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Sunday, June 18, 2006

Celebrated liberal strategist was a paid shill

I discovered this New York Post article on the Little Green Footballs political blog. Apparently, Jerome Armstrong (a strategist for Howard Dean who wrote the book Crashing the Gate along with the Daily Kos guy) was a paid advocate for BluePoint Linux Software Corp (sec filings, pink sheets) accepting below market shares to write, are you ready for this?, ordinary message board posts over at Raging Bull [I keep fixing the link and it keeps breaking]. Unfortunately, the messages don't go back further than Jan 2005, so you can't easily see what he wrote.
"Armstrong posted over 80 times on the BluePoint message board located on the Raging Bull Web site in the first three weeks [it traded]," reads the complaint, filed by the Securities and Exchange Commission. At no point in any of the 80 posts did Armstrong disclose he was paid for the service, the suit alleged. In fact, The Post has uncovered hundreds of Armstrong posts from 1999 to 2003, many supporting now virtually or entirely worthless stocks. Armstrong denied to The Post that he did anything wrong and said the SEC made a mistake in charging him. "This was a long time ago and I settled the case without admitting or denying guilt, and I paid no fine," said Armstrong, who refused to comment further.
Raging Bull is not exactly a good place to do PR. It's even more hokey than the Yahoo message boards, and they're plenty hokey. Message boards are good for getting info that you then go and verify independently. Just touting or badmouthing a stock ("THIS POS IS GOING TO ZERO YOU LOSERS!!!!!!!!!!!!!!" that sorta thing) is absolutely pointless.

Looking at the 10-K for 2001, I don't see any mention of shares being issued for this purpose. Note 11 a, b, and c have details for issued shares, but they're all for other things.

a) On October 1, 2000, 100,000 shares of common stock, par value of US$0.001 per share, of the Company were issued to an employee for past services rendered to the Group. The issued price was based on the market value of US$2.39 per share on that date, totaling US$239,000 with US$120 as share capital and US$238,900 as additional paid-in capital. The amount was recognized as an expense in 2000.

b) On February 27, 2001, March 14, 2001 and June 28, 2001, 15,000 shares, 5,000 shares and 150,000 shares of common stock, par value of US$0.001 each, respectively, were issued to employees for their past services rendered to the Group. The issued prices were based on the market value of US$0.531, US$0.781, and US$0.850 per share on those respective dates with aggregate of US$170 as share capital and US$139,200 as additional paid-in capital. These amounts were recognized as an expense in the year.

c) In March 2001, the Company reached an agreement with an investor to settle the debt of US$600,100 by issuing 120,000 shares of restricted common stock, par value of US$0.001 per share, at US$5 per share on March 14, 2001 to the investor when the market price was US$0.780 per share. As a result of the issuance of the common stock, an extraordinary gain of US$506,500 was recognized in the year with US$120 as share capital and US$93,480 as additional paid-in capital.
I can see that they issued shares on Dec 12, 2000 to "an Indiana corporation" to serve as counsel. It was 400,000 shares. I looked around a bit and didn't find anything else, but it wasn't an exhaustive search.

Overall, I find it more funny than alarming. And since I've never liked/trusted political types much, it doesn't change my views.

UPDATE 1:50 PM same day:
I fixed the Raging Bulls link. Also, check out the latest financial statement for the company.

They have assets of $514 in cash. They have $530,675 in liabilities, all of it is current (i.e. due within a year). Zero revenues. $2,821 in costs for the quarter which was charged to the company (not subtracted from the cash).
As discussed in note 2 (c) of the Company’s audited financial statements for the year ended December 31, 2005, the Company has suffered recurring losses from operations, has had no revenue generating operations since July 2005 and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. In light of the situation, the major shareholder and CEO, Mr Xin Liu has pledged to provide funds to maintain the Company as a trading shell. In addition, the related companies and major creditors confirmed that they will not demand repayment from the Company in the near term. The Company has been contemplating practical plans for a business restructuring and/or possible arrangements to raise additional capital funds to support its continuation as a going concern, but there can be no assurance that the Company will be successful in such efforts.
So it's now just a shell company with a lot of liabilities hanging over its head.

And this is a good time for another Japanese video link: dual-DDR (those who don't know DDR won't realize just how difficult this particular feat is). Note: it's not a computer memory thing.

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