Another Wave of Hard Mailers Help IFAN Financial Inc. (OTCBB:IFAN) Recover
The paid pump for IFAN Financial Inc. (OTCBB:IFAN) has been running for a while and at the end of October it managed to lift their stock to prices above $0.60. The devastating slide that followed though obliterated much of the gains with the ticker sliding below 40 cents per share. Many thought that this could spell the end of the promotion but with a massive disclosed budget of $3.5 million it seems that the campaign is still going strong.
With the start of December investors have once again began receiving the glossy hard mailer brochure in their mails. The hard mailer is a copy of the landing page that was put online by the McShane Letter. This newest wave of promotional activity is apparently luring investor once more and for the past four sessions IFAN has been recovering some of its lost ground. Yesterday the stock added another 8.5% to its value and closed at $0.51. Even more impressive though was the number of shares that changed hands throughout the session – investors shifted the record amount of 1.57 million shares.
The artificial hype might help IFAN in the short-term but the multitude of red flags around the company is too serious to be ignored. At the end of May they were in an atrocious financial position with zero cash, zero revenues and a $26 thousand net loss. Even their latest acquisition – Mobicash America Inc. d/b/a/ Quidme fails to inspire much confidence with:
• current assets: $4,586 in cash
• current liabilities: $223 thousand
• NO revenue since inception
• accumulated deficit: $752 thousand
The annual report for their fiscal year ending August 31 should be submitted by December 15 and then we will see what the current state of the company really is.
In a recent interview the CEO of IFAN stated that they will need around $3 million in order to complete the development of their products. Last week they were able to secure a third of that sum through a subscription agreement with one accredited investor. The company sold 3.7 million of its shares priced at just $0.27, significantly lower than the current market price, but at least for now the shares are restricted.
This, however, cannot be said for the 214 thousand shares that were sold during the previous fiscal year. Thanks to the 140-for-1 forward split the people who bought those shares now owned over 29 million shares purchased for just $5350. If these shares find their way to the market the consequences for the share price could be dire.
Even with the recently acquired financial injection IFAN will need to find more external sources of funds which could lead to more dilution of the common stock. But the still active paid pump turns the stock into an even bigger risk. Just take a look at one of Don McShane’s previous picks – Nevada Gold Corp (OTCMKTS:NVGC) that got suspended by the SEC and is currently trading on the Grey Market.
