LAS VEGAS -- June 23, Pluvia Securities Research Reiterates Coverage of Computerized Thermal Imaging, Inc., (OTC Bulletin Board: COII), with a STRONG SELL/AVOID Recommendation at the current price of $8 15/16, giving a 12 month price target of under $0.25 cents.
PART TWO OF OUR REPORT ON COII
Our Strong Sell Recommendation and price target are based on:
1. Computerized Thermal Imagingïs lack of a commercially viable product and our belief that the technology in the companyïs proposed product is insignificant and will never be commercially successful;
2. A series of press releases issued by Computerized Thermal Imaging that appear to be false and misleading, and, misrepresent the companyïs business prospects and relationships;
3. Computerized Thermal Imagingïs failure to disclose managementïs past involvement in fraudulent investment schemes. Specifically, a lawsuit filed by investors against Computerized Thermal Imagingïs CEO, under the auspices of the "Racketeering Influenced and Corrupt Organizations Act", (RICO), alleging "Fraud and Deceit", in which the defrauded investors won the suit and subsequent appeal, and were awarded a $25 million judgment;
4. 23 million shares of COII stock recently registered, which if sold could cause a very negative impact on COIIïs stock price.
MISLEADING PRESS RELEASES CONCERNING FDA SUBMISSION/APPROVAL
In late 1999, CTI began what appears to be another scheme to mislead investors using the name of the FDA and the FDA modular Pre-Market Application (PMA) approval process to give credibility to their thermal imaging product and promote their stock.
Because Computerized Thermal Imaging's products are a low health risk and substantially similar to approved products already on the market, the company admits in its recent SEC filings they don't need to go through the FDA modular Pre-Market Application (PMA) approval process. For example where that state;
We do not believe that either of our Medical Imaging Systems requires us to submit a PMA to the FDA for approval. Notwithstanding, we have chosen to pursue FDA approval via the PMA process to gain market acceptance.
They go on to explain;
The FDA is permitting us to submit our approval application in five modules, thereby, accelerating the data submittal and review process. We have already filed three modules and anticipate submitting the two remaining modules in 2000.
These statements are accurate, as they state that they are submitting data in a modular fashion. As each module is submitted, the FDA will check it for completeness. Once all modules are complete, then and only then will the FDA review process begin by examining data in all of the five modules.
But this isn't the impression given by the company's press releases. On December 17, 1999 the company said;
"CTI's Breast Cancer Detection System Wins FDA Pre-Market Approval for Module I" They go on to explain, "Each module is individually reviewed and approved by the FDA."
That isn't correct. Each module is checked for completeness. The data is not reviewed BUT not approved by the FDA.
An approval review is only conducted when all 5 modules are complete. COII is implying that each module is a partial approval, and each step is a significant portion of the final approval. This is totally false. The only purpose of this, that we can see, is to have several opportunities to hype the stock as each module is submitted.
When viewed with the other press releases made by the company, we believe a record of misleading promotion becomes obvious...
1. A December 3, 1990 Press Release describing sales of 6 thermal imaging units to Midwestern facilities totaling approximately 9 million in revenue;
2. A April 7, 1992 press release where the company stated they had signed a letter of intent to acquire a profitable hospital and arranged for financing which would net them $2.5 million in capital. "allowing the company to finance the installation of the first 10 systems ordered by hospitals around the country."
3. An October 6, 1994 press release where the company announced a joint venture with Trisun Medical America to bring computerized thermal imaging technology to China, stating; "Over the next five years it is the intent of the venture to install 6000 CTI Systems in the PRC [Peopleïs Republic of China]. The top 500 medical facilities will receive systems within the first two years providing the hub for the additional 5500 installations."
4. A November 29, 1994 press release stated "The first units are scheduled to be shipped to China in the first quarter of 1995. It was announced to the shareholders that this endeavor results in $3 billion in sales for the Company".
5. In an April 25, 1996, press release, the company stated; "The first CTI System has now been sold to Thailand. The first of two payments has been received by CTI and the unit will be shipped on or about April 25, 1996..., After a few months of operation in Thailand we expect to place a large number of units throughout the country".
6. On September 16, 1996 the company stated; "After several months of operation in Thailand, CTI expects to place an additional 1,000 systems by 1999".
In contrast to the claims and constant reference to millions and billions of dollars of sale revenue, it should be noted as of March 31, 2000, the company had managed to generate a mere $180,000 in product revenue during itïs entire thirteen year history.
ONGOING NASDAQ LISTING PROMOTION
1. As far back as April 7, 1992, COII claimed they would be applying for listing on NASDAQ or another national stock exchange.
2. On June 22, 1995, David Johnston told the Associated Press that COII expects to gain a NASDAQ listing within the next 150 days.
3. On April 25, 1996 the company said, "We are continuing to pursue NASDAQ status and will report to you on a timely basis."
MORE FAILURES AND MISLEADING PROMOTION IN THE CEO'S PAST
In addition to the COII CEO Dave Johnston's past history of defrauding investors in a rabbit ponzi scheme, the 09/15/1996 Portland Oregonian states this about David Johnston:
"I've learned since then that he was associated with Grace Capital, a company he took into Chapter 11 bankruptcy proceedings in 1987. It was a fiber-optics telecommunications startup that Johnston and his one-time partner, Larry Stockett, predicted would generate annual sales of $500 million by 1991, according to published reports. Obviously, it didn't happen.
We have found it very common for companies to mislead investors with fraudulent promotion, then sell stock to the investors that these promoters and insiders own for pennies a share. This is known as a "pump and dump" scam.
Computerized Thermal Imaging's misleading promotion and recent registration of shares give this investment all the elements of a "Pump and Dump".
Furthermore, we believe the company has no technology that will be commercially successful and management with a strong history of promotion and fraud. For these reasons we strongly warn investors to AVOID investment in COII and reiterate our STRONG SELL/AVOID rating with a price target of less than $.25 within 12 months.
Our investigation continues, we have more research to report... Stay tuned.
Pluvia Securities Research, their agents, associates, and or employees have investment positions consistent with the above-stated investment opinion.
CONTACT:
Pluvia Securities Research
Steve Pluvia
e-mail pluvia2@aol.com |
