NSRS, APII, FROG – Pump And Dump Alerts January 6, 2012
This week were exposing these three popular Pump & Dumps: North Springs Resources (NSRS), Action Products International (APII), and FrogAds (FROG).
That said, welcome to Pump and Dump Friday, where every week we highlight a few of the bogus promotions that are going on in penny stocks.
If you dont know how these scams work, be sure to check out this free report that exposes the whole thing.
Now without further ado, here are this weeks disasters waiting to happen:
North Springs Resources (NSRS)
Wickenburg, Arizona once known as the Dude Ranch Capital Of The World is back in the news. It seems modern day prospectors are following in the footsteps of Henry Wickenburg, the famous prospector who struck gold in the town thats now named after him.
Back in 1862, the gold rush along the Colorado River was in full swing and Henry Wickenburg hit pay dirt at whats now known as the Vulture Mine. In fact, the Vulture Mine has produced over $30 million in gold over its lifetime.
Fast forward to present day and it seems North Springs Resources believes theres still more gold to be found nearby
On December 29th, NSRS entered into a joint venture agreement with DNP Mining to conduct mineral exploration on whats known as the Goldstar property. Goldstar is in the same town as Vulture Mine Wickenburg, AZ.
Through their agreement, NSRS will acquire a 20% working interest by paying an aggregate of $500,000 in the funding of phase 1.
Thats where the problem comes in
As of their latest report, North Springs Resources has $16 in cash. Thats right $16.
But never fear, the company did find a way to further finance the deal. Right after NSRS cancelled 80 million outstanding shares of common stock (on Dec 28, 2011), the company issued a 10% convertible promissory note to Kazuo Holdings, Inc giving NSRS access to $1 million!
Thats great, except theyll need to pay 10% interest a year on it and if they default, Kazuo will be able to convert their debt into shares of common stock.
That seems like a good reason for NSRS to cancel 80,000,000 shares of common stock.
You see, if they fail to strike gold or generate revenue in the next year theyll owe Kazuo $100,000 (they took all $1 million of the note by the way). So unless they keep $100,000 aside to pay the interest on the note, Kazuo can convert the debt to shares.
Now lets do a little math
The company has to pay $500,000 to meet their obligation in the joint venture. $100,000 was paid at the end of last year. And $400,000 is due today January 6th. So that leaves the company with $500,000 right?
Well, theyre going to have to pay $100,000 to Kazuo by the end of 2012 to avoid default. So that would leave $400,000. But NSRS still has $108,770 in liabilities (other notes, accounts payable, etc). If we pull that number out, were down to around $300,000.
Now quarterly expenses, as of the latest filing, look to be around $50,000. However, if theyre running a stage one exploration, that expense will probably rise. Even if it remains at $50,000, that adds up to $200,000 for the year.
It sure looks like cash levels at NSRS will be down to $100,000 by the end of the 2012.
And thats assuming no increases in expenses at all
Heres the problem… If NSRS actually finds gold, theyll need to come up with $3 million to proceed to phase 2 (as per the agreement). And where do you think theyll get that cash?
Most likely, NSRS will do one of two things. Theyll either issue more shares of common stock, or float yet another convertible note.
The bottom line
NSRS share are headed for a fall!
If its not enough that NSRS is a long way from producing revenue from mining operations, let alone earnings I have one last reason why you should be leery of investing in this company. Nahulate S.A. paid Free Penny Alerts $600,000 to hype NSRS shares for just one month.
If Nahulate S.A. felt that strongly about the company, why didnt they just invest in operations directly? Think about it $600,000 would have covered the cost of North Springs Resources commitment for stage one development.
My guess is they really dont care about the success of a company with $16 in cash. Instead, theyre really interested in their own gold mine bilking unsuspecting investors. By pumping up shares of NSRS, they can then sell them off at a huge profit.
Remember, with 694 million shares outstanding, the market cap for NSRS is over $240 million. And $240 million is far more than NSRS could hope to see in earnings, even if they struck gold tomorrow.
Companies like Nahulate S.A. know it. Thats why theyre running scams to pump shares of companies like NSRS. This is truly a case of Caveat Emptor buyer beware!
