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Robert W Walter, Esq.  

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  • Revisiting Valmie Resources: A Host Of Issues To Consider [View article]
    Bart, yes they did finally file (quite late) and included the required financial statements of Vertitek. As you said, the picture is ugly. You can see why they would not have wanted to file those financial statements, as the statements make it clear that (1) Valmie got next to nothing for $2.7 million in stock, and (2) Vertitek's drone "business" is so undeveloped as to be more illusion than reality. We had guessed this was the case, but the financial statements make it crystal clear.

    It is also interesting to note that the date on the auditor's report (Anderson Bradshaw) for the audited Vertitek financial statements is March 19. That means that Valmie/Vertitek had the audited Vertitek financial statements in their possession when the acquisition closed on March 31. That would indicate that Valmie/Vertitek knew that audited Vertitek financial statements would be required to be filed with the Super 8-K, but Valmie "sat" on the financials until after the management team read my initial post. Put another way, why would Vertitek have had the audit done at all unless Valmie knew it was going to have to file the Vertitek financial statements in the Super 8-K? And if Valmie knew it was required to file the Super 8-K, why did it fail to do so within four business days of March 31? Was it to allow the stock to continue to trade on the basis of misleading press releases rather than the reality represented in the audited Vertitek financial statements? And once Valmie management realized their plan had been exposed, is that why they then filed the Super 8-K? I believe the answers to these questions are obvious.

    The Super 8-K also exposes another major misrepresentation. The signatures on the exchange agreement are dated March 30 for Sean Foster and Gerald Hammack (Vertitek and Valmie, respectively), and March 27 for Dimitriy Protskiv (Masamos Services). However, Valmie had announced on January 28, 2015 that it had then signed the definitive agreement to acquire Vertitek. Thus, the press release of January 28 was pure fiction and had to be misleading based on the dates in the definitive agreement that Valmie filed as Exhibit 10.1 to the Super 8-K. This also means that Note 8 to the Vertitek financial statements is wrong, as it states the exchange agreement was executed on January 27.

    It is also interesting to note that Vertitek is a Wyoming corporation with the Cypriot owner, but the audit report is addressed to Vertitek's board of directors in Lake Charles, Louisiana. The only Sean Foster - the sole officer and director of Vertitek - I found on LinkedIn in Lake Charles, Louisiana, is a Test Technician at Dashiell Corporation. I believe I have seen his picture on another Internet site linked to Valmie. If this is the same Sean Foster who was the sole officer and director of Vertitek, I wonder if his employer knows of his involvement in Vertitek/Valmie.

    Also, I learned recently that Russell Anderson, CPA, who was charged in the SEC civil case filed on July 8, 2014, settled the SEC case on February 11, 2015. In the settled order, the Commission found that Anderson (1) engaged in improper professional conduct, (2) willfully aided and abetted CVB's violations of Sections 10A(a)(1) and (2) of the Exchange Act, and (3) caused CVB's violations of those same sections of the Exchange Act. Anderson has been barred from practicing before the SEC, with a right to reapply for reinstatement after three years. Anderson also was personally ordered to pay a civil money penalty of $40,000, and was enjoined from committing or causing any violations and any future violations of those Exchange Act sections mentioned above. This certainly makes one wonder about why Anderson Bradshaw was used to audit the financial statements of Valmie (report date of March 13) and Vertitek (report date of March 19), when Anderson Bradshaw must have informed both companies of the February 11 settlement with the SEC.

