In the world of penny stocks, you're sure to find oodles of great, unknown companies to invest in. But there are also penny stock scams designed to bilk hard-earned cash from investors. And usually you'll know its hit you after you've watched your investment evaporate into thin air!
We know what to look for, and tell you who's out there pumping stocks using paid promoters.
It's our job to expose penny stock pump and dump scams…
And we take real pleasure in putting the smackdown on the latest penny stock pump and dump scams.
As you read, you'll see the big red flags we've come across on these companies. And with all the great penny stocks out there… there's no reason to put a single dime into any of these companies!
This week, we're exposing pump and dump scams on two companies: Mineral Rite Corp (OTCPK:RITE), and OBJ Enterprises (OBJE)
Mineral Rite Corp (OTCPK:RITE)
Mineral Rite comes to us with quite the past. If I didn't know better, I'd say management was either scatterbrained… or simply couldn't run a profitable business. How about a bit of both?
Let's get into the pumping first, and then I'll tell you all about RITE's checkered past...
Red Flag #1: Paid PUMP!
Wall Street Buzz Alerts was paid $7,000 by Numark Capital Corp. In addition, Numark paid $3,000 to Trinity International, LLC… owner of 24-7 Stock Alerts. I guess one pumper just wasn't enough to get the job done. There are a handful of other pumpers out there touting this ticker symbol, which raises even more red flags.
Red Flag #2: Horrible Financials
As of their latest quarter RITE continued to post losses from operations, which adds to a growing accumulated deficit.
- $317,890 operating loss for the first 9 month period of 2012
- $5.7 million accumulated deficit
- Only $9,365 in cash on the books
As you can see, RITE isn't running a profitable business- yet again. And that leads me into our next red flag...
Red Flag #3: Checkered Business History
Right now, Mineral Rite is operating as a mining company. Just last August, RITE was known as Royal Quantum Group. Before that, the list of failed business ventures is rather lengthy...
Aug. 31, 2012- Name Change to Mineral Rite Corp and got into precious metals
Sept. 2005- became Royal Quantum Group
Oct. 2002- changed to a new business- Platinum Super Yachts, Inc.
2002- Company went from PSM Corp to Super Yachts Holdings
1996- Incorporated as PSM Corp.
As you can see, RITE jumped from business to business over the year. The craziest jump was from Yachts to the oil and gas business (as Royal Quantum Group). There's no way you'd catch me buying shares a company run by these guys!
Red Flag #4: Chart Pattern Show Signs of Previous Pump And Dumps Activity
If you think the pumpers have no effect on a stock, think again. Often times they can create massive moves in a company's share price because of low trading volume. Big peaks and valleys are usually the result of such activity.
And that goes for RITE as well. Look at the following chart to see for yourself-
It looks like the pumpers had a go at it back in September, when the stock hit $1.00 a share. Given the huge move in December and the fact we know the pumpers have been paid to promote the stock- the recent price action looks like a clear result of this pumping.
OBJ Enterprises (OBJE)
All the stock pumpers have to talk about on this stock is the price action, "Hot Pick OBJE Up 23% in Just Over Three Weeks", the headline reads.
That's the latest and greatest. But one thing you should know is that OBJE has been promoted by known pumpers as far back as September of 2011. There were promotions in 2012 during Jan., Feb., April, May, July, Oct., Nov. and December.
Here's the latest…
Red Flag #1: Big PUMP!
OBJE was promoted over the past week by OTC Stock Pick, and they were paid $30,000 to do it. There was also pumping by Top Microcap Stock, which just happens to have a disclaimer written for OTC Stock Pick- obviously the two companies are one in the same.
That leads us to our next issue....
Red Flag #2: Reverse Stock Split
That's right. In their annual report released December 19th, OBJE acknowledged the company effected a 1-for-40 reverse stock split on November 13, 2012. With their stock trading at $2.50 a share right now, the price the market assigned shares was $0.06 a share before the reverse split.
Now, back on November 16th last year, OBJE was trading for $0.58. That means, before the reverse stock split, shares were trading at just over a penny each! Not exactly on many investor's radar at that price.
Red Flag #3: Disastrous Books
The company formerly known as Obscene Jeans Corp. reported financials for the year ending August 31st… and it wasn't pretty. Here's the breakdown.
· $0 Revenue for the year
· Net Loss In 2012- $886,997
· Accumulated Deficit as of August 31st- $2.1 million
· $2,652 in Cash on the books
That's amazing that a company with $0 revenue ran up an $886,000 loss. Doing what is my question.
The Wrap Up:
Too many investors get sucked into these nightmare penny stocks scams. They fall for the overly-optimistic projections the paid promoters are selling. In the search of easy money, investors lose sight of what a real return should be… and end up holding the bag.
At the end of the day, the predatory practices of penny stock pump and dump scams are allowed to continue by the SEC and our government. As long as pumpers disclose they've been paid, everyone is willing to look the other way.
It's the ultimate case of "let the buyer beware!"
*Note: All financial data has been sourced directly from each company's SEC filings, or non-SEC financial reports. Other quotes are directly from paid promoter's emails
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.