COREwafer Industries Inc (PINK:WAFR) Warm Up for a Pump

Are you interested in a company that is specializing in the logistics and transportation business and at the same time is developing a high end, extremely expensive and extremely complicated software? Then look no further as Inside Bulls have started a promotional campaign on COREwafer Industries Inc (PINK:WAFR).

The variety of businesses developed by the same company might not be such a bad thing since a couple of subsidiaries operating in different sectors could mean that there are two potential sources of revenue. But is that the case? Since WAFR are developing a quality assurance software we decided to perform a sort of quality control check on them.

We weren’t impressed. Inside Bulls’ email is full of all sorts of technical details that are completely unfathomable to the regular person, but when you do some actual research you will see that WAFR are on their way to oblivion and they are in a hurry.

Let’s start with the financial statement. Most of the promoted companies that we cover frequently have some pretty terrible financials so we were expecting much the same thing from WAFR. We read, however, that they have completed the acquisition of COREwafer Systems, the subsidiary producing the quality control software, back in October 2012 and we were hoping that, with their assets in place, it would be a bit better. We were wrong. Here are the figures for the fiscal 2012:

• cash: $733
• current assets: $713 thousand
• total liabilities: $6 million
• revenue: $659 thousand
• net loss: $2.3 million

When you read on, things don’t get any better. Back in December 2011 they increased the number of authorized shares and ever since then, the printing press has been working full-time. Common and preferred shares have been issued at least three times per month and for all sorts of reasons – convertible notes, service compensation, stock compensation to directors and officers, etc. We did a rough calculation of how many common shares saw the light of day during 2012 and we can see that the number hovers around 54 million. We can only imagine how angry the shareholders were when they saw that.

It’s fair to say that WAFR have no other way of financing their activities, and you should bear in mind that they also have a huge amount of liabilities to think about. A lot of these liabilities come from a number of court cases filed against WAFR over the years. Most of them have been for breach of contract or failures to pay compensations. Almost all of the cases ended with WAFR being convicted which means that, right now, they owe millions to different individuals. Having that in mind, we predict that the share issuance will continue.

With all this in mind it’s rather difficult to believe the email that was sent from Inside Bulls. It’s even harder when you consider that they have been sending similar emails for quite a while now and the result has pretty much always been the same – in the end the promoted company simply crashes and leaves a lot of badly burnt and extremely grumpy investors. HOKUTOU HOLDINGS INT (PINK:HKTU) is a classic example and Inside Bulls were, of course, part of the promotional effort, that took place on February 5. You can see how HKTU have been doing since then and you should have in mind that the same thing could happen to WAFR.