|The "Big" Announcement|
His brag that "after weeks of speculation, no one got it right" fell more than a little flat, given he'd put a video about Well Power, Inc. (WPWR) online late Friday afternoon. It seems the only person who hadn't seen it was a message board poster who'd paid $37 for a "VIP" subscription, and $97 more for some kind of trial. So much for special service.
The email alert directs those who'd missed it to the video, which isn't really a video, but a cheap text presentation with a voice-over. Statler, whoever he may be, dedicates the first half of it to himself and his supposedly spectacular past performance. His pitch is shamelessly directed to Joe Sixpack. He assures Joe that he's here for the little guy, the guy who didn't go to one of those "preppy schools in the East where they wear funny ties." He counsels his flock to avoid the "snake-pit" of Wall Street and embrace the kind of promising microcaps he touts.
Statler claims to have been a full-time penny stock day trader for more than 15 years, and would have us believe he's made millions, has an apartment in Paris, his own chef, and always "flies private." Who does he think he is? John Babikian? Where's the wine cellar?
In the disclaimer attached to the email alert, Stocktips says its parent company, Amerada Corp., expects to receive $4.1 million as a "marketing budget" from Laluna Services, Inc. In the disclaimer provided at the out-of-date Stocktips website, which seems not to have been tended to since sometime in 2012, Amerada is also referenced, and Laluna Inc. is named as the third party payor for several old promos. It appears that for at least two years, Stocktips has (ostensibly) been owned by Amerada, and that its only client has been Laluna. Amerada does exist. In a disclaimer attached to an AMMR pump that's reproduced at StockPromoters.com, a Marshall Islands address is given. And indeed Amerada has existed since 2005. It was first registered in the Seychelles, and then moved to the Marshall Islands in October 2012. Unfortunately, the corporate registry information offered does not include the names of those who own Amerada. "Mike Statler", on the other hand, is possibly the figment of someone's imagination. Some, including Promotion Stock Secret's investigator, Nodummy, suspect that Statler may actually be Paul Kincaid, the producer of several stock promotion videos, including those for StockTips.com. Whoever Statler is or isn't doesn't change the real intent of the pump on WPWR, and that is to screw people out of their money.
Given the cheesy website and the unimpressive production values of the Statler video, it seems likely the $4.1 million budget for the WPWR promo is made up as well. If the tax man asks questions, Amerada can always say it only "expected" to receive that amount.
Well Power, Inc.
Well Power Inc. is a new company created for the purpose of consummating a reverse merger with a public shell called Vortec Electronics, Inc. Well Power was formed in Nevada in December 2013 and merged out on the same day. It is still a Nevada corporation.
An SB-2 was filed with the SEC on 22 June of the same year. At that time, 75 million shares of common were authorized (though according to Nevada, the correct number was 100 million), 2,150,000 issued and outstanding, including those to be registered in the offering. Lopez and Tin each owned 587,500, or 27.33% of the company. They were the only beneficial owners. Hung owned no stock. The selling shareholders were 36 residents of the Philippines, each of whom had previously purchased 25,000 shares.
The SB-2 was deemed effective only a week later, having received no comment at all from the SEC.
For the next six and a half years, nothing whatsoever happened. Although Vortec diligently kept up with its SEC filings, always carefully noting that it was a shell company, it did no work, and made no money. Neither did it raise any money or incur any debt. It was assigned a stock symbol--VOEL--but never traded. None of the stock registered in the SB-2 offering was ever sold into the market.
The shares outstanding remained at a modest 2.15 million. Vortec was a squeaky clean shell.
Well Power entered the picture on 10 December 2013, when the reverse merger described above took place. In an 8-K filed on 6 January 2014--the moment at which the change in control became known to the general public--it was said that Vortec had transacted the merger with its "wholly-owned subsidiary," Well Power, Inc. Though the Articles of Merger were attached to the 8-K, there is no document memorializing the terms of the acquisition of Well Power by Vortec. We therefore don't know whether any cash changed hands, or what became of Lopez and Tin's control block of stock.
