23 Sep Vitality Biopharma Inc (VBIO) – super well connected ticker setting up for a new paid promotion
Vitality Biopharma Inc (VBIO) was first mentioned in the chat room on August 18th as a biotech OTC ticker with some unusual volume trading at $.64/share. A few days later the ticker became a regular fixture on our daily morning reports after working its way up to $.90/share. VBIO has been holding its price in the $.90s for the past three weeks hinting that it might be ready to start going higher soon. But VBIO is much more than just a biotech OTC ticker with an interesting recent price history. This ticker has a prolific paid promotion past, strong links to some other big name paid promotions, and some big name insiders who are on the verge of getting 10,600,000 shares made free trading that cost them between $.10/share - $.17/share to acquire.
Before we get into the links to other big name paid promo tickers and the big name insiders that are currently being set-up with cheap free trading stock, let's quickly talk about the past and current VBIO business operations.
A Brief History
Vitality Biopharma Inc (VBIO) first went public as Legend Mining Inc (LDMI) back in 2008.
As comical as it seems, Legend Mining Inc was a Chinese based company with a Chinese CEO and 30 Chinese seed shareholders holding 2,850,000 shares that owned a mining claim in Saskatchewan, Canada.
In July of 2011, Avtar Dhillon came in and bought control of the LDMI shell.
Avtar Dhillon changed the name/symbol of the ticker to Stevia First Corp (STVF) and did a 7:1 forward split increasing the free trading stock held by the 30 Chinese nominees to 19,950,000 shares. With the name and symbol change came a change in business operations. STVF would be engaged in the cultivation and harvest of stevia leaf and the development of stevia products. Stevia leaves contain nine to 12 compounds called steviol glycosides, which taste sweet but have no calories so it is considered by some to be a healthy alternative to sugar.
STVF did its first paid promotion in March of 2012 using Paragon/Bedford for a landing page/newsletter promotion that also included hard mailers starting about halfway into the promo. The price climbed from $.73/share to $3.28/share over a 18 day stretch including some impressive volume above the $2.00 mark.
It is probably no coincidence that just one month before the promotion kicked off, in February of 2012, STVF entered into an agreement with an unnamed financier for $1,200,000 in financing to start being received in March of 2012. That is nearly the exact same amount that was allegedly used for the paid promotion budget:
My guess is that this was probably similar to the JAMN situation where some of the proceeds of the paid promotion were cycled back into the company to pay for business operations as part of the trade off for letting those business operations be used for the anonymous insiders that secretly owned the free trading shares to profit as much as possible from the paid promotions.
Strangely, Avtar Dhillon would end up selling 28,927,500 of his 32,150,000 shares ahead of the promotion in 13 separate private transactions all for $.0022/share. Outside of the CEO, Robert T Brooks, getting 2,572,500 of those shares we aren't told where the other 26,355,000 shares went. What I am sure about is that all of those 26,355,000 eventually became a part of the float getting sold into the market.
The March 2012 paid promotion was followed by a short re-pump starting in late August of 2012. The landing pages were brought back online and the re-pump was supported by some STVF press releases and a series of positive stevia geared Seeking Alpha articles written by Henry Kawabe that would lump STVF in with some big board tickers and big name companies like Pepsi and Coke.
Between 2013 - 2015, STVF also did a lot of fund raising efforts involving common shares and warrants and a lot of S-8 and S-1 filings to create new free trading stock. By June of 2016 the float had grown to around 70 million and the price had fallen to $.05/share.
That brings us to July of 2016 when STVF did a 1:10 reverse split and a name/symbol change to Vitality Biopharma Inc (VBIO) because of its new business operations dealing with cannabinoids.
The Current Business Operations
As the video above explains, VBIO has recently changed its operational focus towards pharmaceutical development of cannabinoid prodrugs.
Cannabinoids are the active drugs found in cannabis that cause drug like effects throughout the body. The main active cannabinoid found in cannabis is delta-9-THC. Another active cannabinoid is cannabidiol (CBD), which may relieve pain, lower inflammation, and decrease anxiety without causing the "high" of delta-9-THC.
Scientists and drug companies have been researching the effects of cannabinoids for over a decade now and have found some positive effects in treating pain, inflammation, and anxiety. To date only two cannabinoids have been approved by the FDA - dronabinol which is a synthetic pill form of delta-9-THC and nabilone which is a synthetic pill form of delta-9-THC blended with CBD.
