting into the business of constructing diesel hybrid conversion installation centers. Next up was a storage and distribution contract for Bionic Products Natural Energy Drinks. In August, Melinda Rice had become acting president, and somehow the outstanding had risen to “approximately” 8 billion shares. Rice canceled a “planned” reverse split that had never been announced, and appointed Dale Baeten, of BEHL fame, to do the company's IR work.

The craziness continued unabated. CBYI decided to create a subsidiary and hand out a stock dividend. Nothing came of that, or of plans to open a “U.K. Headquarters.” At the end of January 2009, Baeten told a correspondent that he was no longer the IR guy, and that Rice and Pawson had resigned “as of today.”

Cal-Bay fell silent. On 19 November 2009, the company belatedly announced that Shaun Bailey had taken over as president, secretary, treasurer and CEO, effective on 9 March. Had they forgotten that he'd already been named to those positions in January 2008? Pawson's and Rice's resignations were confirmed.

For reasons that must be obvious by now, shareholders were concerned about Pawson's influence on Cal-Bay. On 11 May 2010, Bailey issued a press release he styled as a “Round Table With the CEO.” In reality is was a short and simple Q&A. The first question addressed was:

Is Roger Pawson involved with Cal-Bay anymore? 
"No. The former president of Cal-Bay, Roger Pawson, no longer has any position within the company. Since selling his position in Cal-Bay, he has not been given or sold any shares of stock. He has only retained a small percentage of preferred stock that cannot be converted to common stock without board approval. Roger has no relationship, either personal or professional, with current management."

Bailey was not heard from again. On 30 March 2011 he resigned, and was replaced by Kevin Denniston; Bailey would continue to work for CBYI as a real estate consultant, or so Denniston said. In April the company released “projected revenues for Arizona Power Production Station #1.” Investors might have been happier if they had any idea where this new tweak of, or addition to, the business plan had come from.

Pawson perhaps had reason to stay out of the spotlight. Back in early 2008, Robert Cashman of Smart Truck Systems, Inc. had sued Pawson in San Diego for breach of contract. In October 2010, Cashman was granted a judgment of $1,311,170. Pawson must have seen it coming; he had in fact defaulted some months earlier. It must be wondered if Cashman has been able to enforce that judgment.

Things quieted down until “Larson Coleman” took over as CEO in the spring of 2012. Kenniston's departure was not noted. How many of these revolving door CEOs actually existed? If they weren't Pawson, they were Pawson's underlings and willing tools. With BEHL, Pawson made skillful use of an apparently made-up character called “Michael Burton.” Like Larson Coleman, Burton served at his creator's pleasure. It appears that Pawson was just recycling the name of a real individual that he had ripped off in 2006 after signing an agreement through Cal-Bay to acquire a racing team from Michael Burton in 2006. Pawson never ended up paying Burton any of the money promised in the agreement.

In another change of direction, a Brazilian gold and copper mining venture was broached in April, followed by “precious metal mining operations” in Nevada in July. And then Cambertire came to Pawson's attention.

Pawson's return from behind the curtain

CBYI shareholders want to believe Pawson is gone. He is not. He probably never will be. Despite Bailey's insistence that he owns no significant amount of stock, it's likely he holds a control block, and always has. Someone has to own a good-sized chunk of those 3.112 billion shares outstanding.

Blaine Nabors, with whom I also spoke, was hired by Pawson, not the Cal-Bay CEO du jour. And John Scott struck his yet-to-be ratified agreement with Pawson.

In recent days there've been a few interesting developments. Someone from the company has added a little detail about Cambertire to the OTCMarkets company information page. It wasn't Scott; he's had nothing to do with OTCMarkets, or with any press releases issued by the company. Now the Cambertire website is linked to the info page, and a brief explanation of CBYI's supposed business—“Cal Bay is a cutting edge patented state of the art revolutionary tire manufacturing company”—has been incorporated.

There's also been a change to the Cambertire website. Until a few days ago, the CBYI ticker was included at the bottom of the homepage but over the weekend it disappeared. This may mean something, or it may mean nothing. When an investor wrote to Cambertire about it, he received this reply: “The stock symbol was erroneously put up by a web developer who thought he was helping the cause, but didn't realize that the symbol should not be posted on our site until the deal is done and the name change has been affected (in which case it would be CMBR) so it was immediately pulled down.

The same shareholder was also told what Scott told me:
    1. yes, there is a LOI and Definitive Agreement; but,
    2. no, the deal has not been formalized as obligations Cal Bay committed to have not yet all been met; and,
    3. Cambertire has not yet benefitted one cent or one share of stock and will not look to do so until all obligations are met assuming all obligations can be met within the time period committed --- if and when we take the reins it will be publically announced at that time. Up until that time there is a deal by definition only....not yet executed.
The final decision rests with Scott. Perhaps he'll stop to consider the manic sequence of Cal-Bay business plans over the past years. Becoming a CBYI subsidiary—as recent press releases suggest may now be Pawson's plan—could be bad for any young company's health.