Bad Directors

Reg S(pider): Spidergoats, Spiderworms, Spiderscams Part 3 – (KBLB, GALE, CYTR, Michael McCarthy)

To recap our continuing series on Kraig Biocraft Labs (KBLB), in Part 1, we looked at the history of another spider-silk company, the originator of the field, Nexia Biotech.

In Part 2, we uncovered the involvement of filthy crim lawyer Gregg Jaclin, in foisting this penny stock onto the public markets, and the non-involvement of Kraig CEO Kim Thompson in developing any spider-silk technology whatsoever.

Today let’s explore just how, where, and from whom, Kraig gets its money.

Kraig has recently touted an “investment” from the University of Notre Dame:

However, what really happened is that KBLB didn’t have the cash to pay the school what it has owed the University for YEARS, in return for the technology the company has licensed. An agreement, by the way, that ended in 2017.

On June 6, 2012, the Company entered into a consulting agreement for intellectual property and collaborative research and development with The University of Notre Dame.  On March 4, 2015, the Company entered into a new collaborative research agreements (2015 Notre Dame Research Agreement)  extending the duration of the agreement through March 2016; in February 2016 the agreement was extended to July 31, 2016.  Under the agreement the Company will provide approximately $534,000 in financial support. In May 2017 this agreement was amended to increase the total funding by approximately $189,000 and the duration of this agreement was extended to September 30, 2017. The Company did not extend the agreement after September 30, 2017. As of December 31, 2018 no new agreement has been signed.

Not able to pay off the school, Kraig did a debt-for-equity swap. Notre Dame did increase their equity position, but this is not a vote of confidence, rather an admission that Kraig will never have the money to pay off the debt.

Although Nexia was the biggest life sciences IPO in Canadian history up until that point, and other competitors in the spider silk world, like Bolt Threads, have raised huge sums of venture financing (and a partnership with Patagonia), tiny KBLB has, instead, resorted to financing of the ugliest kind, with the most unseemly of “investors”.

Like the company’s long time benefactor, filthy death spiral-like, future-priced, schlock shop Calm Seas:

On July 17, 2009, we entered into letter agreement for an Equity Line of Credit with Calm Seas Capital, LLC, which was amended on September 14, 2009 (together, as amended, the “Letter Agreement”).
Pursuant to the Letter Agreement with Calm Seas Capital, during a 24 month period we may put to Calm Seas up to an aggregate of $1,000,000 in shares of our Class A common stock for a purchase price equal to 80% of the lowest closing “bid” price of our Class A common stock during the five consecutive trading days immediately following the date we deliver notice to Calm Seas of our election to put shares pursuant to the Letter Agreement.  We may only put shares at the beginning of each calendar month, unless Calm Seas accepts an additional put

and again:

On October 2, 2014, the Company entered into a letter agreement for an equity line of financing up to $7,500,000 (the “Letter Agreement”) with Calm Seas Capital, LLC (“Calm Seas”).
Under the Letter Agreement, over a 24 month period from the effective date of a registration statement covering shares issuable to Calm Seas (the “Effective Date”), we may put to Calm Seas up to an aggregate of $7,500,000 in shares of our Class A common stock for a purchase price equal to 80% of the lowest price of our Class A common stock during the five consecutive trading days immediately following the date we deliver notice to Calm Seas of our election to put shares pursuant to the Letter Agreement.  We may put shares bi-monthly.

Just who is Calm Seas Capital, LLC?

Who is Calm Seas? The infamous Michael McCarthy.

That’s right. Calm Seas Capital, LLC is actually one of the filthiest stock operators of the last 10 years, Michael McCarthy. Probably better known for his “Dream Team Group” alter-ago, he is a vertically integrated stock scammer. One might remember him from such bioturds as Galena (GALE now SLS) CytRx (CYTR), and Lion Bio (LBIO now IOVA).

McCarthy’s M.O.? His Calm Seas outfit invests in scam companies, getting stock a big discount and selling it off to retail suckers. Some of the money the company raises from Calm Seas is required to be spent on IR/PR services provided by none other than Michael and his cronies.

Read about how his companies would pay people to post tout pieces on the internet, most notably on Seeking Alpha. And read about how he got caught. Read about what the Feds think.