According to the VBIO filings, cannabinoid pharmaceuticals that are currently approved or in development by other companies have well known limitations, such as poor oral bioavailability, which translates into erratic and potentially unsafe dosing as well as a short duration of action, which means that current treatments must be administered repeatedly throughout the day, and that there is no overnight relief.
VBIO believes that they have developed a new class of cannabinoid prodrugs, known as cannabosides, to overcome these limitations, and to ultimately provide a compelling oral cannabinoid pharmaceutical that they expect physicians will be eager to prescribe, and that patients will prefer over use of medical marijuana.
VBIO claims to have discovered this new class of cannabinoid prodrug in 2015 through application of the company’s proprietary enzymatic taste modification technologies that were originally developed for their stevia sweeteners while they were still a stevia company called Stevia First Corp (STVF).
STVF was working on trying to produce better tasting varieties of stevia sweetener through an enzyme bioprocessing process known as glycosylation (which is the process of adding additional glucose molecules to compounds). I guess around this same time it started to become accepted within the pharmaceutical industry that glycosylation can in some cases act to generate novel natural product libraries with improved drug properties by attaching a glyosidic moiety, a glucose or sugar molecule, to a compound that is typically found without one, known as an aglycone, making the product more water-soluble. So VBIO came up with the bright idea to apply this science to cannabinoids to cause the production of cannabinoid glycosides (“cannabosides”), which are metabolized differently from cannabinoids and can enable their use as pharmaceutical prodrugs.
VBIO gives some clarification about what cannabosides are in their filings as follows: Cannabosides are cannabinoid “prodrugs,” which means that they are medications or compounds that, after administration, are converted within the body into a pharmacologically active drug, and which often already have a long history of clinical investigation and use. A classic prodrug example is Asprin, acetylsalicylic acid, which was first made by Felix Hoffmann at Bayer in 1897 and is a synthetic prodrug of salicylic acid. Because there already exists independent verification of the active drug’s safety and efficacy, prodrugs may receive marketing approval more quickly than others, and in some cases may receive drug approvals through completion of small clinical studies evaluating bioequivalence or bioavailability. Cannabosides are more stable and soluble than cannabinoids, so there is less risk of non-psychotropic cannabidiol (“CBD”) being converted to psychotropic THC or otherwise degraded in the acidic stomach environment. This could improve product bioavailability, eliminate unwanted side effects in pediatric epilepsy patients, and be useful in any medical treatment where oral CBD is administered at high dose. Because passage of cannabosides through the digestive tract is likely to occur over several hours or longer, there is a sustained or delayed release of cannabinoids, which can also provide patients with long-lasting or overnight relief, a desirable attribute that is unavailable with medical marijuana or with current cannabinoid pharmaceutical formulations.
So basically if I am understanding their filings correctly, VBIO claims to have developed some medications or compounds that once they are administered into the body they release one of the two cannaboids that have already been approved by the FDA, dronabinol or nabilone, but in a way that delays the release and stretches it out over more time solving some of the limitations of current applications and offering some greater uses for the drugs.
To date VBIO claims to have produced more than 25 novel cannabosides and have patent applications that include composition of matter claims for their cannabosides. They list two drugs by name in their filings:
- Cannabosides - VITA-100 whose primary purpose is the treatment of Inflammatory Bowel Inflammation and it currently awaiting Phase 1/2 trials which are planned to be begin some time in 2017
- Cannabosides - VITA-210 whose primary purpose is the treatment of Irritable Bowel Syndrome, Neuropathic Pain, Fibromyalgia, Muscle Spasticity in Multiple Sclerosis & Rare White Matter Disorders and is also currently awaiting Phase 1/2 trials which are planned to begin some time in 2017
The rest of their cannabosides are lumped together as pre-clinical stage cannabosides whose primary functions will focus on the treatment of Epilepsy, Schizophrenia, Huntington’s disease, and Guillain-Barré.
VBIO is still continuing to run their stevia related business operations which brought in almost $300,000 in revenues over the past 15 months, but operational costs for the ticker over that same span have far surpassed their revenue totals so they are forced to borrow money to fund operations while working on their new breakthrough cannabosides. VBIO makes it clear that they will need to raise at least $2,400,000 to cover the costs of developing their new drugs over the next 12 months. That funding was provided by some offshore entities with some major connections to some big time paid promotion individuals.
