April 9, 2014: Tired of pot plays? Longing for a good old-fashioned gold mining scam? If so, there's good news and bad news. The good news is that marijuana stocks, which screamed to nosebleed highs in February, declined sharply in March and aren't getting the second quarter off to a good start. The Marijuana Index illustrates the trend:
|The Marijuana Index|
|Hemp ice cream sandwich|
So in all likelihood the hoopla will continue, and we'll continue to cover it.
IMD Companies and Anything Technologies Media
Our subject for today is IMD Companies (ICBU) and the people behind it. ICBU is closely associated with one of the companies on the Marijuana Index, Anything Technologies Media (EXMT); it is, in fact, now handling all of EXMT's hoped-for pot business.
The story begins with EXMT, which began as Legend Resources in 1997. Between 2001 and late 2006 it was SMS@ctive Technologies Corp. It was not an SEC registrant, and in these iterations it filed nothing with anyone; little is known about either company. It offered its first cursory OTCMarkets report in December 2007; by then it had changed its name to Exchange Mobile Telecommunications Corp and received its current ticker. Although a Nevada company, its headquarters were in British Columbia. An accompanying attorney opinion letter identified Arshad A. Shah, a Vancouver promoter, as president and a director, and Martin Zezula, also of Vancouver, as CFO. EXMT claimed to have "patent pending" SMS technology. Shah expected "explosive revenue growth," especially from Chinese customers, but it was not to come.
On 12 October 2010, the company filed an OTCMarkets information and disclosure statement in which it revealed without explanation that it had changed its name once again, this time to Anything Technologies Media, Inc. It had added Richard ("Rick") Wilson to its board of directors. EXMT was purportedly still in the SMS business, but now, it seemed, its focus would be on "captur[ing] the potential of the internet by developing online shopping centers for buyers of accessories and lifestyle products and services, utilizing new and innovative processes for specific "niche" [sic] or market segments." The plan was to begin with a website to be called anythingtrucker.com.
It's unclear when the name change took place; perhaps it was when the company reinstated its Nevada incorporation on 18 August 2010, though it could have been earlier. It isn't coincidental that an entity called Anything Media, Inc. was formed in Nevada on 21 January of the same year. Currently, its president and a director is Chris Jensen; Peter Jensen is another director, and Julie Jensen, Chris's wife, is secretary and treasurer. For reasons that will become apparent, it can be assumed that the company was created by Jensen.
Jensen is well known in the penny arena, though he keeps a lower profile today than once upon a time. Back in the day, he worked more visibly for some very bad companies as a promoter, consultant, financier in a small way, and even as a CEO. In 2001 and 2002 he received 2 million shares of stock, 1 million of them free trading, in eConnect (ECNC, ECNT), one of the decade's biggest scams. His old friend Rick Wilson got 725,000 shares in the same time period. By early January 2003, Jensen had received 5.5 million shares of ECNC; his brother Peter, 2.2 million. He had also become CEO of the company. His appointment, at first as acting CEO, was announced on 10 October 2002, along with the resignation of former CEO Thomas Hughes.
In addition to helping in the ways described above, in 2001 Jensen announced that one of his own private companies, Gold Stake, was allowing its customers to purchase its nutritional supplements using ECNC's "revolutionary" eCashPad, which was a gadget that allowed users to swipe their own credit cards. The fact that it never caught on had little to do with the merits or lack thereof of the product.
eConnect was already in trouble by the time Jensen was introduced to it. On 13 March 2000, the SEC suspended trading "because of questions… concerning… a purported license arrangement regarding Palm™ organizers, a purported strategic alliance with a brokerage firm to distribute one of eConnect's products, and the amount of revenue reportedly generated by one of eConnect's websites." Ten days later, the agency followed up with a lawsuit alleging that ECNC and Hughes had engaged in a scheme to "artificially inflate the value of eConnect's stock by disseminating fraudulent press releases, primarily over the Internet." A temporary restraining order was granted, and a swift judgment was handed down.
Though monetary penalties were levied, no officer-director ban was imposed on Hughes. He carried on as before, having evidently failed to learn his lesson. Two years later, on 25 July 2001, the SEC suspended trading in the stock once again. This time, not only were civil charges filed against the company; Hughes was also indicted on seven counts of fraud, wire fraud, and contempt of court. In early 2004, he was sentenced to 97 months--more than 8 years--in federal prison. As noted above, he was replaced by Jensen, who served as CEO until the SEC revoked ECNT's (as it was by then) registration on 29 October 2004.