The company did increase its authorized shares from 90 million to 4.5 billion. In reality, the number of shares authorized in Nevada had always been 100 million; presumably an error was made in the SEC filing. It is unclear why Well Power felt it necessary to raise the authorized so very aggressively, unless of course there are plans to sell an awful lot of stock into the market sometime in the future. The company also effected a 50:1 forward split, which increased the issued and outstanding to 107,500,000 shares. The new entity had dealt efficiently with FINRA, lining up a new ticker--WPWR--that would become official on 3 February. A week later, the pump is decidedly underway.
In a separate section of the 8-K, the company announced that it had entered into a letter of intent with Cristian Neagoe to acquire a license for a new technology to be used in the oil and gas sector. This was an "economical, mobile and scalable Micro-Refinery Unit (the 'MRU') to process raw natural gas into Green Fuel™… and clean power." The acquisition was expected to be finalized by 3 February, and would be paid for with an as yet undetermined amount of cash and common shares.
Change in Control
On 10 January, a second 8-K was filed, revealing more information about the new public company. Lopez and Tin, still directors, had appointed Cristian Neagoe CEO, CFO, President, Secretary, Treasurer, and director. For the moment, the two women remained as members of the board.
WPWR reportedly delivered the license and distribution agreement as promised. It was signed on 22 January; the relative 8-K was filed with the SEC on 29 January. The other party to the agreement is ME Resource Corp, a British Columbia company that trades on the Canadian Securities Exchange as MEC, and on the Pink Sheets as MEEXF.
By the terms of the agreement, MEC appointed WPWR its exclusive distributor of MRUs in the state of Texas. According to the agreement, if all goes well WPWR will have first right of refusal on additional territories within the U.S. (Not exactly what the mendacious Mike Statler told his followers; according to him, WPWR has exclusive rights to sell MRUs in the entire United States). Briefly, the MRUs are designed to convert waste gas into clean fuel. As the Stocktips promo describes it, the process simply deals with natural gas that would otherwise be flared; in reality the technology is much more complex. At its website, Well Power briefly explains the gas flaring problem, and hints at the rewards awaiting a company that can deal with it by converting the gas to clean, salable fuel. Needless to say, a number of firms are working on flaring solutions technology, and there's certainly no guarantee that MEC and WPWR will be the first to achieve the desired goal, or the most successful in the long run.
The Stocktips promotion suggests, as all promos do, that instant success awaits WPWR and those willing to take the plunge and buy its stock immediately. Anyone tempted to believe that would do well to read the 29 January 8-K. In it, there's a long description of the company's research and development plan. As this program gets underway, Patience will continue to optimize the design and functionality of the MRU. The current schedule provides for a pilot demonstration in summer 2014, followed by "optimization and safety and monitoring" in the last four months of the year. January through October 2015 will feature "pre-commercialization and continued development."
WPWR states clearly that it is working with MEC "to develop a finished MRU product. The product is still in development, which is ongoing, and a finished MRU is expected to occur within a year. As such, the Company will not be able to realize any revenue from the sale of MRUs until the development has been completed and a commercialized product is ready for launch."
It sounds as if an optimistic estimate would place those expected revenues sometime in 2016.
Who makes out like a bandit?
Everyone knows that pumps are funded because an individual or entity, or a group of individuals and entities, holds a large amount of stock and wants to dump it for outrageous profits.
In the case of WPWR, it's difficult to see who that might be. The sale of the Vortec shell was arranged by the law firm Cane Clark LLP. Hip and aggressive, or trying to be, they say: "We keep our boxing gloves in our desks." They represent a number of OTC companies, including some very dirty tickers that have been involved in some Pump & Dump campaigns that have proved devastating to investors, or thought that they were investing. Some of these tickers include: BFLX, GROV and CACL, which has been tagged Caveat Emptor by OTCmarkets. Current or recently pumped Cane Clark tickers include: COSR and MYRY.