On May 4, 2016, VBIO entered into a Securities Purchase Agreement with 6 purchasers providing for the issuance and sale of an aggregate of 2,650,000 shares of common stock and warrants to purchase 7,950,000 shares of common stock, for gross proceeds of $265,000. The warrants if exercised allow for the 6 purchasers to acquire up to 7,950,000 additional shares of stock for $.17/share raising an additional $1,351,500 in funding for the company. The $1.6m in funding all together will not be enough to fund operations for a full 12 months but it is a good start. The funding agreement included VBIO doing a 1:10 reverse split which got approved in July of 2016.
The Suspicious Offshore Entities and Big Name Paid Promotion Individuals linked to them
Following the 1:10 reverse split that VBIO did in July of 2016, the outstanding shares count was reduced to 7,911,708 shares outstanding (not counting the 2,650,000 shares sold in the financing agreement). 2,865,979 of the outstanding shares were restricted and held by the company officers/directors leaving a float of a little bit over 5,000,000. Most of that float is held by retail shareholders so we won't really concern ourselves with that number. What we care about is the 10,600,000 shares that are going to the 6 offshore entities linked to our big name paid promotion individuals.
According to the filings the warrants can (and most likely will be) exercised immediately and the 2,650,000 shares costing $.10/share have already been issued.
VBIO is in the process of trying to get an S-1 made effective that will make the 2,650,000 shares issued at $.10/share and the 7,950,000 shares issued at $.17/share through the warrants all free trading. In that S-1 filing we find out who gets those 10,600,000 total shares.
In that screen shot we see some very familiar names.
- Gotama Capital SA - this is a foreign entity incorporated in the Marshall Islands that we linked to Benjamin Kirk and Luis Carrillo in our very in depth research on XLIT and ORRP. Gotama Capital SA also shows up as a shareholder in Luke Zouvas linked Vincompass Corp (VPSC), in HWAL which was originally set-up by Benjamin Kirk and Luis Carrillo as NIAS, in Uneeqo Inc (UNEQ), and in past paid promotion ticker Vapor Hub International Inc (VHUB). This is the first time we've seen Fedir Nikolayev used as the nominee signing for Gotama Capital SA in an SEC filing. In the past we've seen Kirk and Carrillo use Christopher Smith as the nominee signing for Gotama Capital SA. In our ORRP report we mapped out how Christopher Smith ties in with Clifford Wilkens, Virgilio Santana Ripoll, Frederick Sharp, and others linked to these paid promotion/money laundering organizations. Good old google gives us some hits on Fedir Nikolayev including several domains he set up using a British Virgin Island based company named Allied Irish Investors Ltd. We also find Fedir Nikolayev as a shareholder in Itoco Mining Corp (ITMC) back in 2009 along with familiar names like Robert Seeley (the CEO), Virgilio Santana Ripoll (the CFO), and Miguel Adolfo De La Rosa. ITMC was a Dominican Republic company when it went public (just like XLIT when it went public and ORRP). Virgilio Santana Ripoll we talk about in great detail in our ORRP report. Robert Seeley and Miguel Adolfo De La Rosa are well linked to Luis Carrillo through many past tickers. All indications are that Fedir Nikolayev lives in the Dominican Republic and works closely with Virgilio Santana Ripoll. I found Fedir Nikolayev signing for Gotama Capital SA in a recently filed document for a Vancouver company called StartMonday Technology Corp (formerly Centennial Acquisition Corp) that is working on going public in Canada. In that document we find 5 of the 6 foreign entities from the VBIO S-1 and also find 2 other entities (Inland Trading Limited and Pegasus Global Limited) that were involved in the XLIT paid promotion.
- Trius Holdings Limited - this is a foreign entity incorporated in the Marshall Islands that we linked to Benjamin Kirk and Luis Carrillo in our very in depth research on XLIT and ORRP. Trius Holdings Limited also shows up as a shareholder in Luke Zouvas linked Vincompass Corp (VPSC) and in HWAL which was originally set-up by Benjamin Kirk and Luis Carrillo as NIAS. This is the first time we've seen Jordan Wolsey used as the nominee signing for Trius Holdings Limited. In the past we've seen Kirk and Carrillo use Christopher Smith as the nominee signing for Trius Holdings Limited. A google search gave a hit for a document that shows that Jordan Wolsey was recently used as the signatory for Trius Holdings Limited for a company that publicly trades in Canada called Identillect Technologies Corp. We also find Jordan Wolsey in the Panama Papers working out of Ecuador linked to a Bahamas company using a Belize address called Northern Dealers Inc that was set up by Frederick L Sharp through his Corporate House address in Vancouver with the assistance of the infamous Mossack Fonseca law firm. This is the same Frederick Sharp that I explained in the ORRP report was the main guy setting up foreign entities for Luis Carrillo to help Carrillo move his ill gotten gains moving around out of the reach of the regulators.