Adam Feuerstein, now at Stat, and Richard Pearson have both written extensively on GALE, CYTR, DreamTeam, McCarthy, and the scams they were pulling.

More recently, in March 2019, the company resorted to an older form of financing for scams, Reg S, which seems to be slowly coming back into vogue. Read more about Reg S scams here.

The press release from Kraig was light on details. It merely says:
Under the terms of the stock purchase agreement, the Company issued shares of its class A common stock at a price of $0.06758 per share and warrants to purchase additional shares of its class A common stock at exercise prices of $0.06 and $0.08.

One needs to dig into the filings to get any real information:

On March 9, 2019, Kraig Biocraft Laboratories, Inc. (the “Company”) entered into a purchase agreement with one investor (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company issued the investor 14,797,278 Units at a purchase price of $0.06758 per Unit, for total gross proceeds to the Company of $1,000,000. The Units consist of 14,797,278 shares of the Company’s Class A Common Stock (the “Common Stock”) and two warrants (the “Warrants”): (i) one warrant entitles the investor to purchase up to 14,797,278 shares of Common Stock at an exercise price of $0.06 per share (the “6 Cent Warrants”) and (ii) one warrant entitles the investor to purchase up to 7,398,639 shares of Common Stock at an exercise price of $0.08 per share (the “8 Cent Warrant”). The Warrants shall be exercisable at any time from the issuance date until the following expiration dates:
● ½ of all 6 Cent Warrants shares shall expire on March 8, 2021;
● ½ of all 6 Cent Warrants shall expire on March 8, 2022;
● ½ of all 8 Cent Warrants shall expire on March 8, 2022; and,
● ½ of all 8 Cent Warrants shall expire on March 8, 2023.
The securities sold in the private placement were issued in reliance on an exemption from registration under Regulation S of the Securities Act of 1933, as amended (“Regulation S”)
Typically in these deals the “one investor” is actually a boiler room somewhere outside of the United States that then pushes these shares on retail idiots. Usually, when it is a package of shares and warrants, the shares are immediately sold off, and the warrants are kept, enabling the boiler room owner to profit handsomely. Why? Because the warrants have great value. Using Black-Scholes the 6c warrants were actually worth 4c at issuance. The 8c warrants were worth 1.5c at issuance.
In return for $1mm, the buyer received a package worth:
  • 14,797,278 shares, when the stock was trading at 6c = $887,836
  • 14,797,278 Warrants struck @ 6c (each worth 4c) = $591,891
  • 7,398,639 Warrants at struck @ 8c (each worth 1.5c) = $110,979
which equals $1,590,706, an immediate 59% profit. A profit that is substantially higher after the run in KBLB shares over the past month. The identity of the Reg S buyer is still unknown, but there are a grand total of 0 legitimate Reg S investors. Maybe Michael is hiding out overseas somewhere?
THE CONTENT CONTAINED IN THIS BLOG REPRESENTS ONLY THE OPINIONS OF THE AUTHOR. THE AUTHOR MAY HOLD EITHER LONG OR SHORT POSITIONS IN SECURITIES OF VARIOUS COMPANIES DISCUSSED IN THE BLOG. THIS COMMENTARY IN NO WAY CONSTITUTES INVESTMENT ADVICE, AND SHOULD NEVER BE RELIED ON IN MAKING AN INVESTMENT DECISION, EVER. THIS BLOG IS NOT A SOLICITATION OF BUSINESS: ALL INQUIRIES WILL BE IGNORED. THE CONTENT HEREIN IS INTENDED SOLELY FOR THE ENTERTAINMENT OF THE READER, AND THE AUTHOR.
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Reg S(pider): Spidergoats, Spiderworms, Spiderscams Part 2 – (KBLB, Gregg Jaclin)

In Part 1, following our theme that “past is prologue“,  we looked at the history of Nexia Biotech, an older recombinant spider silk company, that quickly pivoted to transgenic drugs for biodefense, that then became an oil field services company, Enesco, which finally managed to go bankrupt.

In Part 2, please keep in mind another saying at BuyersStrike! HQ, “pedigree counts“.

