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The FITX Fiasco: Bill Chaaban's Pants Are On Fire


August 27, 2014 (updated): We had Creative Edge Nutrition's (FITX) CEO and President, Bill Chaaban, scrambling after our recent revelation that the law had been broken. Within its August 19th Quarterly Report for the period ending June 30, 2014, FITX disclosed that it had issued more shares than were authorized. Once we publicized this, Chaaban was obligated to do something.  He chose to flim flam his way around the problem. We would have had a lot more respect for him had he just said, "Oops! I screwed up. Now let me fix it."

   » Related: FITX's Bill Chaaban Loses Count

Bill's first response was to post on the company Facebook page that (a) the reported number of shares issued was a typo; and, (b) that the Transfer Agent would never be able to issue more shares than authorized. Bill dug himself deeper with these two fabrications.  He made it even worse by posting that the actual number of shares outstanding is 3,479,417,549.

Bill Chaaban's Facebook Post - August 22, 2014 <click to enlarge>
First of all, the overage was reported on three separate sections of the Quarterly Report. Did Bill, whose signature confirmed the correctness of the QR, make three "typos"? Secondly, the Transfer Agent does not have the responsibility of ensuring that a company stay within its authorized number of shares. When a creditor presents a convertible debt for conversion, it is the Transfer Agent's job to generate a share certificate. If company management is negligent with its issuances, well that's not the TA's problems.

In order to humor Mr. Chaaban's ridiculous notion, on August 23rd we had our agent contact Action Stock Transfer, FITX's Transfer Agent. Their policy, as is the case with most TAs, is to not disclose a company's share structure to the general public. We did get the TA, however, to state that the "specific" number of shares outstanding, as shown within the Quarterly Report, was correct.

So the two statements in the one Facebook posting were both lies. Not surprisingly, that posting has since been deleted from FITX's Facebook page, but a loyal follower provided us with a saved screenshot.

In hopes of sweeping the dirt under the proverbial rug, on August 26th, 4 days after we published our report, FITX filed a "Revised 3rd QT with retirement of 75,000,000 shares accounted for".  It took four days for Bill to come up with a plan that should fool no one.

Bill is inferring that he "forgot" to include this share retirement. Bill Chaaban is a liar.  The retirement is a Band-Aid for the mess he created. He hopes the Band-Aid sticks. It might not.

For one thing, this is the first anybody has heard of any share retirement. The revised Quarterly Report now states that:
The Company cancelled 75,000,000 shares of its common stock that was issued as a deposit for the acquisition of the Canadian Nutrition Superstores.
The previous incarnation of the Quarterly Report stated that:
The Company will either consummate the transaction in the by September 30, 2014, or terminate it depending on the ability of the acquiree to supply certain financial information requested.
The May 2014 Quarterly Report for the period ending March 31st, states that the transaction would be consummated in the 1st quarter of 2014 or terminated. According to this statement, that determination should already have been made as of the date of this report.  It seems that Bill can't keep his stories straight.

So now to cover his ass, Bill is declaring that the acquisition of Canadian Nutrition Superstores to be null and void.  Funny, there hasn't previously been mention of the cancellation of the transaction, even though the acquisition was announced to great fanfare back in May of 2013. And are we to believe that it took 15 months to determine that a chain of three small stores was not worth the investment?  Please! Perhaps, Billy decided that he had generated all the hype he could out of this bogus acquisition and sacrificed it in the name of saving his ass over the share issuance debacle.

Finally, the revised QR states that the number of shares outstanding is 3,467,969,548 not the 3,479,417,549 number he used on his Facebook post.  Was that just another "typo"? A good liar has to have a good memory, Bill.

Whether Bill Chaaban will get away with this series of ruses is yet to be determined, but one thing seems certain:  with over a billion shares worth of debt yet to be converted, FITX will have to increase its authorized number of shares significantly. And soon!