Is Rocket City Taking Investors for a Ride ? (RCAU.pk)
Citron Research warns about blatant promotion
Let us start off by saying we feel stupid even discussing the financials of this company, as it is nothing more than a vigorously orchestrated stock promotion. For anyone who remembers, this one is, in its own way, as ludicrous as Conversion Solutions (CSHD.pk) was before the SEC halted it.Nevertheless, we feel obligated to our readers to at least describe this melodrama, at least until regulators come a’calling.
Without ever filing any financials publicly or even a 15c211, the company has now announced that they are looking to jump exchanges. Currently on a breathless 3-a-day PR pace, it has of course filed not a single document with the SEC so far. You have to sympathize, its pretty tough getting a 10-K together when you’re spending $1,400 a month on accounting. Even the share count, which we believe to be in excess of 211 million, is listed as “TBD”.
The only glimpse we have into the real financials of the company is a business plan that is being distributed by Charlie Garcia, investor relations. This plan was written by CEO Jeff Roman and it shows a company that loses money on miniscule revenues. It shows a first quarter 2006 loss (as of March 20) of 92,951.30, as their revenues have come in only about 60% of their projection in the same document.
Their 2005 profit of $11,712 is …… well, if they were a family, they’d be living below the poverty level.
More importantly, this plan projects a future of small revenues and unrealistic expectations of expenditures. Here are the startling numbers for this “$900 million dollar” company.
Cash Deficit of ($10,692.00) at the end of 2006
$183,650 revenue projected for qtr 1 ending March 2007
$108,562 actual revenue by March 20.
Loss for 2006- 84094,38
Projected 2007 profit $1 million dollars (Dr. Evil Style)
Humorously, CEO Jeff Roman is so naïve about running a public company that he only budgeted $4500 a q for accounting and $1500 for legal. Get a clue, folks. It costs about $500,000 a year to administer a public company.
OK, projections are projections, but even if they were real, what is a $1 million profit to a $900 mil company? The funny thing is that even if every single year’s published revenue and profit projection through 2011 was realized by this company, it wouldn’t support a market cap of 1/20th of their current valuation.
While Mr. Roman is tending to the lemonade stand, the company has shot off a rapid-fire series of promotion moves second to none. Here is a list of some of the promotional activity that we have observed on the stock:
The past 3 weeks has seen a slew of ridiculous press releases and touts coming out of every corner. The one common denominator of most of this promotion is that it has been paid for by ATN Enterprises.
A Full Page in the USA Today calling RCAU, “our top stock of 2007”. For this, ATN discloses it paid Discovery Stocks $37,500, and ATN 600,000 free trading shares for the publication of the advertisement.
For this, ATN discloses it paid Discovery Stocks $37,500, and ATN 600,000 free trading shares for the publication of the advertisement.
Beacon Equity Research who put a speculative buy on RCAU — paid $7,000 by ATN
Thecapitalreport.com — paid $50,000 from ATN Enterprises
We do not know who is behind ATN, or more importantly, who paid ATN to act as a liaison for the promotion. But we do know that ATN has an outstanding track record. Just Google “ATN Enterprises” and look at their crash and burn stocks:
CMKK- no longer trading
AXTG- .98 cents
NPWV- .009 (an eBay related stock)
AUML- .01 (an eBay related stock)
For all those who were fortunate enough to buy this stock and are in profits, congrats but be careful. These games are notorious for harsh and abrupt endings.