This month, Ambrosino delivered his latest knockout blow with a powerful recommendation of CLKZ that has since left investors reeling. With CLKZ sitting at $1 a share, Ambrosino urged investors to buy the stock before it surged past $20 as the company – a cash-poor outfit with just a handful of employees – conquered Craigslist to become the new heavyweight leader of the online classified advertising world. CLKZ did march higher on that paid tout, ultimately reaching $1.37 a share on Wednesday, but never approached even Ambrosino’s $5 short-term target before staging a remarkable collapse.
The stock, hammered by a sudden selling spree that began the same day it peaked, now fetches just 53 cents a share. Even at that lower price, however, CLKZ still boasts a market value of $31.2 million that looks rather lofty for a company that – just six weeks ago – cautioned that it lacked the funds necessary to finance its operations for more than 30 days.
Less than a month after CLKZ disclosed its precarious financial condition, Ambrosino issued his bullish recommendation of the stock in a newsletter known as the M3 Profit Accelerator. The newsletter, one of several tout sheets published by Trinity Investment Research, received funds from Capital Financial Media (CFM) to promote CLKZ as part of a $500,000 publicity campaign. Over the years, CFM has surfaced as the manager behind expensive promotions for other dubious penny stocks as well.
CLKZ’s top executive, Albert Aimers, told TheStreetSweeper that he knew nothing about the recent promotional campaign. He also said that he has never sold any CLKZ stock himself. He blamed the recent volatility on day traders instead, while speculating that short sellers – bearish investors who profit when stocks fall -- had triggered last week’s massive plunge.
Trinity did not respond to questions for this story. A receptionist at CFM said her firm would be answering no questions, either.
“We’re not really in to giving information about how we do our business,” she stated, “especially to reporters.”
To some industry experts, those firms look like they may have good reason to hide. In essence, they see CLKZ as the latest vehicle of a professionally orchestrated “pump-and-dump” scheme. Following a long-familiar pattern, they say, CLKZ dramatically increased its share count and then spiked on paid publicity – carried out by experienced hands – before crashing and leaving ordinary investors holding the bag.
Down for the Count
To be fair, Ambrosino himself is a relative newcomer to the penny-stock game. Now past his prime as a professional wrestler (reportedly attracting just a dozen spectators at a Florida event last year), Ambrosino has embraced his current job as a promising second career.
Trinity portrays Ambrosino as an investigative reporter who stands out as the “most unconventional member” of its small research team. Lately, however, Ambrosino’s so-called “investigations” have failed to unearth lasting winners for ordinary investors.
Earlier this year, Ambrosino touted CRGE and EHSK in two other six-figure CFM publicity campaigns. CRGE has lost more than a third of its value, tumbling from 80 cents to 51 cents, since that time. EHSK has fared even worse, plummeting from 45 cents to just 3 cents, on miniscule volume when it trades at all.
One of Trinity’s senior analysts, Tim Fields, has touted some big losers as well. This spring, for example, Fields recommended Lithium Corp. (OTC: LTUM.OB) – a past target of coverage by TheStreetSweeper – as a 75-cent stock headed past $15 a share. Since that paid tout, arranged by CFM under a seven-figure publicity campaign, LTUM has lost more than half its value and now fetches just 35 cents a share.
Fields has attracted scrutiny for embracing other losers, too. Yet Trinity showcases Fields as an accomplished analyst – who has “used his analytical skills to pick winning stock after winning stock” – instead.
“Tim has amassed some great profits for our readers using ‘old-school’ fundamentals,” Trinity states on its website, “putting his nose to the grindstone and getting to the bottom of corporate filings.”
Based on TheStreetSweeper’s own research, however, Trinity should have dug a whole lot deeper before endorsing CLKZ. Even a cursory review of CLKZ’s corporate filings reveals a company riddled with serious risks and tainted by a poor track record.
In CLKZ’s latest quarterly report, filed just a few weeks before Ambrosino recommended the stock, the company offered a troubling picture of its financial situation.