PCBM (later Serac Holdings) collapsed under the weight of its own mismanagement and fraud, shareholders transferred their allegiance to CMKX and its sleazy though charismatic leader, Urban Casavant. CMKX had everything: the promise of diamonds in unimaginable quantity, shameless appeals directed at the religious and members of the military, and best of all, a Funny Car that raced at NASCAR events. Casavant was always in attendance at the races, and fans were gifted with t-shirts, caps, hotdogs, and on one notable occasion, free stock. By the end of the summer of 2004, there were nearly 800 billion shares of CMKX common issued and outstanding.
In October of that year, the SEC suspended trading in CMKX's "sister" company U.S. Canadian Minerals (then USCA). The action cast a pall over the long-awaited party in Las Vegas thrown for loyal shareholders that very weekend. Brave merrymakers scarfed down bacon-wrapped shrimp and told each other everything was fine, despite the antics of a liquored-up woman who staggered onstage to tell Casavant he was a fraud. Needless to say, she was right on target.
In 2005, the SEC suspended trading and revoked the registration of CMKX stock. It subsequently sued 14 people involved in the larger enterprise, including those sanctioned in the earlier PCBM action. The Department of Justice secured a sweeping criminal indictment. The matter has yet to go to trial, but is expected to do so soon.
What did all this have to do with Jensen? He was hanging around the edges, performing services in return for stock. He received CMKX paper as early as 1999, and nearly ten years later was deposed in the SEC's civil action against the perps. He was also closely associated with Jeffrey Turino, one of the PCBM/CMKX "masterminds." In 2004, he introduced Keith Houser to Turino. Houser was in the market for a public shell, and Turino offered him one of PCBM's subsidiaries, called Corbel Holding, Inc. Houser bought the shell, which is now called BioTech Medics, Inc (BMCS). Things did not go well, and in 2007 Houser brought a civil suit in Texas, naming Jensen and a number of others as defendants. The action eventually fizzled, ending in dismissal for non-prosecution.
None of these associations landed Jensen in serious trouble, but it is perhaps understandable that he prefers to stay out of the limelight nowadays.
EXMT and Anything Media
On 2 December 2010, EXMT announced that it had entered into a revenue sharing agreement with Jensen's Anything Media Inc (AMI) to "develop, fulfill, produce and co-market certain DVD and CD productions on a world wide scale." In the relative press release and those that followed, Jensen was not named; AMI's spokesperson was its vice president of sales and marketing, Don Yarter. Yarter is another familiar figure from the past. Along with Jensen and Wilson, he received stock in eConnect in 2001; in 2003 he was given more shares in connection with a consulting agreement. Yarter wasn't the only one of Jensen's old friends to be involved with EXMT. The company's attorney was William Haseltine, who had served as legal counsel for eConnect, and as CEO of St George Metals (SGGM; registration revoked), another CMKX "sister" company.
By 2011, Rick Wilson had assumed a more prominent role with EXMT, participating in an audio interview aired by SmallCapVoice.com. A flood of press releases deluged investors and potential investors, nearly all of them issued jointly by EXMT and AMI. By the end of the year EXMT had announced two pending acquisitions that would, it said boldly, qualify it for listing on the Nasdaq SmallCap Market. The Nasdaq SmallCap Market was renamed the Nasdaq Capital Market in 2005; evidently the author of the press release hasn't bothered to pay a visit to the exchange's website.
One acquisition--of a California entity called Global Publishing, specializing in DVD replication and more--was completed easily enough, given that it was owned by AMI. To celebrate the deal, Rick Wilson was appointed president of EXMT on 26 April 2012. By the end of August, he'd been promoted to CEO. Somewhere along the way they also purchased an outfit called Zenetek, but forgot to announce it until at least a month after the fact.
The company was evidently busy, or at least gave the impression of being so. Revenues were on the upswing, though far from healthy, and profits non-existent. At the end of the year, Wilson was firmly in charge, though Arshad Shah remained as chairman of the board. A 17.68 percent beneficial owner of Class B preferred stock was Redwood Funding Corp., a Minnesota company controlled by Chris and Julie Jensen.
