NYBD Holdings Inc (PINK:LNWZ) Get Their First Taste of Promotional Action

All the promotions work in pretty much the same way: you open an email that’s full of promises of wealth and fortune, you buy some shares of a company that you have never heard of before and then, it’s a matter of keeping your fingers crossed that the pumpers turn out to be correct. We always say that it’s extremely important to perform your due diligence before jumping in on the artificial hype and the current awareness campaign for NYBD Holdings Inc (PINK:LNWZ) will show you exactly how misleading the excitement created by the pumpers can be.

So, what do we have? Well, it’s just another penny stock getting the pump treatment. We received a number of emails about LNWZ yesterday and they all read pretty much the same. The promoters claim that LNWZ operate through their wholly owned subsidiary called Infiniti Systems Group, Inc. – a company that is in the business of reselling computer security software solutions and the pumpers are quick to point out that they have established partnerships with all sorts of big names like Dell, Microsoft, Cisco, McAfee, Apple Consultants Network etc. Some of these things are not 100% accurate.

While Infiniti Systems does appear to have some potential and while it was indeed part of LNWZ until about a month ago, this is no longer the case. On March 6, an 8-K form was filed with the SEC in which we read that LNWZ decided that they want to change their name from League Now Holdings Corp. to NYBD Holding, Inc. The reason for the change is a share purchase agreement with another company which, in effect, means that there is a reverse merger.

Not mentioning this is quite a big mistake on behalf of the pumpers, but that’s not all. The 8-K also states that the location of LNWZ‘s principal offices has changed and when you look the new address up, you will find that it’s actually a bagel restaurant in Miami, Florida. Most importantly, though, we read in the form that Infiniti Systems is no longer part of LNWZ.

That’s right, all the assets and liabilities of their daughter company have been sold to the former CEO and will not be present in their next financial statement. This means that LNWZ are now selling bagels instead of software and it also means that yesterday’s emails have absolutely no relation to LNWZ‘s current situation.

The promoters’ poor research, however, didn’t stop people from buying into their promises and LNWZ recorded massive volume yesterday as well as a whopping 176% gain. While this is a huge move, it’s not that uncommon with promoted penny stocks. The question now is: “Can they hold on to the higher price?”.

Well, all in all, we would say that it’s way too early to call it. They are now entering the restaurant business and while LNWZ‘s new subsidiary appears to operate through a couple of bagel shops in Miami, there is now way of knowing how successful they are. The fact that LNWZ changed their operations recently means that the latest 10-K that they filed for twelve months that ended on December 31, 2012 is virtually useless when estimating their chances of success.

One thing that is quite strange, however, is the fact that they are keeping surprisingly quiet about the whole thing. There have been no press releases, the information on the OTC Markets website is still not updated and the only way of finding out about their share exchange agreement is to dig deep in their filings.

It will be interesting to see what their next quarterly report will look like but we are guessing that we’ll need to wait for a while before it comes out. In the meantime, the promotional campaign is definitely a cause for concern and we have seen so many small cap ventures fail under the pressure, that the threat of a sudden drop is very real with LNWZ. Take Suspect Detection Sy (PINK:SDSS) for example. They got the pumping treatment from pretty much the same newsletters at the beginning of the month, but now, just a couple of weeks later, they are about 70% down compared to the pre-pump value.

That is definitely something worth keeping in mind when you are considering a potential investment in LNWZ. As we have just proven, it’s also absolutely crucial that you perform the necessary due diligence before making any quick decisions.