    Jun 13, 2015. 12:30 PM | Likes Like |Link to Comment
  • Revisiting Valmie Resources: A Host Of Issues To Consider [View article]
    Thank you, Phil. I am very hopeful the SEC will take note of the filing deficiencies and stop trading of this stock. In my view, they have ample reason to do so. Like you, I have been bombarded with banner ads about this company. Hopefully the average investor will not rely on promotion, but on reality.
    May 15, 2015. 10:11 AM | Likes Like |Link to Comment
  • Revisiting Valmie Resources: A Host Of Issues To Consider [View article]
    Bustingscams, thanks for adding to our knowledge base. I am unfamiliar with the players you identified, but it would not surprise me if Valmie has failed to make full disclosure of its ownership given the other disclosure omissions it has committed.
    May 14, 2015. 11:12 AM | Likes Like |Link to Comment
  • Revisiting Valmie Resources: A Host Of Issues To Consider [View article]
    Thank you Ikarus. I'm not sure it's a unicorn, but I appreciate the metaphor. This was an easy one to out, as there was a lot to work with!
    May 14, 2015. 11:04 AM | 1 Like Like |Link to Comment
  • Revisiting Valmie Resources: A Host Of Issues To Consider [View article]
    Bart, thank you so much for pointing that out. I checked Nasdaq's price chart and it shows that the closing price was $2.774 on March 31. This would mean that the acquisition price was $2,774,000. Even if the stock was valued at a discount because it was restricted, this would mean that the investment test for significance was exceeded handsomely - meaning that the failure to file the Vertitek historical financial statements, interim information and pro formas in an 8-K is a huge, gaping hole in Valmie's SEC filings.
    May 13, 2015. 08:45 PM | Likes Like |Link to Comment
  • Revisiting Valmie Resources: A Host Of Issues To Consider [View article]
    Thanks much. I will take a look at SPYR and LOGG - sound like birds of a feather!
    May 13, 2015. 06:15 PM | Likes Like |Link to Comment
  • Did Herbalife Repurchase Shares While In Possession Of Material Non-Public Information? [View article]
    I saw your reply and it is consistent with the initial observations you made. I don't subscribe to your response based on my post above. Unfortunately, the rules around 10b5-1 plans are such that I believe they could have used a 10b5-1(c) plan and you would not know if they did so.
    Feb 21, 2013. 04:10 PM | Likes Like |Link to Comment
  • Nomenclature: Will Herbalife Copy Nuskin? [View article]
    Matt, I respectfully disagree. A going private transaction doesn't have to be sponsored by Icahn, and given HLF's free cash flow, I believe there are many private equity firms who would step up. With management fees and high-yield debt, the rewards are obvious. Yes, there are some that will be scared away by the reputational risk, but I submit that some firms would welcome the opportunity to generate above-market returns and management fees. And as for your points about churn, regulatory risk and slowing growth, you just made the best arguments one could make for why the "going private" price should be less than what investors might expect. And the icing on the cake is that for the P/E investor, the regulatory risk will drop significantly when the company is no longer subject to the SEC's oversight. I don't see a takeover in the cards, but a management-led buyout a la Dell - and the institutional investors will clamor to exit their positions at a high enough price, for the very reasons you described.

