CYNK Technology Corp (OTCMKTS: CYNK): Even Jessie Pinkman won’t buy this!!!
Few days back, when I first read about CYNK Technology Corp on http://www.zerohedge.com, I thought of it as just another small time pump-and-dump scheme. Kudos to my laziness, I didn’t even bother to dig further into it. However, today, when the stock again appeared on my radar screen, I was surprised to see the company’s stock trading at around USD 21 (intraday). That puts the market capitalization of CYNK at USD 6.120B (USD 21.00 * 291.45 outstanding shares). To put its market capitalization into perspective, US’ one of the biggest solar panel making company First Solar, Inc. (NASDAQ:FSLR) has market capitalization of USD 6.37B, while a well-established fashion accessory designer Fossil Group, Inc. has market capitalization of USD 5.51B. CKNY closed at USD 13.90 on 07/10th. It has appreciated by 23066.67% in less than a month (June 17th to July 10th). Yes, the number is not a typo.
Fig 0: Stock price movement of CYNK (Source: www.google.com/finance)
When I finished reading CKNY’s SEC filings for last couple of years, the first thing that came to my mind was of the meth addict Jessie Pinkman, a character of junkie played by Aaron Paul in American drama series Breaking Bad. In the most part of the series, he keeps getting fooled by his partner Walter White. Every time Jessie wants to move out of the drug trading business, Walter succeeds in persuading Jessie to keep continuing. People who are betting on CKNY are no different than Jessie. There is Walter White on the other side of the trade, who is able to sell the stock at higher price each time it is traded. Below are few of the mid-boggling red flags that I observed into the company’s financial statements, a company worth USD 4.05B on June 10th.
1. Company Incorporation – Company’s FY 2013 Q3 report mentions that the firm was incorporated in Nevada on May 1, 2008, while per its last filing 15-D business address is Belize City (Central America) and company is classified as “Service-computer processing & Data preparation”. I am unsure why a social networking website would fall under that category.
Fig 1: 2013 Q3 report for CYNK (Source: www.seclive.com)
Fig 2: 15-D form (Source: www.sec.gov)
2. No product, fuzzy business plan, zero revenue, and one employee firm –
As per FY 2013 3Q report, company intends to start the website www.introbizz.com during the fourth quarter of 2013.
Fig 3: MD&A FY 2013 Q3 report (Source: www.seclive.com)
As of now the website does not work. However, it looks like company has changed the web address, which has no mention anywhere in any of the financial statement.
Fig 4: www.introbiz.com
Business plan is fuzzy at its best. It includes funny lines, one being – “Instead of paying for a lunch that neither party wants to eat, parties can get down to business knowing that their time has been valued.
Fig 5: Business plan description (Source: www.seclive.com)
Also, it mentions that motivation for people to join this social network is that the social network generates the revenue. It’s like saying people should buy Coke cans because Coke generates revenues.
Fig 6: Motivation to be a user of www.introbizz.com (Source: www.seclive.com)
As per the last filed report on November 2013, “The Company did not have any operating income from inception (May 1, 2008) through September 30, 2013. It didn’t generate any revenues in last five years. And yes, despite of that company is currently valued in market at USD 4.05B.
Fig 7: Income statement (Source: CapitalIQ)
As per the report, company has one employee named Marlon Luis Sanchez, who happens to manage different roles (President, CEO, CFO, CAO, Secretary, Treasurer, and Director).
Fig 8: FY 2013 Q3 (Source: www.seclive.com)
3.Revenue generation – It is not clear from the financial reports that how company is planning to generate the revenue. This is how the website is supposed to work. Say for example as a user, I want to purchase email and phone numbers to the Nicole Kidman’s talent agent, publicist, legal representative, etc. Upon purchase, I will receive these details, while the money will get transferred to the Nicole Kidman’s charity. In layman’s term, money will flow from the user to the agent. It is not clear how CYNK will make money from it.
Fig 9: Product (Source: www.introbiz.com)
CONCLUSION: It’s very easy to conclude that the company is nothing but a fraud and some con man is possibly playing behind the scenes. Human nature knows no limits to irrationality. On having lost twenty thousand pounds in South Sea Bubble, Newton exclaimed, “I can calculate the movement of the stars, but not the madness of men“. How apt is the quote in this context? CYNK with certainty will become a penny stock. Only question that needs to be answered is –“By when?”