FOY JOHNSTON INC (PINK:FOYJ) and StockEdge Paint a Great Picture

Do you know the gut-wrenching feeling when you have messed things up and you know that there is no way you can fix them? In case StockEdge are not familiar with it, they should just have a look at the email they sent out promoting FOY JOHNSTON INC (PINK:FOYJ).

What’s wrong with it? Well, the email states that FOYJ produces paints, cosmetics, cleaning products, wood stains, lacquers and a host of other products they have never been even remotely interested in. In fact, they are a mining company and they want to dig out gold, silver, gems, rare-earth minerals, and whatever they could get their hands on from mines that are supposed to be located in Africa. You would agree that this is a far cry from the wood stains and cleaning products StockEdge speak about.

But let’s leave the pumpers for a moment and see what FOYJ is actually worth. If the market cap is anything to go by, the company costs around $172 million, but that may be a bit of a stretch. In fact, FOYJ have yet to commence the actual mining of anything, so in all fairness, they are quite overvalued even now. Their financial statement is also anything but confidence-inspiring. Here are the figures as of the end of Q3, 2012:

• cash: $0
• current liabilities: $501 thousand
• revenue: $0
• net loss: $1,250

The pumpers are not the only ones making fumbling attempts to draw some attention to FOYJ. A press-release came out of the company headquarters a couple of hours ago stating that they are going to acquire more mines which are supposed to add even more value. We’ve read our fair share of news coming out of mineral exploration penny stock companies, and we sometimes feel that they all came out of the same mold: the price of gold is rocketing, there are tonnes of the stuff in our properties, etc, etc. If we had to point out the most interesting moments in this particular one, these would be when they have misspelled “hectare” for “hector” ( which we found very funny), and the statement that FOYJ are going to invest between $1.5 and $5 million in the development of the new mines. Having in mind their current financials, we fear that they might have made another typo with the “million” bit.

It’s time now to go back to the promoters, and their rather entertaining email. Apart from the, let’s say, error with the company description, StockEdge also say that there are some technical elements according to which, FOYJ is about to explode (the appropriate amount of complicated words and technical jargon is applied, of course). The thing is, we have read these things before and, ironically, they were once again related at FOYJ. Pumpers hyped the stock back in April 2011 and although it scored a negligible increase, it soon sank down to $0.0001 where it remained for a full year.

But it’s not just FOYJ who fall victims to such bodged pumps. And as proud members of the promoters’ community, StockEdge have their fair share of failed picks. One of the most recent ones is Crown Marketing (PINK:CWNM) who followed the all-too-familiar scenario: they did gain some pennies, but as soon as the emails stopped, they came crashing down.

Apart from the fact that both FOYJ and the pumpers were obviously in a hurry to get the whole campaign going, there are a number of other red flags you should pay close attention to while making your investing decision. We would advice you to do your own research and consider carefully the risks before buying any of FOYJ‘s stock.