It’s hard to believe that a former Canadian energy shell with virtually no money and zero revenue could suddenly have a market cap of almost $630 million.
But that is exactly what has happened with Sunpeaks Ventures Inc. (OBB: SNPK, Stock Forum), which was recently acquired in a reverse takeover transaction by Healthcare Distribution Specialists LLC., a Maryland-based distributor of the Clotamin multivitamins brand.
After rocketing from 28 cents last month to new 52-week high of $1.49 on Tuesday, Sunpeaks has a market cap of $622.3 million, based on 420 million shares outstanding.
How could this happen to a company which had only $9,916 in cash as of December 31, 2011, no historical sales, and which recently borrowed $200,000 from an investor to pay its bills, according to documents filed with the U.S. Securities & Exchange Commission?
“It’s quite simple,’’ explains Stockhouse bullboard poster Shaftsinker.
Shaftsinker said Sunpeaks is being heavily promoted by the same third party that ran a pump and dump scheme which sent North Springs Resources Corp. (OBB: NSRS, Stock Forum) rocketing to $1.71 in early February. Following a spectacular collapse, North Springs is currently trading at 6 cents.
As reported by Short Report in January, North Springs was featured in dozens of newsletters, including Awesome Penny Stocks, which was paid $15,000 for its work by a third party through something called the Tengeria Foundation.
Perhaps it’s a total coincidence. But Sunpeaks has recently been featured by 37 different promoters in 312 newsletters tracked by the Stockpromoters.com website, including names like Awesome Penny Stocks, Victory Stocks, Stockegg.com, Penny Stock Alley, and Killer Penny Stocks.
The majority of these newsletters have been paid by third parties to write glowing profiles of Sunpeaks, which recently maintained an office in Calgary and was focused on oil and gas exploration in Oklahoma.
Notes in a disclaimer reveal that AwesomePennyStocks.com, for example, expects to be paid $15,000 for a stock alert that describes Sunpeaks as potentially its “best pick of the decade in the making.’’
“SNPK is moving in the right direction and on its way to becoming the best pick we have EVER covered,’’ trumpeted Victory Stocks, which expects to receive $50,000 for its work.
Meanwhile, the phoenix-like rise in its stock price has not escaped the attention of Sunpeaks and its sole officer and director Mackie Barch. A 37-year-old former stockbroker, he controls 47.56% of the company’s common shares and 100% of the outstanding voting shares.
(Due to the 100:1 voting rights of the Class A Preferred Stock, Mr. Barch holds 69.40% of the voting rights of all issued and outstanding stock of the company. He is also the sole officer and director of Georgetown Corp. (OBB: GTCP, Stock Forum), a U.S. Bulletin Board company with 540 million shares outstanding).
In a March 16, news release, Sunpeaks said it has become aware that internet newsletters have been making unsupportable claims, inappropriate comparisons, and unjustifiable common stock performance projections about the company.
But having launched a review, through special outside counsel, Sunpeaks said the trading did not involve any shares that are held by Barch. It also said it is co-operating with the Financial Industry Regulatory Authority (FINRA), a U.S. regulator, which has commenced an inquiry into the trading activity, the company said.
Sunpeaks denied that it is in contact with publishers of newsletters which feature OTC Bulletin Board stocks, and said neither the company, nor anyone associated with the company has paid anyone to promote its securities.
That denial was issued on a day when Sunpeaks closed at just under 50 cents.
But in spite of the company’s warning, promoters have continued to gain the upper hand with daily stock alerts and reports that Clotamin is being placed in convenience stories, not only in the United States, but also in Asia. On March 22, the company said it has hired U.S. basketball legend Paul Silas to act as Sunpeaks’ National Clotamin spokesperson.
Still, a number of observers remain skeptical about how this is going to play out.