Stocklemon reports on Law Enforcement Associates Corp. (OTCBB:LENF) … A “Shocking” Tale of Stock Promotion. Read this and you will be “Stunned”!
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October 18, 2004
Law Enforcement Associates Corp. (OTCBB:LENF) … A “Shocking” Tale of Stock Promotion. Read this and you will be “Stunned”!
“Homeland security” has become a buzzword in the new world of stock promotion. Everything from anti-anthrax spray to new forms of stun guns have become the flavor du jour for stock promoters. Law Enforcement Associates runs the gamut in its self-promotion as a “homeland security” stock. And who is helping along the promotion?….none other than the felonious Agora Publishing who has a history of separating investors from their money.
With a money losing business and slightly more than $400,000 cash in the bank, Law Enforcement Associates has reached a market cap of close to $140 million (at $6 per share).
Numbers Don't Lie
One year ago today, Law Enforcement Associates was trading at .28 cents. Comparing the financials of the company we notice that things have not gotten better, contrary their net loss has increased while their outstanding shares have increased
First 6 months of year 2003 2004
Revenues $2,190,782 $2,614,947
Expenses $859,047 $1,531,463
Net income (loss) (92,489) (262,195)
Shares Outstanding 19,970,433 20,118,290 (now over 23.3 mil)
*8/16/2004 10-Q
The lack of fundamentals is also evidenced by the insider selling from company insiders. Most notably, LENF's largest shareholder and chairman John Harrington has sold shares on 6 different occasions over the past year with a total of 242,004 shares being sold at an average price of .32 cents
finance.yahoo.com
The recent run-up in the stock can be attributed to the patent acquisition of stun gun technology from James McNulty, formerly an engineer at Tasertron. LENF has now spun the story that they are “competing” in the stun gun market with high-flyer Taser Corp.
While the market cap of the company has increased close to $100 million, the McNulty patent cost them 0 cash and around $700k in restricted stock in an illiquid (at the time of course) OTCBB issue. LENF traded sparsely at 94 cents on the date these patents were acquired.
As stated in the 8-K, the company gave McNulty, “750,000 shares of our restricted stock.”
Taser vs. Tasertron Confusion
Based on their recent patent acquisition, LENF is attempting to invoke the Tasertron name as much as possible. Yet, Tasertron was nothing but a failed company in the stun gun market. Last year, Taser Corp. bought Tasertron for the low price of $1 million. Sometimes it is just cheaper to acquire a potential market obstacle to clear the risk of market confusion and pre-empt a later court fight over intellectual property. This acquisition was a good example of just such a transaction. Taser Corp's 10-Q states that its $1 million purchase price was allocated as follows:
“The Company completed a valuation of the assets purchased, and allocated the $1.0 million dollars paid as follows: $900,000 to the TASER trademark, $50,000 to the non-compete agreement, $30,000 to U.S. Patent #5,654,867, $10,000 to U.S. Patent #5,936,183, and $10,000 U.S. Patent #5,955,695. “
phx.corporate-ir.net
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THEY VALUED ALL THREE ACTIVE PATENTS FOR A TOTAL VALUE OF $50K…That makes the 750,000 shares at .95 cents for an unused patent look ridiculous and an increase in market cap of $100 million to be nothing short of LUNACY.
Sour Grapes for McNulty
In April of 2001, McNulty sued Taser Corp. in California alleging patent infringement. The case never even got to trial. On July 29, 2002 Taser won a motion for summary judgment in which the court ruled that no patent was infringed upon. As expected McNulty filed an appeal. On July 7, 2004 the court of appeals affirmed the decision of the district court against McNulty.
phx.corporate-ir.net
secToc&TOC=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS
94bWwvY29udGVudHMueG1sP2lwYWdlPTI5NDc1MDUmc
mVwbz10ZW5r
patentlyobviousblog.com
Who is behind this stock promotion? Agora Publishing, who is being charged by the Securities and Exchange Commission for Multiple Frauds in relation to a string of otherwise obscure OTCBB stocks that have in common sharp run-ups and inevitable collapses.
The SEC has charged that Agora Publishing has engaged in “on-going efforts to disseminate false information to the investing public.”
sec.gov
“Agora promoted other securities in its newsletters. Even after Agora became aware of the Commission's investigation, its newsletters have continued to publish e-mails promoting numerous securities accompanied by fantastic claims of quick profits or inside information.”
“For example, Agora publications have touted stocks that it claims will double or triple in value over the next year. Other Agora publications claim to provide information that allows an investor to "turn $10,000 into $114,280 by April 18, 2003."
“Agora continues to promise its subscribers, "Almost Unbelievable Profits - 4.5 Times Your Money in 48 Hours."
“As recently as the first week in April 2003, Agora published articles making similar claims of exorbitant profits. In each instance, recipients of the e-mails are offered "free" copies of the headlined reports if they subscribe to one of the various Agora newsletters at a cost of from $69 to $1250 a year. The money-making investments featured in the reports are typically microcap issuers with cures for cancer or AIDS or a technological breakthrough. Some of the tips are characterized as being based on "secret" or "inside" information
Last week, Stocklemon received a deceitful email regarding Law Enforcement Associates that linked to this piece of propaganda that was disseminated by Agora Publishing. Stocklemon last wrote about Agora Publishing and its involvement with Genemax (OTCBB:GMXX) -- now 34 cents. stocklemon.com
Seems like they are up to their old tricks
agora-inc.com (Agora Email)
By playing on the fears of Americans, this line stands out as a prime example of stock promotion at its most crassly deceptive and manipulative.
“Hype surrounding the conference could send the company with the technology to make a safe stun gun flying much higher. Any terrorist attack on or before the November 2 election will do likewise. You must own this stock before that happens.”
Conclusion
Whenever a mania hits the NASDAQ, there are always “me-too” companies on the OTCBB that position themselves to jump on the bandwagon. Unfortunately, history is not on their side. Stocklemon has seen this with everything from the internet boom to Pokemon, to nanotechnogy, Chinese stocks, and now stun guns. If history repeats itself, and we believe it will, Law Enforcement Associates Corp. will end up as another money losing company on the OTCBB whose price is temporarily sparked with “too good to believe” hype, but perennial operating losses that are “shocking” only to the unwary victims of yet another stock promotion.
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