11 Dec Vet Online Supply Inc (VTNL) – stock research report
Vet Online Supply Inc (VTNL) is a ticker we've had on our short list for a future research report for a little while now. VTNL suddenly got very active on Friday including a couple of big block trades. The ticker caught our attention in the chat room at $.50/share when the first big block hit. The early trading activity reminds us a lot of the early trading activity we saw on tickers like ARSN, ORRP, and FTWS. Because of the sudden activity, we are now pushing VTNL to the front of the line to receive its research report.
Vet Online Supply Inc was incorporated as a Florida business entity on June 6, 2014 using attorney, William R Eilers. Attorney William R Eilers is an attorney we've seen before in past research. He was the attorney that did the incorporation documents in Florida for paid promotion ticker Cloudweb Inc (CLOW). CLOW was a Michael J Forster ticker that quickly became a Finest Penny Stock promotion in February 2016 as soon as the set-up was completed. See our Cloudweb Inc (CLOW) research report for more details. CLOW wasn't the only Michael J Forster ticker set-up by William R Eilers - another was Valeritas Holdings Inc (VLRX) which took a very different path from CLOW keeping the float small and working towards an uplist to the NASDAQ. William R Eilers of Eilers Law Group PA has been around a while showing up in SEC filings going a few years back, but recently he has gotten active enough with new IPOs that we added him to our list of attorneys to watch for future paid promotion activity.
According to records, Vet Online Supply Inc was founded by Kristy Pedotti of 2222 San Simeon Creek Rd, Cambria, California. Kristy Pedotti works on a ranch at an equestrian center and married herself a cowboy.
Ms. Pedotti being from California immediately got me interested in seeing if we could find any links between Kristy Pedotti and Michael J Forster who is also from near that area of California. The first place I checked was on the Facebook page for Leisa Swanson (former CEO of VLRX when it first went public) who is now the mother-in-law of Michael J Forster after Michael J Forster married Amy Chaffe Swanson (the original CEO of CLOW) on April 16, 2016. Low and behold, not only is Leisa Swanson facebook friends with Kristy Pedotti, but the two families appear to be related through marriage.
Digging around I was able to find that Kristy Pedotti is the cousin of Amy Chaffe Swanson.
We have ourselves another Michael J Forster ticker only this time it appears we will get something much more similar to CLOW than VLRX. The following is a quick run down of Michael J Forster from our CLOW research report:
On September 18, 2014, the DOJ notified Michael Forster via certified letter that they were opening an investigation. On February 18, 2015, Michael Forster was served with a Subpoena from the SEC ordering him to provide the following information:
- all agreements, documents, communications (basically anything) having to do with Harmon David Kavrell (a broker at Monarch Bay Securities LLC - which is market maker MBAY)
- all communications and documents concerning any contact with any broker at MBAY including but not limited to Joseph Vigliarolo
- all documents and communications with COR Clearing LLC or any of its agents including but not limited to Steve Gribben or Gribben & Associates LLC
- all documents and communications with MicroCap Innovations LLC or any of its employees including but not limited to Laurie Mazzarella
- and basically anything having to do with stock promotions that Michael Forster participated in
Obviously, the SEC believes that Michael Forster was involved in "pump and dump" activity without properly disclosing his ownership in the stocks he was promoting. The SEC is very interested in any stock promotions that Michael Forster was involved with and had concerns that David Kavrell of MBAY was accepting bribes from Forster to help with the market manipulation of those stocks. Laurie Mazzarella, who is an active participant in hundreds of penny stock paid promotions through MicroCap Innovations LLC, and COR Clearing LLC, who will help clear stock for pretty much anybody regardless of how dirty the transactions may be, are also of interest to the SEC. More information in this article.
In September of 2015, the SEC submitted an Order to show cause to get the court to approve the Subpoena that Foster was fighting against. In that submission we get a lot more details about Forster and his activity including his relationship with Amy Chaffe. According to the SEC, Amy Chaffe aka Amy Swanson aka Kensington Forster (who was listed as 39 years old by the SEC) is Michael Forster's girlfriend and Michael Forster used her as a front for most of his business transactions. In particular, Amy Chaffe was listed as the controlling officer of the following Michael Forster entities - Gidapis LLC and Kensington Marketing LLC.
The SEC claimed that Micheal Forster used two entities he created (SLO 3 Holdings LLC and OTC Media LLC) and the two entities created by Amy Chaffe aka Amy Swanson (Gidapis LLC and Kensington Marketing LLC) to open bank accounts at Wells Fargo Bank between 2008 - 2014 then through those bank accounts, Forster frequently sent money to various microcap issuers and stock promoters, including Laurie Mazzarella and her nominee Microcap Innovations LLC.
