StockTips continues its path to irrelevancy as a penny stock promoter with its "pick" of Coastal Integrated Services
June 2, 2015: On Sunday, 31 May 2015, "Mike Statler" of StockTips delivered his new pick as promised. The pick, described as "a tiny beverage stock that could be like rocket fuel for your portfolio," is Coastal Integrated Services, Inc. (COLV). "Mike"--who is in reality is an "actor… compensated solely on a contract basis for participating in this campaign"--begins his voiceover pitch by informing listeners of the advantages of trading his enormously successful plays. StockTips' self-praise is unwarranted. Those who found themselves trapped in Telupay International (TLPY) back in March may feel they were suckered rather than handed a surefire winner. We suggested the stock might fall off a cliff before the promo officially began, and explained why a few days later. Less than a week after StockTips announced TLPY, it was trading far lower than before the pump began.
COLV, 13 May - 29 May
That the same appears to have already happened on Day One of the promotion should not come as a surprise to anyone. The purpose of any promotion is to deliver the kind of volume that allows large shareholders to dump. Prior to the start of this campaign, Coastal's average daily volume was a mere 25,404 shares, so "Mike" has his work cut out for him.
It's worth noting that volume picked up a little in the past seven trading sessions, perhaps indicating some activity by frontloaders. We have no way of knowing if one of those opportunists may have been whoever's behind StockTips. Nothing is said about stock purchases or ownership by the promoter in the disclaimer attached to the COLV alert, but we are informed that StockTips' parent company, Amerada Corp, "expects" to receive a cool $4.5 million as a marketing budget for the campaign from Laluna Services, Inc, an "unaffiliated 3rd party." Laluna is invariably StockTips' third party payor. It's doubtful anyone is forking over that much money to "Mike Statler"; the number is clearly designed to impress the naive and to convince them that COLV must be something special.
StockTips Abbreviated Past Performances <click to enlarge>
Undoubtedly, any frontrunners divested themselves of their COLV position, but not necessarily at a profit. The first day of the promotion was a disaster for anyone who got into stock early in the session. The day's first trade went off at $.1401, a 40% increase over Friday's close. By 9:35:24 the stock price had already reached their intraday high of $.141. It was all downhill from there. COLV did not experience the volatility that are characteristic of past StockTips plays. Shortly after 10:30am volume dried up and the stock churned listlessly until a selloff began at 3:00pm.
COLV Intraday Chart - June 1, 2015
COLV's undeniably poor performance came as a surprise to some, but more experienced penny players seem to have expected it. The penny crowd has been wary of StockTips plays for quite awhile now. Traders were disconcerted by last year's disastrous Pingify (PGFY) campaign, which ended in an abrupt SEC suspension; the aborted Telupay International (TLPY) this past March reinforced their doubts about StockTips. In addition, COLV itself has been pumped and dumped at least five times since December 2011, and none of those pumps had resulted in big gains for players.
COLV Abbreviated Past Performances <click to enlarge>
The product
Though StockTips says COLV is a "tiny beverage company," it isn't a beverage company at all. It makes lids for beverages bought at convenience stores, coffee shops, and fast food restaurants. While lids don't sound sexy, these are, as one might expect, special. At the company website we learn that they're called Simply Lids™. What makes them different from ordinary lids is that the opening from which one drinks is covered by a tab called Simply Slider™ that can be moved back and forth. Other types of lids, once opened, cannot be closed, leaving a thirsty coffee-drinker at risk of spilling his morning Joe on his way to work. If Simply Lids catch on, his worries will be over. The tabs offer another benefit: their rounded rectangular shape allows them to be used to display logos or other types of advertising.
The Simply Lids product
The idea may have promise, but the company is financially troubled. As of 31 March 2015, COLV had $794 cash. That amount was also its total net assets. There were no revenues.
At a different official website, the company describes its product as the "patented 2015 Simply Lid." No patent number is given, and we were unable to find such a patent through online searches. The most recent quarterly report, filed on 12 May 2015 for the period ended 31 March, states vaguely that "the issuer owns various patents and patents pending related to it disposable beverage lids," adding that it also owns a prototype manufacturing mold.
Simply Lids claims proudly that it was an Edison Awards nominee in 2012. That sounds impressive, but a look at the process shows that anyone can nominate himself or someone else in the hope of ending up a winner. The company did snag third place in the non-consumable Best New Products division at the Seattle 2011 Coffee Fest trade show. Last year, Simply Lids tried again for an Edison Award, nominated this time by Harry Epstein of Havi Global Solutions, a procurement company with whom COLV recently signed a non-disclosure agreement. In another potentially positive development, in April the company received a quoting request from Armstrong Paper, a California distributor of packaging supplies.
COLV has never been an SEC registrant, and the information offered in its OTCMarkets filings is extremely sketchy, and in many ways unsatisfactory. No detailed explanation of the reverse merger transaction that resulted in Simply Lids moving into the COLV shell is offered. Neither is any useful information about the company's principals, past and present, to be found. We shall attempt to piece the story together as best we can.
