Explosive OTC Blow Up ADVANCED DEFENSE (PINK:ADCF)

Though the paranoia of the Cold War is now long gone, countries still take their national security extremely seriously. Incredible amounts of time and effort goes into border defense among other areas and technology in this particular sector has been booming recently. One of the many companies devoting themselves to developing such technology is ADVANCED DEFENSE (PINK:ADCF).

Their main area of expertise is supposed to be the production and marketing of unmanned aircraft or, if we have to use the action-movie-inspired term, spy drones. We went straight to ADCF‘s website and we found that they do indeed offer Unmanned Aerial Vehicles ready to protect national borders, costing anything between $15 thousand and $100 thousand. We can’t help but see the remarkable similarity between ADCF‘s planes and remote-controlled model aircraft we crashed when we were kids, but who are we to know. It’s time to get to the nitty-gritty.

This sort of tech requires huge amounts of initial capital and just as much expertise and, at first glance at least, things don’t look so bad. Back in 2009 ADCF purchased the patents and licenses to produce the spying contraptions (they issued quite a lot of shares) and, according to his resume, the current CEO of the company, Mr. Raghbir Tahim has some experience with this sort of technology. Dig a little deeper, though, and things don’t look as promising.

The latest financial statement that they filed with the OTC Markets covers the period that ended on September 30 and if we were to describe it with one word only, we would use “bleak”. You can have a look through the most important figures below:

• cash: $4,998
• current assets: $95 thousand
• current liabilities: $172 thousand
• revenue (Q1, Q2, Q3 of 2012): $0
• net loss (same period): $67 thousand

Looks like ADCF can’t afford to buy any of their own spy drones, but that’s not the biggest issue. They were kind enough to present us with a comparative balance sheet which shows that back in 2011 they were much better off and they even had a revenue of $120 thousand. Either something went wrong with the contracts that they had, or there were some poor decisions on behalf of the management team – the aforementioned Mr. Raghbir Tahim and his wife, Anne Tahim.

Since we mentioned Mrs. Tahim we should also say that she was involved in at least two lawsuits: in the first case she was alleged of performing a pump-and-dump scheme, while the other was for professional negligence, fraud and deceit. The first one ended with Mrs. Tahim being acquitted due to lack of evidence, while the second one resulted in a settlement agreement according to which Mrs. Tahim had to compensate the plaintiff with $540 thousand. These events are not reflected in the latest 10-Q but, we figure, you to keep them in mind while you ponder on ADCF as an investment option. Another thing to consider is the fact that, according to the financial report Mr. Tahim had around 33 million shares and Mrs. Tahim owned about 26 million, all of them freely tradeable.

And since there is a promotional campaign running for ADCF right now, you should also check the promoters’ track records. One of the many emails that we received was sent by Explosive OTC, who pocketed $14 thousand for the pump. We checked into their performance history and we saw that they were also part of the promotional campaign for W Technologies Inc (PINK:WTCG) back in December. The chart shows how badly WTCG fared after the hype stopped.