The SEC also claimed that through documents they obtained they found that Micheal Forster opened an account at Monarch Bay Securities under the name Amy Swanson in October 2013 which was used for trading in the penny stock tickers that Michael Forster was involved in promoting. In particular, between March 2014 and February 2015, Michael Forster and David Kavrell of Monarch Bay Securities (MBAY) texted back and forth more than 400 times discussing trading. Michael Forster also maintained a trading account under his own name at Titan Securities in Belize and at E-trade, and an account under the name of a relative of Amy Chaffe at Fidelity. Michael Forster communicated via email about depositing securities in brokerage accounts that have clearing arrangements with COR Clearing LLC, and Michael Forster communicated with Laurie Mazzarella through skype. The SEC also alleges that Michael Forster was active in the promotion of the penny stock companies through 3 penny stock promotion websites he set up - Openingbellreport.com, Stockmailer.com, and OTCMediaLLC.com. The attached exhibits show that the address that Forster always used was 895 Pismo Street, San Luis Obispo, CA 93410 - the exact same address used by Formigli Inc.
On December 10, 2015, the courts sided with Michael Forster and the Subpoena was quashed. The SEC will have to continue its investigation without being able to gain access to the documents it was requesting from Michael Forster. In the mean time, we have no doubt based on the evidence presented above, that Formigli Inc is actually a shell controlled by Michael Forster with his girlfriend, Amy Chaffe, once again being used as a front.
We had previously discussed Michael Forster in our VinCompass Corp (VCPS) research report. going into his past business associates with convicted securities fraudster Zirk Engelbrecht (now known as Izac Zirk De Maison). Michael Forster briefly served as the CEO of VCPS right after it went public as Tiger Jiujiang Mining Inc (TIGY). This is probably because of Forster's close business association with Luke Zouvas. Luke Zouvas served as the resident agent for Gidapis LLC and a few other older Michael Forster entities not named in the SEC investigation. Luke Zouvas has his finger prints all over Vincompass Corp (VCPS).
Ms. Pedotti never officially held any management position, never owned any stock, and never received any salary from the company she founded. Instead she immediately hired Harold Minsky to set-up and run the company instead of her. When Vet Online Supply Inc filed its first annual report with the Florida SOS in January of 2015, Harold Minsky was listed as the sole officer/director of Vet Online Supply Inc. Harold Minsky who lives in California was a long time stock broker from 1970 - 2013. Harold Minsky's biggest blemish as a broker came in 2010 when FINRA fined and suspended Minsky for 30 days for helping a customer in Bulgaria sell $6 million worth of unregistered stock in Sniffex Inc from May 2005 - January 2006 then wiring the proceeds to offshore accounts. According to the SEC Complaint from 2008, Sniffex Inc (which became Homeland Safety International Inc (HSFI)) was a $32 million pump&dump scheme run by Mark B Lindberg (of Texas), Petar D Mihaylov (of Bulgaria), Yuri Markov (of Bulgaria), Paul B Johnson (of Texas), Nicholas V Klausgaard (of Switzerland), and Ilona V Klausgaard (of Switzerland). While this group was selling their stock they were promoting the ticker used email spam and hard mailers.
A few months after Minsky's career as a Broker ended, on September 3, 2014, he formed a Nevada business entity called Alladin Trading LLC as an investment/finance company. The first public ticker which Alladin invested in was Seacoast linked Eventure Interactive Inc (EVTI) in November 2014. He also got involved in a few other tickers like CRWG, DPHS, and SNXG. Minsky's allegiance with the EVTI CEO, Gannon Giguiere, was so close that Minsky even hired Gannon Giguiere, in March 2015, to help Vet Online Supply Inc to set up its online presence through Giguiere's company, Separation Degrees-One Inc for $15,000. Separation Degrees-Onc Inc was a fresh IPO that got its S-1 made effective in September 2015. Separation Degrees-Onc Inc didn't do any required filings after the S-1 was made effective so it never received a trading symbol as a result.
In May of 2015, before Vet Online Supply Inc had even filed to go public, Harold Minsky stepped aside cancelled all the shares he had received. He didn't go away empty handed though. Later, in 2016, Minsky would be paid $12,000 in cash for his services. Minsky was replaced by Edward Aruda who was issued 50,000,000 shares valued at $75,000 as a signing bonus for becoming the new CEO.
Mr. Aruda was from Carlsbad, California and was also serving as the CEO for Source Gold Corporation (SRGL) at this time. SRGL became Golden Matrix Group Inc (GMGI) earlier this year. SRGL was an often promoted ticker between 2011 and 2015, but has been pretty much diluted down to worthless now. SRGL/GMGI gives us another Michael J Forster link. Forster was doing some dealings with long time SRGL/GMGI insider Jon Fullenkamp using his girlfriend/wife, Amy Swanson Chaffe as a front. It is becoming clear now why Edward Aruda was chosen as the new Vet Online Supply Inc CEO.
