COREwafer Industries Inc (PINK:WAFR) Carry the Promotional Cross Once Again

About a month ago, there was a paid promotion on COREwafer Industries Inc (PINK:WAFR) performed by Inside Bulls as well as a few other newsletters. We were intrigued by the opportunity to cover a company that we have never talked about before, which is why we wrote an article about them explaining what we think about the company and the promotion that was taking place back then.

Looking at WAFR‘s chart right now, we can see that the hype had little effect on the performance of the stock. Inside Bulls and the other pumpers that attempted to boost the share price are probably quite embarrassed about their failure which is probably why they are keeping quiet right now. Penny Stock G, on the other hand, decided to give the stock another chance.

So what do we know about WAFR? Well, they are a small company with big ambitions. Rather diverse, too. The first years of their existence were occupied by manufacturing and selling educational toys. Having failed at that, they decided to join the logistics business. They closed an acquisition of a transportation company in 2011 and have been at it ever since. Last year, however, they realized that this will not be enough and they took the steps to complete yet another merger – this time with a company that is developing a state-of-the-art software that will supposedly help manufacturers of all sorts of products with their quality control checks.

Developing a computer program is an interesting business – on the one hand you have the big investment, but on the other, you have the potential profits. You will need an army of IT geeks with big brains and even bigger salaries as this is the only type of people that are able to make the program work. If you succeed, however, the margin for profit could be huge. On the whole, it’s fair to say that the risk is quite big. So did WAFR weigh their chances properly?

Well, we don’t know and there’s absolutely no way to be sure, unfortunately. The acquisition of their software subsidiary, Core Wafer Systems, Inc, was completed in October 2012. The latest quarterly report saw the light of day on February 19 and it covered the period before the December 2012. Unfortunately, WAFR had not managed to consolidate the assets, liabilities and income of the new daughter company into the statement.

That’s kind of a big problem for investors as they have no idea how WAFR are doing financially at the moment. We reckon that this is why the previous pump didn’t really work as expected and when we heard about the new promotion, we thought that they have finally released the new report. Unfortunately, we were wrong.

It’s not like the old one inspires any confidence, either. While, if you take just a quick look through it, you will see that their total assets exceed their total liabilities, things are still not looking too good – they have only $733 in the bank, millions in debt and most of their assets are labeled “other assets” with no further explanation as to what they actually comprise of. In addition to this, they have been working at a loss since the very beginning and unless the new subsidiary brings any fresh income, WAFR will really struggle.

That’s the main problem – people have no concrete idea of the current financial situation which is why they are reluctant to invest in them.

Penny Stock G, however, are undeterred and the biggest problem with that is that if inexperienced investors fall for the emails, they could end up seriously burned. To give you an example of how bad the losses could be, we pasted W Technologies Inc (PINK:WTCG)’s chart on the right. WTCG got pumped by Penny Stock G back in December 2012 and you can see how badly it all ended up.