Simply Lids and Coastal Integrated Services
On 9 November 2011, a Californian called Paul Konapelsky reserved the name Simply Lids with the Nevada Secretary of State. The reservation expired three months later. On 27 August 2013, the entity now known as Simply Lids was incorporated in Nevada by John Newman and Michael Booth, who currently serve as COLV's only officers and directors.
There is no way of telling whether Konapelsky was once associated with Newman and Booth, and then moved on, or whether the identical names of the proposed company and the one eventually incorporated are merely a coincidence. We do know that Simply Lids existed, and had developed a product, as early as September 2011, when it won its award at Coffee Fest. The company's Twitter account may offer further clues. According to the brief profile, the account was created in June 2010; the location is given as California, not Nevada. There are only 53 tweets in all, most of them from recent months.
Coastal Integrated Services has a longer history. It was formed in Nevada on 5 March 2002 by Frank Sherman, who named himself as the new company's only director. Louisianan Warren "Skip" Wheeler was secretary. Nothing more happened until May 2007, when Wheeler amended Coastal's articles of incorporation. Until that time, the company's authorized capital consisted of 20 million shares of blank check preferred stock; no provision was made for commons. The amendment authorized 175 million shares of common stock in addition to the 20 million preferred. Wheeler signed the document as an officer, but did not state what office he held. He later said that the company had been incorporated "for the purpose of raising capital that is intended to be used in connection with its business plan which is the buying and selling of black oil."
In 2009, Wheeler decided to take Coastal public, and in preparation he compiled financial statements for fiscal 2007 and 2008. The numbers show the company had very little money, but was at least engaged in some activities. No more can be said, since no detailed disclosure of its business plan was made. On 19 May 2009, shortly after those initial reports were posted, Coastal began trading on the Pinks as COLV. The first day, 150 shares changed hands at $0.18. A few months later, action picked up a bit as stock price declined. By 2012, Wheeler was issuing stock at a good clip, though the particulars of those issuances are not known. On 1 June, he raised the company's authorized capital dramatically, from 175 million to 2 billion shares. By the end of the month, shares outstanding had risen to 1.82 billion. That increase had occurred entirely in the second quarter; as of 31 March, issued and outstanding had been a mere 175 million shares. A table inserted in COLV's quarterly report for the period ended 30 September 2013 tells a slightly different story.
From COLV's 30 September 2013 Quarterly Filing
Wheeler preferred not to reveal to whom he'd paid 1.5 billion shares in return for unspecified services. Evidently a modest country boy, he also declined to explain by what sleight of hand he'd magically made those shares and 150 million more disappear by early 2013, supposedly reducing the outstanding to its former, and much more manageable, 175 million shares.
By the end of that year, the number hadn't changed. As of 31 March 2014, it was the same, with the public float at a mere 60 million shares, according to the company. Or was it? Though the period end date should have been 31 March, as noted, at the top of the column it's given as 30 September 2013. What was going on?
One thing was finally explained. In the table accompanying the 31 March 2014 financial report, it's noted that the shares issued for services and for cash in the third quarter of 2012 had been cancelled in the following quarter. How and why is not made clear.
And then came a surprise for any shareholders who'd stuck around long enough to try to make sense of the mess made by Wheeler. The CEO announced that on 1 April 2014 FINRA had effected a 1:2500 reverse split requested by the company. That left Wheeler, who before and at that time was the company's only greater-than-5% owner, with 43,700 shares. The new issued and outstanding figure was 69,940 shares. The corporate action was sprung on retail players the day before it happened, leaving most with only a handful of post-split shares.
In the midst of all the confusion, Coastal redomiciled in Wyoming in March 2013. The authorized capital remained at 2 billion common, 20 million preferred, and hasn't changed since that time.
The reverse merger
Coastal Integration Services was a failure. Wheeler finally gave up and decided to sell the shell. Before the reverse split hit, message board posters sensed that something was in the wind, and guessed hopefully that COLV was about to turn into a hot hot hot pot play. On 2 September 2014, the company filed its quarterly for the period ended 30 June, and it contained a belated announcement:
On May 2, 2014, the Company entered into a share exchange agreement with Simply Lids, Inc., a private company incorporated in Nevada on August 27, 2013, in which it acquired 100% of the shares of Simply Lids, Inc. For accounting purposes the share agreement is being treated as a reverse merger. Simply Lids, Inc. has developed a patent pending, leak resistant, re-closable container, designed to provide the ultimate drinking experience.
The transaction is only summarily described. In connection with the merger, 300 million shares were issued. On 27 May, 28,418,000 shares were issued for debt reduction, and on 24 June, another 24 million were issued to pay a debt "assumed by the company in the reverse." That resulted in 352,487,904 shares outstanding as of 30 June 2014. Exactly how it all came about is, once again, not entirely clear, though some additional information is included in the disclosure statement filed the same day.
