It's time for a reality check regarding IMTC pump and dump stock campaign
August 11, 2013
Last week I wrote about a new "pump and dump" spam campaign being used to artificially inflate the value of a penny stock, with the trading symbol IMTC (actually renamed to IMTCQB). Spam for this penny stock has exploded over the last week, overtaking all other categories.
The pump and dump email messages are sent by anonymous persons, using spoofed sender information and compromised computers, making grandiose claims about the potential profits for investors. Despite not revealing their actual names, the scammers often use the first person in the subjects or body text, with phrases like "If this company doesn`t Bounce I will RETIRE!"
The purpose of these anonymous email spam messages is to pump of the value of a low value stock by means of trickery, until it peaks. The people behind these stock spam campaigns purchase large volumes of a targeted stock when the price is very, very low. At an agreed upon time they compose an email spam campaign and rent a botnet to disburse fake news and innuendo about the potential trading value of that stock.
Eventually, after enough people have been fooled into investing in this risky endeavor, the value per share goes up, often substantially, in a short time. Then, when the value appears to have peaked, or reaches an agreed upon value, the scammers sell off (dump) all of their holdings at a profit, leaving the later investors holding the empty bag. Thus, it is no surprise that on the Otcmarkets.com page for IMTC, a black skull and crossbones is displayed, with the Caveat Emptor hover text beginning with: buyer beware.
The latest incarnation of these spam messages goes to great length to try to fool potential investors with long paragraphs written in broken English (by scammers whose native language is not English). They are now even including a paragraph of disclaimer language, again using poor English grammar. This should act as a red flag for any North American English reading potential investors (who are the primary targets of this campaign)!
The following is a direct quote, bad grammar included, from one of this weekend's email scams promoting the IMTC stock.
Today is considered to be a superb moment to procure one of the most downplayed development enterprise involved in the industry. I'm uttering about Imogo Mobile Technlogies (IMT C). Their particular shares worth has now escalated higher than average for the reason that purchasers are initiating to see how downplayed it may be. But nonetheless, please don't burden yourself there exists right now countless upside opportunities, realistically we imagine OTCBB: IMT C may very well get to more than $3.9. Do not miss the opportunity with this one, it is now a surefire to make so many shareholders very loaded!
This is followed by a lame disclaimer, again poorly written.
This is now a paid commercial Shareholders can trade in their specific securities at or even within the days the said services are pulled off. You see, the company presented through this email would not necessarily need to cover any specialized banking set of guidelines and even are normally developmental phase organizations of which present a substantially a lot more potential risk to traders and additionally an investment option of this means can easily give you a complete Defeat during a stretch of time. This can be not a proposal to own or distribute stocks. Resources or feedback in such a report normally frameworked merely for instructive features.
At least the anonymous spammer is attempting an ounce of honesty by including a disclaimer warning of potential looming losses.
Who is the company being targeted in this spam campaign?
According to the company description, "Imogo is the SuperCloud computing platform that synchronizes and secures desktop, files, data, email, digital telephony and messaging." However, according to information I found on their website, they are also involved in reselling overstocked Chinese goods.
Reality check: what is the company actually worth?
On 18-Jul-2013, IMOGO filed a Form 10-Q for IMOGO MOBILE TECHNOLOGIES CORP. The report lists the date of incorporation, name changes, a letter of understanding in the acquisition of Imogo Mobile Technologies, and nature of the business. Further down the page the actual cash holdings and prospects are revealed, as is required by law for companies filing such reports. These items are especially important to potential investors, as they determine the stability and probable future of the company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, our company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of May 31, 2013 and May 31, 2012, there were no cash equivalents.
Here is the real kicker:
As of May 31, 2013 our total assets were $0 and our total liabilities were $144, 814 and we had a working capital deficit of $144,814. Our financial statements report a net loss of $13,434 for the six months ended May 31, 2013 and a net loss of $188,357 for the period from September 6, 2005 (date of incorporation) to May 31, 2013. Our net loss from operations increased to $13,434 for the six months ended May 31, 2013, as compared to $4,583 for the six months ended May 31, 2012. Our losses have increased primarily as a result of increased professional fees.The continuation of our business is dependent upon obtaining further financing, a successful implementation of our business plan, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements.
There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.
This company has generated no cash in at least the last 12 months and is in danger of dissolving unless they can find investors or financing. This honest description of their fragile status is a far cry from the bright outlook presented by pump and dump scammers in spam email blasts.
The Pump and Dump Campaign
From mid October 2012 through mid-January 2013, the stock averaged between 5 and 6 cents. On January 10, it dipped to an even 5 cents, with no volume. The next few days saw the volume increase to over 37000 shares, causing the value to jump to 17 cents. It remained at 17 cents for several months, then dropped to 14 cents on June 21, 2013.
Between June 21 and August 2, 2013, the stock value of IMTC remained flat lined at 14 cents. Remember, on July 18 they filed a very unpleasant financial report, outlining a bleak future that might well end in under 12 more months. Then, suddenly, on August 3, the value of their stock began to rise, although there was no good news issued by the company (just the opposite). The volume and value continued to rise until Friday, August 9, coinciding with the ongoing pump and dump campaign. Sometime next week, watch for a big sell-off, as the price peaks, and the pumpers become dumpers. The value will drop well below the previous 14 cents and Imogo will be in even worse shape financially.
This is how pump and dump scams work. A company is watched, then when the stocks dip to a very low value, the scammers buy a large volume. After sitting on their holdings for a month, or as in this case several months, they begin a large spam campaign. When the price peaks, they sell off everything, wait a while, and either start again (buying low), or pick a new target to exploit.
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