Alternative Energy Partners Inc (OTCBB:AEGY) and SK3 Group Inc (OTCMKTS:SKTO) Suspended

Alternative Energy Partners Inc (OTCBB:AEGY) and SK3 Group Inc (OTCMKTS:SKTO) have quite a few things in common. Both companies are working in the booming marijuana industry, both often rely on overly optimistic press releases, and both have something of a history with the paid promoters. The similarities don’t end there.

The two companies have been pretty exuberant when it comes to share issuance. In a matter of seven months, AEGY issued 2.7 billion shares of common stock as a conversion of $635 thousand worth of debt. SKTO, on the other hand needed three months to turn just $39 thousand worth of notes into 130 million common shares. As we mentioned numerous times, there’s still a lot of convertible debt outstanding which suggests that the severe dilution is far from over.

Nevertheless, people seemed excited about the two tickers. AEGY in particular was registering some impressive volumes last week and the reason for this was the announced merger between the two companies. The press release came out a couple of months ago, but the rumor had it that the deal is about to be completed. This was, apparently, enough for a lot of traders to jump in and it made for some wild swings. Unfortunately, most of the people who put their money on the line are probably regretting their decision right now.

A few minutes before Friday’s opening bell, the SEC issued a temporary suspension order on AEGY and SKTO. Apparently, the Commission thinks that there are some questions regarding the accuracy of information available about the two companies. There is, apparently, some uncertainty around the business activities as well.

That’s a rather big blow to the people who believed that AEGY and SKTO are in for a bright future. Trading in the two stocks will resume on June 20 when they will be on the Gray Market. Most likely AEGY and SKTO will open at levels far below the current ones and if history is anything to go by, they will never be able to go back to their former glory.

This means that lots of people will lose money and the logical question is: “Could this have been avoided?“.

It’s no secret that the SEC has been cracking down on the pot sector and we mentioned numerous times that being careful around the marijuana stocks might not be a bad call.

Then you have the two companies themselves. As we mentioned, AEGY was running mostly on rumors which is never a good thing while SKTO recently came up with a conference call which raised quite a lot of eyebrows.

In it, Arthemus Mayor, SKTO‘s CEO said that investors will never be able to simply walk into an office and talk to people affiliated to the company. He announced that he will refrain himself from answering some of the questions shareholders ask because, apparently, he deems it to be a waste of time. He also informed the people interested in the ticker that he will not be giving away the location of SKTO‘s cultivation land because that will create “tremendous business risk“. Not exactly the words you want to hear if you are willing to invest in the company.

There’s another thing that could have hinted towards a potential suspension for AEGY and SKTO. If you have been reading through the two companies’ filings, you would know that they have quite a lot of connections with an entity called iEquity Corp. iEquity announced on February 24 that they have signed a definitive agreement to acquire controlling interest in Aventura Equities (OTCMKTS:AVNE). Nine days later, AVNE was suspended by the SEC. Currently, it’s on the Gray Market and it’s hovering around $0.01 per share – 96% below its pre-suspension value.