COLV now had new officers: John Newman was named director and president and Michael Booth vice president. Warren Booth and Alex Zukovs are described as control persons. Therefore the last two were greater-than-10% owners, but the size of their holdings is not disclosed. Newman received 120 million shares of common, or 34%, and 10 million shares of Preferred Class A; Michael Booth received 120 million shares of common. Presumably Wheeler resigned, but that is not specifically stated. No background information is offered for Newman, the two Booths, or Zukovs.
A new plan?
It's difficult to say whether new management arrived equipped with a plan to turn COLV into a better and more interesting company than it had been under Skip Wheeler's stewardship. Wheeler himself has spent his life in the oil business. He owns Richochet Trading, Inc., a private Louisiana company that has or has had investments in a number of OTC issuers. He seems in part to have lost interest in COLV because he was busy with other things: in 2012 and 2013 he lent a hand in the reinstatement of several dormant Nevada public shells. As this report shows, Wheeler and Richochet participated in custodianship actions initiated in Nevada state courts by attorney Peter L. Chasey. Another name for these kinds of fiddles is "corporate hijacking." The hijackers gain control of the public shell, install new officers and directors, and inform the shell's transfer agent of the changes. They may then sell the shell, pump and dump it, or both. We also wrote about Wheeler's activities as a shell peddler in connection with Hybrid Fuels (HRID), which is now Nouveau Pharmaceuticals (NOUV).
Chasey is an interesting connection for Wheeler to have. Three to five years or so ago, he was often used by the Mina Mar Group to take over shells they'd then sell. Wheeler seems to have been part of that circle. In 2012, he used David Price, another lawyer associated with MMG, to write opinion letters to accompany his OTCMarkets filings for COLV. By early 2013 he'd switched to Hsieh & Associates, P.C. By the end of the year he'd thrown in the towel, declaring that "the company has no counsel on retainer," and "the company financial statements are currently prepared in-house; they are not reviewed or audited."
Wheeler hasn't given up on penny stocks. His Omega Energy LLC, Ricochet Trading, and Ten Hundred Co., LLC all have significant ownership in American Leisure Holdings, Inc. (AMLH). Perhaps interestingly, this past January AMLH was temporarily awarded the dreaded skull and crossbones by OTCMarkets. According to the company, OTCMarkets had "become aware of certain promotional activity of our stock, which may have included spam emails by a third party or parties." The company swore that although it had recently issued a number of enthusiastic press releases, it knew nothing at all about a spam campaign. That campaign lasted 35 days.
It might reasonably have been expected that when new management, in the form of Newman and Booth, took control of COLV, they'd make an effort to improve the company's inadequate disclosure. That has not happened. In addition to what we've described above, a bizarre and inexplicable bit of misinformation has crept in.
Diane Dalmy
Beginning with the quarterly report filed on 2 September 2014--the one in which the reverse merger with Simply Lids and the change in control were announced--Diane Dalmy made her appearance as the company's supposed legal counsel. She's still said to be COLV's lawyer in the most recent disclosure statement, published on 12 May, and covering the three months ended 31 March.
Most people who follow penny scams are familiar with Dalmy. She was added to OTCMarkets' Prohibited Attorneys list in September 2009. In August 2013, she was sued by the SEC in connection with her role in the Zenergy International, Inc. (ZENG) fraud. And on 15 January 2015, she was sued once again by the SEC, this time for the help she provided former Canadian attorney John Briner in an elaborate scheme involving the creation and filing of a large number of illegal registration statements for fake mining companies secretly controlled by him.
How did Dalmy's far-from-illustrious name creep into COLV's filings not once, but four times? It's the kind of mistake that does not portend well for the company's future.
The pump
So why is COLV being promoted now? Who wants to unload? Remember: the object of a Pump & Dump is to create volume. A rising price is secondary. The people interested in selling obtained their stock very cheaply, so they'll profit no matter what.
Back in September 2014, when COLV announced the reverse merger that had taken place, it said, four months earlier, several stock issuances were noted. One was a convertible note in the amount of $28,418. It was converted to 28,418,000 shares of common on 27 May 2014 at a price of $0.001 per share. If the tacking period commenced upon conversion, that stock could have been freed up… right now. On 24 June 2014, the company issued 24 million shares to satisfy a debt of $24,000. Again, we don't know how or when the debt was incurred, and so we don't know when the stock in question would become free trading. Normally the holding period would be one year, but if the debt were properly aged, it could have been tradable for some time. COLV's volume over the past year was extremely low. A few minor pumps last fall and early this year failed to generate the kind of action a serious dumper likes to see.
Who are those dumpers? It seems likely they're the people who benefited from the two large issuances in the late spring of 2014. We have, unfortunately, no idea who they may be, since they weren't identified in any of the company's filings. But it isn't a stretch to imagine that Skip Wheeler may be looking to fatten his wallet on the heels of the StockTips promotion.