Action Products International (APII)
Sometimes the pumpers are their own worst enemy. In this case, they led me straight to the financials of Action Products Intl. Let me explain
After being paid $12,000 by C. Security, LLC to hype shares of APII, Level Stock bragged about how their initial buy alert on December 23, 2011 gave followers a 120% gain. Shares went from $0.06 to trade at $0.13.
Of course, the pumper failed to tell you about the companys performance
In 2011, APII generated zero revenue! Yes, thats a big fat goose egg. Whats more, the company lost money to the tune of $348,000 last year. This certainly isnt the kind of performance I like to see from my investments.
Whats more, the company had to hand over 1,000,000 shares to the Fuzhou Transbrilliant Co of China to eliminate their debt. Its pretty common for companies to convert debt into shares, but what I read next had me scratching my head
APII issued 250,000 shares of restricted common stock to corporate officers. For what, may I ask? The company generated no revenue and lost money What exactly are they being rewarded for? That sounds kind of sketchy to me but hey, who am I to judge. Im not a shareholder.
Let me give you one more good reason to avoid Action Products shares
APII hasnt filed anything with the SEC since they pulled their registration back in November of 2010. My simplistic thought process says with all the great companies not being hyped up by promoters and which actually do file with the SEC theres no reason to give these shares a second look.
FrogAds (FROG)
I dont even know where to start with this company
So let me begin with the pumper, Stock Hideout. Their parent company, Blue Wave LLC, was paid $50,000 to hype up shares of FROG. And Stock Hideout pulled out all the stops.
They drew an almost comical comparison between FrogAds and the leading classified ad site on the web, Craigslist.
Both sites look alike, but thats where the similarities end. Craigslist is the number one site and an innovator… and FrogAds is nothing but a weak imitation at best.
And I love how the pumper uses Craigslist numbers and stats to make you believe they are for FrogAds. The pumper says Thats a business that racked up roughly 29 million visitors a day and $115 million a year of Craigslist.
Yeah buddy, what does that have to do with FROG again? Oh, its the company you want to be like got it.
Before I carry on with the ridiculous comparisons FROGs promotion companies make lets look at the numbers.
Back when they first started, the company sold some one time banner ads and in the process $248,000 in revenue. And theyve earned around $35,000 in the process.
The problem is, since March 2011, theyve booked zero revenue. In fact, their latest SEC filing shows for the six months ending September 30th last year, FROG not only had no revenue but they lost $137,815!
Heres the entertaining part
The pumper sent out an email with a link sending us over to a PRNewswire article in which the CEO and majority shareholder Julian Spitari says
“We believe that it is a tremendous feat that we have succeeded in building a profitable business that offers more and more of the industry’s most demanding online advertising tactics without any cost to our online audience
Ok wait hold the phone.
Do you mean to tell me the CEO is so delusional he actually believes his company is profitable?
Even with $0 in revenue since March 2011?
Even with a $137,815 loss?
Wow!
Now what youre about to read hasnt been written by me not one word. It comes from the investors link found directly on FrogAds website. Its so comical and so entertaining you wont believe they actually have the audacity to post this as information for investors on their site. Here you go
- [CEO] Julian [Spitari] flat out predicts that FrogAds will, as he put it. . .obliterate Google. . .eBay. . .Yahoo. . .Facebook. . .Craigslist. . .Twitter. . .Groupon. . .and the rest of the Internet want-to-bes!
Clearly, FROG has a sales letter pumping their stock on their very own website. Shame on them!
Not only is it ridiculous for someone to call Google, Facebook, Ebay, Craigslist, and Twitter internet want-to-bes it insults the readers intelligence.
Just in case you have any doubts this is a sales letter, check out the disclaimer found at the very bottom in tiny print
S & I Consulting and Lake make no recommendation that the purchase of securities of the company or companies profiled in this Update are suitable or advisable for any person or that an investment in such securities will be profitable.
Now thats some research you can trust!
A final word (and warning).
So that takes care of a few of this weeks inglorious pump and dumps.
Remember, theres a lot more of this going on each week than we highlight here.
As you know, penny stocks are a great place to invest your money. You just have to do your due diligence to stay away from all the scams out there these days!
Until next time,
Brian Walker
Category: Pump & Dump Alerts
