PWSV, SPOW, LSTGE – Pump And Dump Alerts – September 30, 2011

This week we’re exposing these three popular Pump & Dumps:  Power-Save Energy (PWSV), Sky Power Solutions (SPOW), and Lone Star Gold (LSTGE).

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 don’t know how these scams work, be sure to check out this free report that exposes the whole thing.

Without further ado, here are this week’s disasters waiting to happen:

Power-Save Energy (PWSV)

The environmental revolution is in full swing.  Unfortunately, some companies will do well and others will become worm food.

I had to talk about this popular pump and dump today because the hype will only last one day.

See, the pumper – 007 Stock Chat – was paid $2,500 for a one day promotion.  Funny thing is, their write-up is a whopping 407 words.  So they earned $6.14 for every word they put in the write-up.  Nice work if you can get it!

I just wish they’d spent a little more time focusing on the financials.

Here’s what I uncovered in their filings…

First, the company sells solar equipment to electricians and home builders.  Here’s the first red flag… I don’t know if anyone has told you this, but the housing market isn’t doing so hot!  Shocking, I know.

Home sales are down, construction is down, banks won’t lend to buyers, and builders are on their knees.  It’s ugly.

So is it any surprise their sales in the last six months have been CUT IN HALF?

As you can imagine, with a drastic drop off in sales, earnings aren’t so good either.  In the first six months of the year, the company only LOST $415,254… not bad.  But big red flag number 2 is when their revenue was double… they still lost over $317,895.

So when times are tough, they lose money, and when times are good… they lose money.

This brings us to BIG Red Flag number 3… the going concern.

Cue the spooky music.  This is like the death watch for a business.  Their own accountants took a look at the numbers.  They checked the bank accounts.  They looked at the bills.  And what they discovered wasn’t good.  They decided our friends at PWSV aren’t long for this world.

Their own accountants said the business doesn’t have enough money to survive the year.

Why are we still looking at this company… oh yea… the pumper said… “This company really is under the radar and soon to be discovered.”

Wow, what a ringing endorsement.

Here’s what I say – “Stay Away!”

Sky Power Solutions (SPOW)

I couldn’t wait to get my arms around this one… Penny Stock Explosion said, “SPOW is on the verge of a massive breakout.”

But what really got my attention was their lack of an exclamation point!  Seriously, after making a huge statement like that, don’t you think you’d toss in an “!” or two?

Does that show lack of conviction?  I just don’t know.

But before I jumped into this stock with my life savings, I decided to do a little homework.  Our pumper didn’t say much about the company after all.  I guess he was focused on the “massive breakout”.

What I discovered was… ummmm… interesting.

The company is developing lithium battery technology.  What’s amazing is, just a few years ago, the company was doing VoIP telecommunications.  That’s a logical jump… right?  From phones to energy.  Sure, why not?

Anyway, what caught my eye was the going concern statement.

As we’ve seen before, all a going concern means is the company’s accountants don’t think they have enough cash to survive the year.  No big deal right!?!

This is what they said… “The Company does not have any revenue and as of April 30, 2011, there was a working capital deficit of approximately $6.5 million.”

I guess it doesn’t surprise me.

The company does after all have a whopping $178 in cash.  But don’t worry, they only owe “related parties” $4.3 million.  Boy, that’s going to make the holidays with family really uncomfortable!

Well, I went back to the pumper’s email… what did they see that I didn’t?

I took a close read of their footnote.  Our friendly pumper was paid $7,500 to promote this stock for one day.  I guess in their excitement over the “massive breakout” they forgot to actually look at the business.

You know, maybe I won’t be buying this stock after all!

Lone Star Gold (LSTGE)

This company may ring a bell for you… we profiled them a few weeks ago.  If you want to see our original write-up you can find it here.

Those who followed our advice and stayed away from this stock sidestepped a staggering 30% fall in the stock over the following days.  You can thank me later.

Unfortunately, the pumpers are back at it again…

This time it’s Monster Stock Picks and they’ve been paid a whopping $3 grand for a week promoting the stock.  They’re like little cockroaches, aren’t they? 

Here’s the problem with Lone Star… their story is getting worse.  That’s right, worse…

You see, Lone Star changed their ticker symbol.  Ok, that’s not entirely true.  The NASDAQ regulators changed their ticker symbol to LSTGE.

Why the little addition of a fifth letter?

That’s a code used on the trading floor to alert traders that something is up with the company.  For example, if the extra letter was an “F”, it indicates the company is a foreign filer.

If the extra letter is a “K”, it means the shares are non-voting.

The little “E” has its own meaning too… and it’s not a good one.  The “E” means the company is late filing their reports with the SEC.

Now I’m not going to call the management team incompetent… but let’s be honest, what word do you use when an easy filing deadline is missed?

See, I told you it could get worse.

Do I have to say it again?  Stay away from this stock!

A final word (and warning).

So that takes care of a few of this week’s inglorious “pump and dumps.”

Remember, there’s 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

Tags: Lone Star Gold (LSTGE), penny stock scams, penny stocks, Power-Save Energy (PWSV), pump and dump, Sky Power Solutions (SPOW)

Category: Pump & Dump Alerts