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Quick Take – You were all warned about Puma. – (PBYI)

In what should come as no surprise to anyone with a clue, Neratinib aka Nerlynx, from former bucket shop biotech analyst Alan Auerbach‘s Puma Biotechnology (PBYI) has been a complete failure in the marketplace. In September 2016 readers were all warned this would be the case. As our friend @b4uconsent pointed out almost 3 years ago:

It’s a snore of a TKI (PD-1/PD-L1s are becoming old news, and investors are supposed to get amped about a TKI?) that perpetuates fear mongering to patients who don’t understand recurrence risk, it de-prioritizes QOL, and it indulges a wasteful healthcare system where anything other than gross inferiority must equate clinical benefit. But who’s going to prescribe this? Who’s going to take it?

and

there is a risk of “life-threatening” side effects when, per the 92% DFS rate at two years, the cancer itself is not life-threatening

and

Neratinib is a drug no one needs or asked for

Alan, and mentor Lindsay R, merely got lucky with Cougar, nothing more. In this instance, prophecy did not fail. Puma did.

THE CONTENT CONTAINED IN THIS BLOG REPRESENTS ONLY THE OPINIONS OF THE AUTHOR. THE AUTHOR MAY HOLD EITHER LONG OR SHORT POSITIONS IN SECURITIES OF VARIOUS COMPANIES DISCUSSED IN THE BLOG. THIS COMMENTARY IN NO WAY CONSTITUTES INVESTMENT ADVICE, AND SHOULD NEVER BE RELIED ON IN MAKING AN INVESTMENT DECISION, EVER. THIS BLOG IS NOT A SOLICITATION OF BUSINESS: ALL INQUIRIES WILL BE IGNORED. THE CONTENT HEREIN IS INTENDED SOLELY FOR THE ENTERTAINMENT OF THE READER, AND THE AUTHOR. 

What to listen for on the Twist CONference call. – (TWST)

This afternoon, April 30th, after the close, Twist Biosciences Fancy Inkjet Printing Services (TWST) will be announcing results for Fiscal 2Q19. There will be a conference call at 4:30pm NY times. Here are the details for those interested:

Call in number: 866-688-0947 – Call in code: 2244119
Replay number: 404-537-3406 – Replay code: 2244119

What will we at BuyersStrike! HQ be listening for on the call?

  1. Are gross margins still negative? Are you still losing money on every sale?
  2. How are those coupons working out? Are they helping the company “leverage ecommerce to scale the genomics“?
  3. Are losses increasing Q/Q? Y/Y?
  4. What are sales to their biggest customer, Ginkgo Bioworks (34% of revenues in FY18)? And are they still declining (Q1 2019 sales were $2.7mm)?
  5. What is the average order size ex-Ginkgo? Is that order size still going down (last quarter the average order size ex-Ginkgo declined 45%)?
  6. How many actual biotech/pharma customers do they have? What % of revenues is to the health care segment (16% in 2018, down from 20% in 2016!)?
  7. What % of revenues is to the industrial chemicals segment (59% in FY18)? You see, Twist isn’t really even a healthcare/biotech company at all. It is really little more than an inkjet print shop for various industrial chemical companies. 
  8. What is the estimated cash burn for FY19? Is it higher or lower than previous guidance? (Last quarter the company increased it’s guidance for cash burn by over 8mm).

If any reader does manage to get on the call and ask a question, may we suggest “Have you found those little USB thumb drives Agilent is seeking?

What’s that, you ask? Read up on Twist and the little USB souvenirs here.

THE CONTENT CONTAINED IN THIS BLOG REPRESENTS ONLY THE OPINIONS OF THE AUTHOR. THE AUTHOR MAY HOLD EITHER LONG OR SHORT POSITIONS IN SECURITIES OF VARIOUS COMPANIES DISCUSSED IN THE BLOG. THIS COMMENTARY IN NO WAY CONSTITUTES INVESTMENT ADVICE, AND SHOULD NEVER BE RELIED ON IN MAKING AN INVESTMENT DECISION, EVER. THIS BLOG IS NOT A SOLICITATION OF BUSINESS: ALL INQUIRIES WILL BE IGNORED. THE CONTENT HEREIN IS INTENDED SOLELY FOR THE ENTERTAINMENT OF THE READER, AND THE AUTHOR.

