Seven years ago I thought to put out more detailed research on certain pump and dump scams on a separate blog at OTCMicrocapResearch.com. After a handful of highly-researched posts I got distracted and stopped. I am now giving up that domain name and shutting down that website. Below is a copy of one of those posts. The article below was originally published on 19 December 2012.
This is the first article in a series I am calling “Inside the Pump Factory.” These articles will show how a series of companies have been promoted in a way that appears to me to require the complicity of company executives. For this reason I am initiating coverage on Aristocrat Group Corp. (and will soon initiate coverage on other companies promoted by the same stock promoters). My rating on Aristocrat Group is Strong Sell and I have a medium-term (over the next few months but within a year) price target of $0.10, although the stock should eventually go much lower.
I believe that Aristocrat Group is being promoted by the same stock promoters that promoted First Titan Energy (OTCBB: FTTN), GTSO Resources (OTCBB: GTSO) and Rainbow Biosciences (OTCBB: RBCC). After a brief review of Aristocrat Group’s fundamentals and a description of the current stock promotion on it, I will return to prove the connection between these companies.
As far as any fundamental analysis of Aristocrat Group goes, it is pitifully easy. With 62,250,000 shares outstanding and a recent stock price of $1.50, the company has a market capitatlization of $93 million. The company has total assets of $1,243 as of July 31st (per their recent 10-K) and liabilities of $9,118. I know high school students with more impressive balance sheets. What is the company doing with its pitifully small amount of money? At first, it looks like it must be buying advertisements on Yahoo! Below is a screenshot of an advertisement I saw for it today.
(highlighting of the ASCC advertisement added by me; click image to enlarge)
The link takes you to the company’s investor relations page, or more specifically, http://www.luxuriabrands.com/investors?utm_source=MSN&utm_medium=CPC&utm_term=Company&utm_content=NewsAd122&utm_campaign=ASCC.
Unlike most online stock promotion advertisements, the link does not take you to a stock promoter’s website but rather to the company’s website. So this is why it seems that the company is paying for the stock promotion ads.
The Luxuria Brands website is very slick and very promotional. Take a look at this image below that I took from the website’s Investors page:
I have seen companies pay for stock promotion campaigns before, and I have seen stock promoters paid by companies issue outrageous price targets. But I cannot remember ever having seen a company touting itself so blatantly on its own website.
From the same page:
ASCC’s Proprietary Formula Could Turn $5000 into $50,000 ASCC is on target to producing smooth, unflavored vodka that uses domestically-grown potatoes as its main ingredient—integral in appealing to consumers with allergies to certain grains. The market demand for our gluten-free vodka could boost investor gains by 400% or more!
Luxuria Brands is working to promote national market modernization trends in product branding beginning with an American-made premium vodka line, while helping to spur economic prosperity within the U.S. ASCC will expand into the music industry, branding in-demand products on a global scale!
As vodka’s popularity continues to spike, consumers and investors are likely to reap very high ROIs in the first few months of production.
While all companies like to accentuate the positive, I must repeat that I have not previously seen such direct references to the stock price (rather than the actual business). What is worse is that the company makes specific predictions about their stock price (“… could boost investor gains by 400% or more”), and about their business performance (saying that they are “poised to capture 3-5%” of the vodka market, an outrageous prediction).
Even PacWest Equities, which rightly drew my ire for many failings, did not make specific and absurd predictions about market share that they would take and price gains that the stock would see. But all this, while highly irregular and inappropriate, misses the more important point. That point is that the company cannot be paying for these ads — it does not have enough cash and has disclosed nothing in its filings about paying for “investor relations” or “stock promotion” services. A quick search of Aristocrat Group’s most recent 10-K revealed no usage of either phrase. Furthermore, the recent 10-K shows that all expenses were under “general and administrative” expenses; stock promotion would not be considered a G&A expense. That brings me to a sinister conclusion: the company is acting in concert with the stock promoters. There is no other logical conclusion that I can think of, especially considering that the company’s two websites are on the same server as the websites of other companies pumped via the same method that I mentioned above (search the YouGetSignal reverse IP tool for the company’s luxuriabrands.com and aristocratgroupcorp.com websites and you find that they are hosted on the same server as the corporate websites of RBCC and FTTN and GTSO and many other penny stock companies).
See this screenshot:
As mentioned above, First Titan Energy and Rainbow Biosciences have been promoted in the same manner, via online ads. At least one of the companies, Rainbow Biosciences (OTCBB: RBCC) is still being promoted in the same fashion. I cannot confirm that the other companies whose websites show up above were promoted in the same manner but I believe that to be the case. (One important aside: large websites like bhphotovideo.com, nextag.com, shopzilla.com, and bizrate.com are often hosted across many different servers and IPs, and I can safely state that they have no relationship with the other websites shown above.) Below is a screenshot of a search on Bing that yielded a Rainbow Biosciences advertisement:
(highlighting of the RBCC advertisement added by me; click image to enlarge)
I find this direct link between all these companies’ official websites and online stock promotion ads to be quite disturbing. Are the executives of all these companies cooperating with the stock promoters? Are all these companies put together and run from behind the scenes by a small cabal of deal-makers and promoters for the sole purpose of being pumped and dumped? While I believe one of these explanations must be true, extraordinary claims demand extraordinary evidence, which I will aim to provide in future articles in this series. In the meantime, I recommend that investors steer clear of all of these promoted, worthless companies.
Disclosure: It is the policy of MorningLightMountain LLC for no authors of articles nor anyone connected to the company or their immediate relatives to have positions in any stocks covered on the OTCMicroCapResearch.com website, from the time coverage is initiated until coverage of a company is officially dropped. This ensures that there will be no bias nor conflicts of interest for the authors of articles on this website. Furthermore, information about upcoming research reports will not be given to anyone prior to public notice being given via this website’s Twitter account or on this website itself (this report was published on Wednesday, December 19th, at 1:58pm EST). OTCMicroCapResearch.com never gets paid to analyze companies.