To All,
I choose to title this post "A Perfect Plan For A Penny Stock Scam". If you're aware of any current stocks that meet the criteria outlined here, better steer clear until you're absolutely certain of your potential investment.
Well, there's a very good reason why this stock has had no activity in almost three years. It done gone belly up. My sympathies to those of you left holding an apparently worthless stock. Perhaps if penny stock researchers had access to penny stock threads like those that exist today, companies like Sky Scientific wouldn't have found it so easy to scam their investors.
Sorry that I cannot post the entire story here, but the Palm Beach Post has a pretty impressive warning about violating their copyrights. However, I don't think they'd object to direct quotes from their articles. Items enclosed in <> are my comments. Where I denote "red flags", I am trying to point out that this information should have been known to active investors (from independent sources) prior to the company's demise.
Quoting from the The Final Edition, Palm Beach Post (dateline: 12/17/95; author Stephen Pounds, Palm Beach Post Staff Writer), headlined: "The Sky Has Fallen From $17.50 to 6 Cents":
"Sky Scientific attracted investors with promises of gold mining, casino gambling and Russian bank financing."
<Note the widely disparate businesses. Red flag #1.>
"It's chairman has had to fight off an embarrassing sex harassment suit. Some contractors have filed suit. A partner has alleged fraud. And one of it's holdings, the upscale Jockey Club hotel and marina in North Miami, has fallen into receivership."
<Red flags #2, #3, #4 and #5.In fairness to the chairman, the article goes on to state that he was subsequently vindicated in court regarding the sex harassment suit.>
"Now, the U.S. Securities and Exchange Commission branch in Denver intends to recommend that the agency file complaints against the Boca Raton-based company, two officers, an employee and two former employees, company records filed with the SEC show."
"Rebecca Del Medico, Sky's staff attorney, said: "We are going to vigorously defend the action."
<"Vigorously defend", indeed. An SEC filing indicates that no one from Sky Scientific or their legal representatives bothered to attend the legal proceedings against the chairman.>
"The SEC is investigating whether the company published untrue facts in press releases and promotional brochures and failed to disclose essential information, the company said in SEC filings."
"It also said regulators are looking into allegations SKY distributed unregistered securities through promoters and broker dealers, used improper accounting in financial statements and made false statements to accountants."
<Noooo!!! Say it ain't so, Jo.>
"On paper, Dorow's company looks large, with six subsidiaries. But in truth, it has only six employees."
<Another pesky Red Flag, #6. Few employees.>
"In the past two years, Sky Scientific has entered into deals to buy a California gold mine, a Nevada ore-processing plant, a barge casino in Mississippi and tons of gold-enriched ore - paying with either promissory notes or company stock or both - only to have the deals fall through, according to records filed with the SEC."
"The company often paid its employees and consultants with stock rather than money. SEC records show 68 instances where it did so in the past two years. For comparison, another Boca Raton start-up, the Panda Project, had two such exchanges during the same period."
<At least 68 Red Flags here. A company that has no manufactured products, no tangible assets (such as office buildings, office equipment, inventories, etc...), and they do most all of their business with stock or debt should clearly be avoided by even the most simple-minded investor. After all, if anything goes wrong, exactly who is left holding the bag? The investor, that's who!>
"Sky has also had trouble keeping accountants around."
"It has changed firms six times in two years. Two firms were fired before completing independent audits. A third quit."
<Darned Red Flag, again #... I lost count... I guess it could be worse. At least with numerous accounting firms coming and going, investors had some warning of what was to come. But a non-reporting company, with no audit to speak of.... an even worse situation.>
<The article goes on to document failed business transactions, direct quotes from an executive apparently not involved in the scam, and an environmental mess remaining in Nevada at some mine operations.>
"SKY SCIENTIFIC WOES"
"It owes the Internal Revenue Service $202,798."
"It is $1.2 million in default on promissory notes."
"It sustained losses of $2.6 million for the six months ended August 31."
"It had no sales revenue."
<For any investor, the last statement says it all. The penultimate Red Flag.>
finaledition.pbpost.com
sec.gov
337412
337471
337474
Cost: about $5 or $6 for the newspaper article.
KJC |