Its dreams of worldwide DVD dominance unrealized, EXMT and AMI apparently decided a new strategy was needed. In March 2013 they announced a joint venture with Quaestus Advisors. The companies had, they said, formed Whole Earth Systems LLC, which would--rather ambitiously--"engage in the development, design, manufacturing and marketing of self contained indoor cultivations systems for fruits, vegetables, fish farming and medical marijuana." Nothing was ever heard of Quaestus again, but clearly a seed had been planted.
Less than a month later, on 4 April 2013, Wilson announced that EXMT had signed a letter of intent to buy R-Quest Hydroponics, which would become a wholly-owned subsidiary of the company. R-Quest makes a device called the EMC 5000 that can be used to control one's marijuana grow room--or any other indoor garden--remotely.
Through the remainder of 2013, EXMT chattered on about new pot-related interests and potential acquisitions, though it did not entirely abandon its media replications services. It did quietly cancel its purchase of Global Media sometime in October. It sold its first 100 EMT 5000 systems in September. It didn't disclose the terms of the purchase, and subsequently filed financials didn't break that revenue out.
In the quarterly report for the period ended 31 December, there was a new beneficial owner--only 7.25 percent--of common stock, and it was Anything Media Inc., with 50 million shares. Redwood Funding Corp., which had been administratively dissolved in August, was still on the books as holder of a slightly smaller amount--15.46 percent--of Class B preferred than before.
In the meanwhile, IMD Companies--ICBU--had entered the picture as yet another of EXMT's partners. Formed in Florida in 2008 as Coastal Biofuels, Inc., in June 2012 it changed its name to IMD Companies. Its predecessor company, Empire Capital Corporation began trading on the Pinks in 1999 as EMPG and then, thanks to a reverse merger, became INTR in 2008. By 2010, it was "engaged in the medical diagnostics provider and nutraceutical industries." Saeb Jannoun was CEO, president, and a director; Bruce Collett, the founder of Integrated Medical Diagnostics, Inc, another Florida company, was vice president and a director. In September 2012, Jannoun resigned, leaving the field to Collett. For that year, the company had some revenues, but greater losses, as its annual report shows.
Big changes for 2014
EXMT had an ongoing problem that was perhaps unknown to its shareholders. Its stock was burdened with a DTC chill. That was not disclosed in any of the company's filings. On 23 January 2014, it announced in a press release that it had hired legal counsel to deal with the problem. It may have been because of that impediment that EXMT decided to move its marijuana business into ICBU.
On 24 September 2013, EXMT coyly revealed that it had "received an offer for a potential buyout of one of its subsidiaries," and would announce the details within 30 days. Nothing further was heard about the matter, at least in press releases, until EXMT and ICBU issued a press release on 9 January 2014, explaining that they had formed a "partnership" by the terms of which ICBU had acquired 51 percent of R-Quest Hydroponics for 100 million restricted common shares of EXMT. In EXMT's quarterly for the period ended 31 December 2013, but not filed until 24 February 2014, it was stated that the stock was valued at $2 million. Upon consummation of the deal, R-Quest became a subsidiary of ICBU.
In reality, the relevant acquisition agreement, not filed by either company, was signed on 28 August; presumably the new partners for some reason didn't want to finalize and report the news until after the end of the September quarter. The document makes clear that the new arrangement signaled a change in control for ICBU: Larry Robertson of R-Quest would receive 50,000 preferred Series B voting shares of ICBU, and would become chairman of the board of ICBU. Rick Wilson, now EXMT's CEO, would also join the ICBU board. The agreement was signed by Bruce Collett for ICBU and Rick Wilson for EXMT. Two weeks after the new year, Collett resigned as CEO and director, and was replaced by Larry Robertson; by then the company had moved its headquarters to California, the home of R-Quest.
Like most penny companies, ICBU and EXMT have a fair amount of convertible debt, though it doesn't seem to be out of control. In their financial reports to OTCMarkets, neither entity identifies its creditors; usually they're simply referred to as "note holders."
One of ICBU's note holders is Chris Jensen. The fact that he's been a creditor for some time explains why that company was chosen to partner with EXMT. Back on 1 October 2012, Bruce Collett, then CEO, lent ICBU $42,431.25. Ten days later, Collett sold his note to Jensen. The note pays 8% interest, and is convertible to ICBU common stock at a 55 percent discount "from the lowest trade price in the 5 days prior to the day that the Holder requests conversion." As is customary, when converting, Jensen cannot at any time own common in excess of the equivalent of 4.99 percent of the company's outstanding.