Cane appears to have found a pristine shell for Well Power. Vortec originally issued 2.15 million shares of common; it never issued any more. It had no convertible debt. Lopez and Tin, the company founders, stayed on the board long enough to hand over the reins to Neagoe, and then resigned those positions on 27 January 2014.
Unfortunately, because the terms of the reverse merger transaction entered into between Vortec and Well Power haven't been made public--an odd omission that will perhaps be rectified with some encouragement from the SEC's Department of Corporate Finance -there's no way of knowing who now owns most of the company's stock. Presumably the 54.65% control block held by Lopez and Tin was turned over to Neagoe at the time of the reverse merger, but then again, maybe not. Were the women compensated in cash? Or did they retain some stock? We have no idea. But somebody funded the current Pump & Dump campaign and is providing the shares that are being consumed by the street. Very likely the original selling shareholders still own the stock that was registered when the 2007 SB-2 was deemed effective, but all that can really be said is that they didn't sell any of it prior to the reverse merger. That stock would amount to 1.25 million shares apiece for those 36 individuals. Their stock, taken together, makes up 45 million of the current 107.5 million shares issued and outstanding, which is nothing to sneeze at. But we can't identify them, except as names on a list, or determine whether they'd be capable of acting together to realize gains on an investment that had been dead in the water for six and a half years. Some or all of the 36 could however be acting in cahoots with each other.
We do know that no stock was involved in the licensing agreement with MEC, contrary to an early suggestion that it might be. MEC will be paid entirely in cash.
WPWR will need to find a way to raise that cash, in the absence of any revenues on the horizon. Fundraising could prove difficult. Vortec was always a blank check company, and declared itself to be one. So far, Well Power hasn't announced any change in that status. When it does, Rule 144 will not be available to it for one year, which may make obtaining financing problematic.
Another Dangerous StockTips.com Promotion
Recent StockTips.com pumps included campaigns on Tiger Oil and Energy, Inc. (TGRO) and Pan Global Corp (PGLO). Both promotions managed to bring a chance for profits to early participants who were smart enough to take the money and run, but those that got in past the second week were annihilated. Both campaigns resulted in millions of dollars in losses for the street and shares of either ticker can be had for less than a third from the highs reached during their campaigns.
So What's The Likely Story?
It's very possible that Neagoe, Singh, and Patience are on the up and up and were merely seeking funding for their dream project. Perhaps they were convinced that they were going to use the shell as a vehicle for raising funds themselves. Most likely, a middle man, perhaps Cane Clark himself, acting on behalf of some or all of the original 36 seed shareholders, provided the shell to Neagoe and perhaps a few token dollars with promises of more money to come. Under this scenario, WPWR management will be encouraged to tolerate a stock manipulation because, "selling stock is the way to raise money". The only problem is that these guys will see little, if any, of the funds picked from the pockets of naive traders who fall victim to the pump, and by the time they realize that they've been had, the Pump & Dump scheme will be long over. It's a common strategy we've discussed in a selection from our Pumps & Dumps 101 series. The stock now being sold into the market is likely the stock given to the original 36 seed shareholders: 45 million shares.
The scenario seems likely because there was always an obvious intention to use the Well Power business plan to sell stock. Why else would Quality Stocks, a well known pumper who hires third party pumpers, be paid $25,000 for 150 days of investor relations work? You only need investor relations services when retail investors are buying the stock.
We recently saw this type of gambit in Makism3D (MDDD), an issue we discussed at length in an advisory published on December 2, 2013. Ten days later, the SEC suspended trading in that ticker "because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in Makism3D’s common stock". We sent that advisory directly to MDDD management and it is possible that we helped them come to appropriate conclusions and they themselves sought help from the SEC.
It will be interesting to see what kind of response Messers. Neagoe, Singh amd Patience have when they read this advisory.
Editor's Note: We attempted to send a link to this article to WPWR management. Our email "bounced". We note that the email address listed by the company, email@example.com, forwards to the email address firstname.lastname@example.org, which then returns the bounce notification. We expect that the company will correct this very unprofessional oversight, likely a result of the haste to commence the current Pump & Dump campaign, in the near future.