Here’s where the story ends – (TWST)

Fans of 80s/90s jangle pop might recall Harriet Wheeler and her band The Sundays singing about “that little souvenir of a terrible year”, fans of Silicon Valley corporate shenanigans should take note of this little souvenir,

ThumbDrive

as it plays a key role in the strange story of high flying Silicon Valley company Twist Biosciences (TWST).

Twist, which was founded in November 2011, or perhaps February 2012, or maybe February 2013, or possibly April 2013 (the corporate history is fluid at best), was an October 2018 IPO and currently sports a nearly $900mm valuation. The shares have been marching steadily higher over the last month, heading into the lockup expiration on the 29th of April. Investors must not have read the prospectus closely, or at all.

Much like bioturd Organovo (ONVO), Twist uses all sorts of biotech buzzwords (“oligonucleotides”, “synbio”, “synthetic DNA”, “NGS” and our favorite here at BuyersStrike! HQ “leverage e-commerce to scale the genomics business“) to hide what is really just an inkjet printer business. Yes, that is what Twist actually does. Fancy inkjets that print DNA. Instead of CMYK colored ink, the Twist machines spit out adenine (A), cytosine (C), guanine (G) and thymine (T) inks.

It is true that selling fancy ink for fancy inkjet printers can be a good business. Just ask Hewlett Packard (HPQ) and its spinout Agilent (A). Asking Agilent in particular about Twist, its founders, and its employees, would be very wise.

Let’s examine the history of Twist, some of its officers and learn about that little souvenir from an angry former employer…

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Quick Take – What’s in a name? (THCT)

Presenting just one aspect from the curious case of Vegas based, pink sheet stinker, THC Therapeutics (THCT), or is it Millenium Blockchain, or is it Millenial Weedscam? No matter what, it was, is and always will be a fairytale. As of today, the 5th of April 2019, a $220mm vape dream.

THCTNameChanges

THE CONTENT CONTAINED IN THIS BLOG REPRESENTS ONLY THE OPINIONS OF THE AUTHOR. THE AUTHOR MAY HOLD EITHER LONG OR SHORT POSITIONS IN SECURITIES OF VARIOUS COMPANIES DISCUSSED IN THE BLOG. THIS COMMENTARY IN NO WAY CONSTITUTES INVESTMENT ADVICE, AND SHOULD NEVER BE RELIED ON IN MAKING AN INVESTMENT DECISION, EVER. THIS BLOG IS NOT A SOLICITATION OF BUSINESS: ALL INQUIRIES WILL BE IGNORED. THE CONTENT HEREIN IS INTENDED SOLELY FOR THE ENTERTAINMENT OF THE READER, AND THE AUTHOR.

 

 

The Map and the Territory: Who Controls Gopher Protocol? – GOPH

As part of our continuing series on filthy reverse merger Gopher Protocol (GOPH), we’ll start to explore exactly who controls the company.

Just looking at common stock is not enough, one must look at the various series of convertible bonds, warrants, and preferred stock. Some of which have conversion prices under 1c!

Here is a snapshot of GOPH ownership from before the stock promotion began in earnest. These numbers have certainly changed.

The short answer, is Galina Vaynter, through various entities and related parties. These include companies headed by her husband, Avady aka Vadim Vaynter, her daughter Regina Kats, and various straw men and women, including this guy, Kenneth Jeremy Smith, in Spokane, WA.

KJSmithEDIT

Together, these account for at least 85% control of GOPH (and possibly more) before the promotion started in earnest. See here:

WhoControlsGOPH-map

There’s lots more to come….

THE CONTENT CONTAINED IN THIS BLOG REPRESENTS ONLY THE OPINIONS OF THE AUTHOR. THE AUTHOR MAY HOLD EITHER LONG OR SHORT POSITIONS IN SECURITIES OF VARIOUS COMPANIES DISCUSSED IN THE BLOG. THIS COMMENTARY IN NO WAY CONSTITUTES INVESTMENT ADVICE, AND SHOULD NEVER BE RELIED ON IN MAKING AN INVESTMENT DECISION, EVER. THIS BLOG IS NOT A SOLICITATION OF BUSINESS: ALL INQUIRIES WILL BE IGNORED. THE CONTENT HEREIN IS INTENDED SOLELY FOR THE ENTERTAINMENT OF THE READER, AND THE AUTHOR.