Borislav Tonev

PacWest Equities Inc (OTCMKTS:PWEI) Gives It Another Go

by Borislav Tonev September 5, 2013
5PWEI.pngThere was a $500 thousand promotional campaign for PacWest Equities Inc (OTCMKTS:PWEI, PWEI message board) back in October and November 2012. A smaller pump was carried out in February and at the beginning of August, some newsletters mentioned the ticker once again, this time doing it for free according to their disclaimers. With or without compensation, all the promotions ended with huge drops, resulting in big gaping holes in the investors' pockets. With that in mind, trusting your money with PWEI is anything but easy, but this is far from the only red flag around the company.

Take the corporate headquarters, for example. It's located at 3651Lindell Rd in Las Vegas which, as Google Maps shows us, is a rather small office building. It might be small, but, according to the OTC Markets website, it hosts the principal offices of a number of penny stocks including Maxam Gold Corp (OTCMKTS:MXAM), Patriot Gold Corp. (OTCMKTS:PGOL), Multi-Corp International Inc (OTCMKTS:MULI), Global Resource Energy Inc (OTCMKTS:GBEN), American Graphite Technologies Inc (OTCBB:AGIN) and Glow Holdings, Inc (OTCMKTS:GLOH). Not surprisingly, when you do a bit of digging around, you'll find that the suite in question is offered as a virtual office.

Things get even more shady when you check out PWEI's financial statement. Back in November, when the $500K pump was in full swing, they issued a press release in which they said that their subsidiary, PurGro Electronics, has registered a 430% increase in sales year-over-year. At the same time, according to the report covering the second quarter of 2013 (published August 10), "The Company has not generated any revenue from either of its lines of business.". The fact that the venture has not registered a dime in proceeds ever since inception raises some doubts as to the adequacy of the current market cap, which, even after yesterday's drop of around 7%, amounts to no less than $88 million. When you check out the rest of the financials found in the Q2 report, it gets downright ridiculous. Here's what we're talking about:

  • cash: $131
  • intangible assets: $50 million
  • total liabilities: $154 thousand
  • quarterly net loss: $31 thousand

Yet, despite the catastrophic financial state and the questions that arise from some of their press releases, optimism seems to be strong at PWEI's HQ (wherever it may be). They announced back in March that they have acquired some patents (hence the $50 million in intangible assets) from a company called DayStar Technologies Inc. (OTCMKTS:DSTI) and they are insistent, even in their latest press releases (dated the beginning of August when the pumpers were once again jumping up and down with excitement) that DSTI is a NASDAQ-listed company. That's not strictly true.

Back in January, DSTI received a notification from NASDAQ that the stock is about to be delisted from the national exchange due to some problems with the filings, the lack of an annual shareholder meeting and a few other niggles. The management team said that they are going to appeal the decision but, apparently, they failed to convince the bigwigs and in April the ticker was transferred over to the OTC Markets.

Currently, DSTI is on the Pink Limited tier, their stock is traded at $0.32 per share and their website doesn't work. More worryingly, they had the clever technology and the supposedly invaluable patents for some time but they failed to convert them into revenues. Instead, they managed to rack up $11 million in current liabilities and an accumulated deficit of around $147 million (as per DSTI's latest 10-Q covering the third quarter of 2012).

Will PWEI and the $131 that they have in the bank be more successful? We'll let you decide.

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