We all know that promoters receive some substantial amounts of money to send out overly optimistic emails suggesting that this or that company has the potential to grow and the profits are waiting around the corner. We're pretty much used to that, but it's really annoying when the pumpers haven't even bothered to do some research. This is exactly the case with 007 Stock Chat
on Immunotech Laboratories f/k/a International Technology Systems Inc. (PINK:IMMB
, IMMB message board
007 Stock Chat start off with the huge news that, a couple of days ago, a two-year-old child was cured from HIV and they are desperate to make the connection between this ground-breaking headline and IMMB. The thing is, they are quite off the mark. IMMB are still in the early stages of development and they have a lot of mountains to climb before they can market the elusive HIV treatment drug that they talk about all the time.
Having said a few words about the potential of the bio-technology sector, 007 Stock Chat then go on to list the characteristics that make IMMB such a great company. Most of the things that they mentioned are taken out of the optimistic press-releases that IMMB have been publishing every once on a while, but some of the things like the "$10 million in assets" and the "60 million shares outstanding" bullets can be easily checked. Or can they?
Normally you will find those figures in the financial statements of the company, but the problem with IMMB is that the latest financial report that they have published is the annual one for the fiscal 2009. You would agree that this was a long time ago and, unfortunately the information about the assets has not been updated since. 007 Stock Chat probably forgot to read through the more recent 8-K's. In one of them, for example, IMMB say that the number of outstanding shares as of January 2011 is not 60 million, but 105 million.
That's the smallest problem we have with IMMB, though. The main red flag, we reckon, is the fact that they can't be bothered to let their shareholders know how they have been getting on financially for the last two and a half years. No matter how busy they are with the development of the magic pill that they want to eventually produce, they have to be able to file a report every now and then letting shareholders know what is happening with their money.
Instead, they just publish news about clinical trials in Europe, that have not started yet, new officers and new R&D facilities. We have no idea how they managed to buy a new facility since the annual report for 2009 states that, apart from the $10 million in intellectual property, their only other assets consist of some equipment and $4,799 in cash.
It really turns out that a shareholder, who once trusted IMMB's credibility can now get information about the company only through press-releases and through the 8-K forms which, more often than not, are exact copies of the PR's anyway. One such form tells us that IMMB currently owes its Secretary, Mr. Harry Zhabilov a total of $1.5 million. They also say that they are unable to pay off the debt right now.
And since we mentioned Mr. Zhabilov, we should also point out that he was once at the helm of another bio-tech company - Viral Genetics, n/k/a VG Life Sciences Inc (PINK:VGLS). While he was there, he was accused of breach of contract and fiduciary duty and other charges with the damages amounting to $10 million as seen from the last page of this official filing.
We reckon that this is definitely worth keeping in mind. Especially considering the fact that IMMB are refusing to disclose any sort of information that might be relevant to shareholders and potential investors.