CLKZ listed $3.42 million in current liabilities, compared to only $580,000 in total assets. Accounts receivable, which had skyrocketed from $27,000 to $310,000 over the course of the past year, ranked as the largest asset on that list. So-called “marketable securities” – consisting largely of Pink Sheet stocks that trade for less than a nickel a share if they trade at all – accounted for another $228,000 of that total. Actual cash, pegged at $22,378, represented an insignificant sum.
“We do not have sufficient funds to conduct our operations for more than a month,” CLKZ admitted in the filing, “and we will need an additional $2 million to fund our anticipated operations” over the course of the next year.
“We have no contracts or commitments for additional funds,” the company continued. “And there can be no assurance that financing will be available in amounts or on terms acceptable to us, if it all.”
By then, CLKZ had already issued about 25 million shares of stock – with an average price of less than 3 cents a share -- to satisfy some old toxic financing deals. The company had issued a similar number of shares to Junior Capital, a corporation controlled by its own CEO, to pay off its top executive as well.
Together, those newly issued CLKZ shares now represent about 85% of the total shares outstanding.
Before executing a 300-for-1 reverse stock split this spring, CLKZ claimed that it had no plans to issue any additional shares at all. Rather, CLKZ portrayed the reverse split as an important move designed to shrink its share count – from 155.7 million to just 519,099 – and boost its stock price in the process.
“The company believes that, if it is successful in maintaining a higher stock price, the stock will generate greater interest among professional investors and institutions,” CLKZ explained. “If the company is successful in generating interest among such entities, it is anticipated that the shares of its common stock would have greater liquidity and a stronger investor base.”
Initially, that strategy failed to pay off. The month after CLKZ’s reverse split, the company’s stock remained stuck – without trading for days – at 12 cents a share. When CLKZ finally began trading again in late May, the stock sank to a 52-week low of 2 cents before rebounding to close at 15 cents a share.
A week later, however, CLKZ suddenly rocketed from 3 cents to 60 cents in a single day. The company finally saw its volume surge, approaching 500,000 shares, by mid-June.
Into the Ring
Ambrosino was busy promoting CRGE, Internet records indicate, during that same time period. Although CRGE climbed higher with help from his paid touts, touching the coveted $1 mark in June, the stock had already lost all of those gains by early August.
With CRGE languishing around 50 cents a share, its burst in volume gone, Ambrosino shifted his attention – and enthusiasm – to CLKZ instead. He touted CLKZ’s classified advertising website, ForWant.com, as a “mega asset” that could soon rival Craigslist and attract lucrative offers from Google (Nasdaq: GOOG) and Bill Gates alike.
“Clicker is set to be the next up-and-comer Google gobbles up,” Ambrosino proclaimed. And “if you think Bill Gates won’t hear about this, you’d be incredibly mistaken.
“Call your broker today,” he continued. “And tell him, ‘I want to buy CLKZ before Bill Gates does!’”
CLKZ began to trade much more heavily, with volume hitting 1.73 million shares in mid-August, after that endorsement. At that point, StockPromoter.com records show, Small Cap Investor – which had previously touted such ill-fated penny stocks as Big Bear Mining (OTC: BGBR.OB) and LTUM – chimed in with a CLKZ recommendation of its own.
CLKZ continued to march higher, adding a few cents every day, until finally peaking at $1.37 last week. It then collapsed with incredible speed, plummeting 60% on a fresh spike in volume, over the course of the next two days.
CLKZ spent years operating as the Financial Media Group (FMG), an obscure firm looking for a foothold in the competitive investment news business, before reinventing itself with a new name and ticker symbol back in May of 2009.
By then, FMG had already soiled its own corporate name. In the 16 months leading up to its merger with Clicker, regulatory filings show, FMG fielded lawsuits from at least five different companies – including Dow Jones/MarketWatch – for allegedly failing to pay its bills.
Ironically, a past news report indicates, FMG had once aimed to overtake MarketWatch with its own financial news site instead.
