USEI – Pump And Dump Alert – June 21, 2013

| June 21, 2013

Pump and DumpWelcome to Pump and Dump Friday, our weekly feature where we identify potentially “bogus” promotions going on in penny stocks.

Today we’re exposing one of the most extensive penny stock pump and dump campaigns of the week:  US Energy Initiatives (OTCPINK: USEI).

If you don’t know how these schemes work, be sure to check out our free report that exposes the whole thing.

Without further ado, here is today’s disaster waiting to happen:

US Energy Initiatives (OTCPINK: USEI)

USEI is one of the most heavily hyped penny stocks of the past week.  At least 29 different promoters have pumped the shares through 68 newsletters.  And over $280,000 has been paid in June so far to plug the stock.

The pump’s being led by some of the usual suspects…

Stock Mister raked in a whopping $180,000 for its services.  Darth Trader has been paid $60,000 to pump the stock.  And there are several others who expect to receive anywhere from $1,000 to $15,000 for their efforts.

The campaign was working well too until the broad market selloff began.

Take a look at the chart…

US Energy Initiatives

As you can see, USEI closed the prior week at $0.008 per share.  But when the pumpers began hyping the stock, it soared to a high of $0.018 this past Wednesday.  It was a 125% gain in just three days time! 

But the good times didn’t last long…

On the same day USEI hit $0.018, the stock plunged 67% to finish the day at $0.006.  And yesterday it fell another 16.7% to $0.005.  That’s a two-day drop of over 72% from Wednesday’s high!   

The shares have been very volatile to say the least.

So, what’s the dirt on US Energy Initiatives?

The company deregistered in 2011 so it no longer has an obligation to file financial statements with the SEC.  However, it did publish an annual report on March 17, 2013 for last year.  And the company published a report for the first quarter of 2013 on May 16, 2013.

According to these reports, the company’s not doing very much to create shareholder value. 

USEI didn’t generate a penny of revenue in all of 2012 or in the first quarter of 2013.  And after posting a net loss of $185,182 in 2012, the company produced a net loss of $57,048 for the first quarter.

Zero revenue and mounting losses is not very encouraging.

What’s more, the annual report includes a going concern statement.  Here’s what it says…

“As reflected in the financial statements, the Company has negative working capital for the year ended December 31, 2011 and a loss from operations for the year 2012.  These conditions raise substantial doubt about its ability to continue as a going concern.”

No question about it, USEI is a speculative company with a capital “S”!

So why did the stock pop?

The company has been saying for months it plans on getting into the biofuel production business.  And on June 19th, it issued a press release which said the company has entered into a one-year biodiesel production agreement with Promethean Biofuels.

Details of the deal are sketchy. 

The press release says the two companies will work together to get Promethean’s biodiesel plant producing at maximum capacity.  And it goes on to say the two companies should be able to generate $6 million in revenue annually from the sale of biodiesel. 

Apparently, USEI and Promethean will divide the revenue (if any) equally.

Based on what little we know, the deal certainly sounds exciting. 

But before you rush out and buy shares of USEI, you need to keep one thing in mind.  These two companies haven’t done anything yet.  They still have to get the plant producing at maximum capacity.  And then they have to find buyers for all the biodiesel they produce.

Given USEI’s recent track record, I’m not holding my breath.

Other Penny Stocks Being Pumped This Week

Prince Mexico S.A. (OTCPINK: LUVE) – 37 promoters with 193 newsletters have been paid nearly $600,000 so far this month to hype LUVE.

Scout Exploration (OTCQB: SCXN) – 23 promoters with 69 newsletters have been paid over $130,000 in June to plug SCXN.

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 schemes and scams out there these days!

Profitably Yours,

Robert Morris

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Category: Pump & Dump Alerts

About the Author ()

Robert Morris is the editor of Penny Stock All Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market's next Blue Chips. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics.