May 2, 2014: It seems to have become a common Friday event. With few schemers willing to pay the tout sheets to pimp the overpriced shares of worthless tickers on a day when many have turned their attention to the weekend, the touts will often collude to pimp the shares of a defunct company with no business, or at a minimum, years of delinquent filings. Today, the numerous newsletters published by Market 365, Flip Ventures, Simply Best Investments and a host of D list promoters did just that, by pounding the table on behalf of shares of China Bio Pharma, Inc (CHBO).
The people that run these tout sheets should go to prison for illegally running a lottery.
The last time CHBO filed anything was in May of 2009, a quarterly financial report on Form 10-Q. The last time the company issued a press release was Boxing Day of 2008, when it claimed profits from its pharmaceutical business and announced the it was looking for other merger and acquisition projects. After these two events, CHBO simply evaporated, a sure sign that the deal was a scam all along as most if not all of these purported Chinese based pink sheets are.
Those 2009 financials illustrated a seemingly insolvent operation, as most pink sheet operations are. One clue is that a large chunk of their claimed assets was "goodwill" a commonly applied intangible asset used to boost the appearance of asset value. Goodwill is defined by Investopedia as, "The value of a company’s brand name, solid customer base, good customer relations, good employee relations and any patents or proprietary technology". How a tiny company with limited operations could possibly claim "goodwill" is beyond us, The simple answer is that it can't, and is the reason we do not include that or other undefined intangible assets when we calculate the book value of a ticker, as displayed on our Dangerous Promotions watch list.
The filing's report of overwhelming liabilities and listing of zero revenues over the reported quarter in conflict with the press release announcing net profits just one quarter earlier, paints a clear picture of insolvency and is probably the reason that operations are now defunct; although one would think that shareholders deserve an explanation of the whereabouts of the almost $346K in cash that was listed as an asset. At any rate, one thing is clear: compensated for this promotion or not, the aforementioned promoters are criminally negligent.
As we already stated, such promotions of empty shells has become a common Friday event, and the evil doings have not been limited to just the promoters mentioned here.
On April 25, 2014, Primary Investments joined this same group in the promotion of Ree International (REEI), a scheme that had not issued a press release since March of 2012 or filed a financial report since February of that same year. Prior to the pump, REEI had traded an aggregate 500K shares over the previous three months, not trading a single share on most days. The promotion produced some very ugly results for participants. 488 of the 505 trades that were executed that day, took place at prices higher than the closing price. These are trades that we call "overpays", as their value was less at the end of the day. So the overpay rate for REEI on that day was 96%. The average share traded at $.03542. Since the stock closed at $.0094, the average share bought on April 25 lost $.02292 just over the course of that session. With 5,442,193 shares traded, this means that $124,712 was collectively lost by retailer investors through the trading generated by the pump. Where did the money go? Well we'll let you try and figure that out.
March 21, 2014's pump of dead ticker, ESSE, in which GS Media joined the party, resulted in a 73% overpay rate and losses of $36K on that day alone. Those losses have been greatly multiplied, as shares have been quartered since that day's close.
There are dozens more of these dead ticker promotions over the years, all with the same results. Today's CHBO promotion look to set a new bar for losses.