He appears not yet to have converted, but the debt is by now more than sufficiently aged, permitting him to do so at any time if he wished. In late September 2013, Collett issued instructions to Olde Monmouth, ICBU's transfer agent, telling them to reserve an initial 50 million shares for possible conversions, adding that should Jensen elect to convert, he need only send a notice of conversion to Olde Monmouth. Collett waived the usual notification to the company.
Ironically, on 19 March 2014 the DTC informed EXMT that it had lifted its chill on the company's stock. But the new plan was already in effect, and ICBU was now leading the charge on the marijuana front.
According to the PR:
IMD Companies Inc., (OTC Pink: ICBU) has agreed to a private placement investment with Irwin "Izzy" Zalcberg, a well-known distinguished accredited Small Cap investor with a large rolodex of connections in the upper echelon of the corporate world. The Company has already received the first round of investment from Izzy. The total investment commitment from Mr. Zalcberg to ICBU is just over $1,000,000.00. Izzy has verbally committed additional funds if the Company has the need of them for future acquisitions or joint ventures.There followed canned quotes from Larry Robertson and Zalcberg himself. Strangely, an almost identical PR was released a month and a half earlier by another penny pot stock, Cyber Kiosk Solutions, Inc. (CYBK). It began:
Cyber Kiosk Solutions, Inc. (OTC Pink: CYBK) has completed a private placement investment from Irwin "Izzy" Zalcberg, a well-known Small Cap investor with a large Rolodex of connections in the upper echelon of the corporate world. The Company has already received the first round of investment from Izzy who took time from his vacation overseas to complete the transaction. The total investment commitment from Mr. Zalcberg to CYBK is just over $1 million. Izzy has verbally committed additional funds if the Company has the need.The canned quotes followed. What's all this about? Obviously the ICBU effort owes a great deal to CBYK's example. Is that because both were written by Chris Jensen? We know he wrote press releases for CMKX in the past.
|From SEC deposition of Helen Bagley, CMKX 's transfer agent|
during its investigation of CMKX and SGGM
It seems entirely possible that Jensen is a consultant to CBYK, ERBB, and perhaps other nascent pot companies. It's mildly interesting that ERBB's legal counsel is his old buddy William Haseltine, who also provides services to ICBU and EXMT. And ERBB's transfer agent is Olde Monmouth.
A more fundamental question is whether Zalcberg actually participated in the private placement described by ICBU. Or, for that matter, in the one described by CBYK. Contact information for Zalcberg is difficult to come by; we were unable to reach him for comment. Often, however, he writes about his investments at Seeking Alpha. He's had nothing to say about ICBU or CBYK.
Even more perplexing is that these transactions are referred to as "private placements." Neither CBYK nor ICBU is an SEC registrant. Had they conducted Regulation D placements, they'd be required to file Forms D with the SEC. Cyber Kiosk did, in fact, file one for a Rule 504 offering in late January. But the company only intended to raise $250,000, not "just over a million." Rule 504 permits companies to raise a maximum of $1 million in a 12-month period, which doesn't fit the description of Zalcberg's supposed investment.
ICBU filed no Form D at all, on paper or electronically.
On 9 April, after nearly a week without any news, Medifirst Solutions, Inc. (MFST) issued a press release that signaled the beginning of a collaboration with not only ICBU but also Cyber Kiosk. MSFT had added Rick Wilson of ICBU and Chris Clarke of CBYK as members of its newly formed advisory board on legal and medical marijuana. Bruce Schoengood, CEO of Medifirst, commented vaguely on "joint ventures and business opportunities."
Can the fine hand of Chris Jensen be detected here? Surely it's no coincidence that CYBK, which was, with ICBU, supposedly a recipient of Izzy Zalcberg's bounty, now has an official relationship with ICBU.
The press releases, mostly about IBCU, but issued jointly with EXMT, will no doubt continue. Whether that will be enough to keep stock price afloat is impossible to guess. Sometimes too much is as bad as too little. One thing is certain: Rick Wilson, now chairman of IMD Companies as well as CEO of Anything Technologies Media, will try, with Chris Jensen's help, to ensure that his companies stay in the center ring of the marijuana circus.