    I would not look on this as an Icahn transaction. I believe he will simply facilitate the going private transaction by using his contacts to helping line up the financing, and will smile all the way to the bank. Just speculation, but we'll see....
    Feb 21, 2013. 03:32 PM | 2 Likes Like |Link to Comment
  • Our Response To Robert Walter Regarding Herbalife And 10b5-1 Plan [View article]
    Shortzilla's comment goes to the issue - can (should) a company be able to do so when it knows information that you, an investor, do not know? Whether you agree or disagree, the SEC's mission is investor protection - including protecting investors from insiders and companies taking advantage of information that is non-public and material.
    Feb 21, 2013. 02:23 PM | 3 Likes Like |Link to Comment
  • Our Response To Robert Walter Regarding Herbalife And 10b5-1 Plan [View article]
    An "ordinary share repurchase authorization" can be made and then take the form of a 10b5-1(c) plan. It is only a question of how you adopt and implement the plan, which can, as I said, follow the authorization.
    Feb 21, 2013. 02:20 PM | Likes Like |Link to Comment
  • An Open Letter To The Independent Directors Of Herbalife [View article]
    Sam, I agree it's not happening - and you called it! If I'm that institutional investor, I'm going to tell a few folks that it's time to go private - for all kinds of reasons...including getting me out of my position.
    Feb 21, 2013. 01:43 PM | 3 Likes Like |Link to Comment
  • Nomenclature: Will Herbalife Copy Nuskin? [View article]
    Matt, your thesis is interesting and exposes a potential land mine that HLF has to know is out there. Thus, I have a difficult time imagining that they will not be thinking through very, very carefully the implications of changes in nomenclature, pricing, and distributor/customer status. Careful planning and execution can, at least in my view, go a long way toward defusing this land mine. However, at the end of the day, I would not be surprised if this issue is taken off the table for public investors through a going-private transaction. That transaction would remove HLF from ongoing SEC scrutiny that I'm certain has the board nervous, would take advantage of Icahn's suggestion and evident support, and then narrow the issues for HLF to FTC and how it revamps the business model a la NuSkin - outside of the scrutiny that a public company would draw. I could well be wrong about this, but I'd sure be thinking along these lines if I were at HLF...
    Feb 21, 2013. 01:31 PM | 1 Like Like |Link to Comment
  • Our Response To Robert Walter Regarding Herbalife And 10b5-1 Plan [View article]
    A thoughtful response, but I'm not quite convinced. The press release spoke as of its date. Unfortunately, as we've seen in some of the insider trading using 10b5-1 plans, the plan can be adopted on a moment's notice, and can be modified likewise, without any disclosure or announcement by the insider. This is part of the problem that I believe the SEC is struggling with in relation to insider trading using the plans - they are far too easy to put into place, and modify, when an insider believes he, she, or it does not "possess" material, non-public information. Proving otherwise can be very difficult, which is one reason why I believe the SEC is focusing on insider trades outside of a 10b5-1 plan by insiders who already have a plan in place - a good indicator of something else perhaps driving the trade.

    If I were Herbalife's general counsel (which of course I am not), I would have recommended to the board long before Ackman's presentation that the company adopt a 10b5-1(c) plan. This would have ensured that HLF could continue to repurchase stock during times it may otherwise have been prohibited from doing so. In that sense, it is a no-brainer - protect the company from the possiblity of being charged with trading while possessing material, non-public information by adopting the plan in a safe "window," but keep flexibility to change the plan on a moment's notice when "not" in possession of material, non-public information. I guess we'll see if and when further disclosure surfaces...if it does!
    Feb 21, 2013. 01:14 PM | Likes Like |Link to Comment
  • Did Herbalife Repurchase Shares While In Possession Of Material Non-Public Information? [View article]
    Yes, that is true, it is an affirmative defense. But an intelligent management team will claim that they merely instructed the broker to continue prior repurchase practices, or that any increase in repurchases under the plan was made prior to the material non-public information being known. As the SEC is currently investigating 10b5-1 plans for insiders, it may be that this whole area will need to be revamped. In the meantime, however, I don't believe the post is necessarily accurate absent more information that Shortzilla cannot obtain (absent a court action).
    Feb 20, 2013. 07:41 PM | 1 Like Like |Link to Comment
  • Did Herbalife Repurchase Shares While In Possession Of Material Non-Public Information? [View article]
    Your post may not be correct. It is not clear whether HLF used a 10b5-1(c) plan to engage in the repurchases. Incidentally, HLF is not obligated to announce the adoption of a 10b5-1(c) plan, even though it must announce and regularly update share repurchase information in each 10-Q and 10-K until the repurchase authorization ceases or the total number of shares authorized for repurchase have in fact been repurchased.

    If HLF did use a 10b5-1(c) plan, the only requirement concerning non-public information is that HLF cannot have had possession of material, non-public information at the time the plan was adopted (July 30, 2012). That also happens to be the day HLF filed its 10-Q and a Form 8-K. After adopting a 10b5-1(c) plan, the issuer may repurchase shares on a regular basis pursuant to the plan, regardless of any material non-public information it later receives.

    So, without more information about whether HLF adopted a 10b5-1(c) plan (which itself is non-public and is not required to be disclosed by Herbalife), I'm not sure you can support the conclusion you reached.
    Feb 20, 2013. 06:00 PM | 3 Likes Like |Link to Comment
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