The first act that Edward Aruda did was to issued a Convertible Promissory Note, in the principal amount of $16,240 to Kensington Marketing LLC. The Note became due after 90 days after which time it could be converted into common shares at $.10/share. Kensington Marketing LLC is another Micheal J Forster entity. Signing for Kensignton Marketing LLC was Amy Swanson Monro Chaffe, Michael J Forster's wife. This is the same Amy Swanson Chaffe that served as the original SEC of CLOW when it went public and has spent years fronting for Michael J Foster according to the SEC (mentioned above). In the Vet Online Supply Inc filings, the Note is explained as start up capital provided by Amy Swanson for her cousin, Kristy Pedotti, to help her start her business.
Another important ticker that recently started using Kensington Marketing LLC/Kensington Marketing Inc is Eco Science Solutions Inc (ESSI). ESSI previously traded as PTRN which got a big, successful Victory Mark promotion in 2013. In February of 2014, PTRN reset the shell with a 1:1000 reverse split and name/symbol change to Eco Science Solutions Inc (ESSI). On August 31, 2015, ESSI acquired some new asset from Kensington Marketing (Michael J Forster) in exchange for 1,500,000 shares of stock. This year ESSI became a long running stock promotion starting in mid-July and continuing to present day. It should be noted that those 1,500,000 shares held by Michael J Forster probably became unrestricted after 12 months - so in late August of 2016.
I have only just gotten through the early set-up and Vet Online Supply Inc has already become an extremely interesting ticker.
The business plan for Vet Online Supply Inc is pretty self explanatory from the name of the company. Vet Online Supply Inc engages in the sale of veterinary supplies for vet clinics of all sizes through an online website found at vetonlinesupply.com.
The supplies come to Vet Online Supply Inc from Concord Veterinary Supply in Surrey, British Columbia, Canada then they are being resold on the Vet Online Supply Inc website making Vet Online Supply Inc just a re-seller.
Between May 31, 2014 and December 31, 2014, Vet Online Supply Inc purchased $925 worth of products from Concord Veterinary Supply and resold those products for $1,008.
On September 18, 2015, Vet Online Supply Inc filed an S-1 to go public and to register up to 6,000,000 shares of stock for sale at $.10/share.
The attorney used by Vet Online Supply Inc was Sharon D. Mitchell of SD Mitchell & Associates PLC in Grosse Point Park, Michigan. It should be no surprise that SD Mitchell & Associates PLC is also the attorney used by EVTI, ESSI, GMGI, SIML (which is a mirror to GMGI in many ways), and Separation Degrees-One Inc.
The CPA used by Vet Online Supply Inc was BF Borgers CPA PC. Again no surprise that BF Borgers CPA PC also provided accounting services for EVTI, ESSI, CLOW, and Separation Degrees-One Inc.
Vet Online Supply Inc estimated that they would have to sell a minimum of 5% of the S-1 shares (300,000 shares) in order to be able to move forward with their business plan.
The S-1 was made effective on December 22, 2015. Vet Online Supply Inc got the trading symbol VTNL.
Seed Shareholders/Results of Business Operations
Through the S-1 offering, VTNL sold a total of just 355,000 shares. It was enough to raise $35,500 and more than the minimum amount they needed to move forward with their business operations probably pointing to the idea that they would keep the online vet supply business as their business operations for the foreseeable future.
In 2015, VTNL purchased a total of $2,881 worth of products from Concord Veterinary Supply which they resold for $3,681 - hardly a stellar business.
Through the first 9 months of 2016 sales dropped off to just $972 off of $620 worth of supplies.
On July 28, 2016, Vet Online Supply Inc did a 150:1 forward spit.
The 150:1 forward split came just days after the 355,000 S-1 shares were sold but ahead of Vet Online Supply Inc getting its trading symbol helping the VTNL insiders avoid having to go through FINRA for approval.
The 150:1 forward split made the new share count look as follows:
Authorized - 8,000,000,000 shares
Outstanding - 7,553,250,000 shares
Edward Aruda - 7,500,000,000 shares
Seed Shareholders - 53,250,000 shares (free trading) - costing just $.00067/share
Recently to keep the market cap reasonable, Edward Aruda cancelled 7,361,250,000 of his 7,500,000,000 shares bringing his total down to 138,750,000 shares. This also brought the outstanding share count down to 192,000,000 shares.
That brings us to present day. We now have a very unimpressive online vet supply resale business with major connections to big name stock promotion tickers CLOW and ESSI coming to life on Friday with sudden huge volume including a couple of note-worthy blocks.
The very unimpressive online vet supply business doesn't exactly make us think there will be any kind of big name paid promotions or lots of rosy sounding press releases used on VTNL. The blocks and trading action plus the links to CLOW and especially ESSI does, however, make it seem pretty likely that we could see some continued interesting price action possibly backed with some good price manipulation (cross/wash trading) and support.
It's possible that VTNL could being in some more business operations later to help kick things up notch but for now we'll be following the early price action very closely.