“Our passion was to go out there and knock off TheStreet.com (Nasdaq: TSCM) or MarketWatch.com,” Aimers, the company’s CEO, told the Orange County Business Journal back in mid-2007. “We’re gathering traffic day by day. (But) it will take a few more years to get where we want.”
Obviously, FMG never achieved that goal. Meanwhile, MarketWatch went on to win a judgment against FMG in March of last year. Two other companies, Renaissance Hotel Management and CBS Outdoors, had by then won judgments against FMG as well. Even so, regulatory filing indicates, FMG never paid off those outstanding debts.
At this point, with just $22,378 in the bank, the company lacks the funds necessary to pay off even half the money it owes to MarketWatch alone.
Meanwhile, however, the company somehow found the resources to pay Aimers (who remained CEO after the name change) a generous sum for his services. Aimers collected a total compensation package worth $368,750 last year, filings show, with $295,000 of that paid in cash. He has since received a raise, with his base cash salary climbing to $325,000, and has been promised additional 10% annual increases going forward as well.
Aimers is sitting on more than $14 million worth of CLKZ stock, issued by the company this spring to satisfy an $800,000 debt, in the meantime.
If CLKZ continues to follow the same pattern blazed by other stocks promoted through CFM-managed campaigns, however, investors can expect no handsome payouts of their own.
For example, the Vancouver Sun noted a few years ago, CFM oversaw an expensive 2004 publicity campaign showcasing an obscure resource company known as Aberdene Mines. In that case, the Sun reported, CFM hired James DiGigeorgia of the Gold & Energy Advisor – who later caught the attention of the TheStreetSweeper with his bullish, if fleeting, recommendation of BGBR – to promote the stock. Aberdene soared to $4.40 a share with help from that endorsement, the Sun said, but promptly lost half of its value over the course of a few short days. The stock had fallen to 24 cents by August of 2007, when the Sun published its article, and no longer appears to trade at all.
In 2005, Dow Jones reported, CFM called on DiGeorgia once again. Armed with another six-figure publicity budget, Dow Jones noted, CFM hired DiGeorgia to promote a company called Eden Energy (OTC: EDNE.OB). With DiGeorgia suggesting that EDNE’s reserves could exceed “all the riches of Saudi Arabia,” Dow Jones said, the company’s stock skyrocketed to almost $10 a share. It had lost almost a third of its value by the following month, when Dow Jones issued its report, and now trades for less than a nickel a share.
Meanwhile, the same firm that touted CLKZ has landed its fair share of stock promotion business as well. In 2008, theVancouver Sun reported, Untapped Wealth – a Trinity-operated newsletter edited by Fields – issued a paid recommendation of an outfit known as Aussie Soles (OTC: AUSE.OB). The stock jumped to $2.55 a share, the Sunnoted, even though the company never actually reported any sales. The stock last traded in mid-November for 5 cents a share.
Notably, the Sun observed this spring, AUSE employed the same attorney who has since come under fire for allegedly issuing false opinion letters for Spongetech (OTC: SPNG.PK) – a notorious penny-stock company now facing criminal charges for allegedly orchestrating a bold pump-and-dump scheme.
Today, those once-popular stocks seem almost interchangeable. They all share one glaring trait: They looked wildly attractive in paid promotions, but they turned out to be painfully ugly in the end.
Ironically, a past news report shows, Ambrosino originally embraced a stage personality – featuring the two faces of Gemini – that could trick his followers as well.
“That way, his character can be both a good guy and a bad guy,” The Palm Beach Post wrote a dozen years ago. “All he needs to do is paint his face two different colors.
“The way he figures it,” the newspaper added, “no one will know which side of Gemini will show up in the ring.”
* Note: No member of TheStreetSweeper's staff or advisory board has ever taken a financial position in CLKZ or received any compensation from others who have positions in the stock. As editor of the site, Melissa Davis will never take a position in any of the stocks that she covers. To contact Ms. Davis, the author of this story, please send an email to firstname.lastname@example.org.