- Quezon Group LLC - this is a Nevis entity signed for by Virgilio Santana Ripoll who was instrumental in the XLIT, ORRP, and CATQ paid promotions as well as REMO, GOFF, XUII, SWVI, NORX, FROT, NIAS/HWAL, SPWZ, ITMC, and CPOW among many others. Virgilio Santana Ripoll runs a law firm in the Dominican Republic and has worked closely with Frederick L Sharp, Clifford Wilkens, and Christopher Smith in the past with their money laundering operations. Rather than go back through lines of research I'll just refer you back our ORRP report to get the scoop on Mr. Ripoll. Quezon Group LLC also showed up as a shareholder in FROT which was basically a mirror to NORX and SPWZ having been set-up by the same anonymous insiders. See our SPWZ report for more details.
- Armour Securities LLC (aka Amor Securities LLC) - this is a Nevis entity signed for by Kazimierz Malik. When I see the name Malik I immediately think of Konrad Malik who used to work for the MacDonald Tuskey law firm in Vancouver and I've been told continues to have a very close business relationship with Luis Carrillo and Frederick L Sharp. We found links to Konard Malik in CATQ which was well linked to XLIT, ORRP, NORX, and SPWZ. It is no coincidence that we keep seeing these same tickers and same names popping up over and over again linked to one another. Kazimierz Malik and Armor Securities LLC also show up in often promoted Arch Therapeutics Inc (ARTH). It turns out that ARTH has a lot in common with VBIO which takes us to our next section of this report.
The Main ARTH Connections
Connection #1) Kazimierz Malik/Armor Securities LLC
We have already mentioned one main connection between ARTH and VBIO - Kazimierz Malik/Armor Securities LLC. Like with VBIO, Malik/Armor was involved in a fund raising effort in which the financiers acquired common shares and warrants to acquire more common shares in ARTH that were then registered to become free trading in an S-1 filing.
Connection #2) Avtar Dhillon
Avtar Dhillon took over as the new Chairman of Almah Inc (AAHC) in April of 2013 changing the ticker to Arch Therapeutics Inc (ARTH) and effecting a forward split. Avtar Dhillon is also the current and long time Chairman of VBIO going back to 2011 when Legend Mining Inc became Stevia First Corp (STVF). One other ticker associated with Avtar Dhillon is Oncosec Medical Inc (ONCS) where he became a director starting in 2011 when a relative of his named Punit Dhillon took over as the CEO.
Connection #3) The Paid Promotions
STVF (the former symbol of VBIO), ARTH, and ONCS all had newsletter/landing page paid promotions. ARTH and STVF both got promoted by Paragon/Bedford with the STVF promotion happening in March of 2012 and the ARTH promotion happening in July of 2013. ONCS got a Capital Financial Media (CMF) newsletter/landing page promotion in March of 2012. ONCS eventually became a legit enough biotech to do a reverse split and uplist to the NASDAQ. In our old ARTH research report we find that ARTH was well linked to NORX and GOFF through the set-up and we had predicted well in advance it would be a Paragon promotion.
Connection #4) The Attorney
The attorney for VBIO is Morrison & Foerster LLP. Morrison & Foerster LLP shows up in dozens of tickers and thousands of filings, but Steven G. Rowles, Esq of Morrison & Foerster LLP only shows up as the attorney in a handful of tickers. Those tickers are VBIO, ARTH, ONCS, IMMY, RXDX, and CLNE with VBIO, ARTH, and ONCS being the only OTC tickers on the list.
Whether VBIO ends up having something legitimate with its new cannabinoid prodrugs or not is not really relevant for the near future. What is more important for the near future to us is:
1) The paid promotion history of VBIO as STVF
2) The strong connections to other paid promotion tickers like ARTH, ORRP, XLIT, NORX, SPWZ, and FROT among others
3) The powerful players like Luis Carrillo, Benjamin Kirk, and Virgilio Santana Ripoll that are on the verge of getting 10,600,000 free trading shares of VBIO stock.
We believe that once that S-1 is made effective we could see some paid promotion/stock manipulation type action for VBIO to help with the selling of those 10,600,000 shares. If VBIO does see a paid promotion it is most likely to be a newsletter/landing page type of promotion possibly even including hard mailers. Just to give you an idea of how much money is on the line: At an average cost of around $.14/share, if our powerful insiders can sell those 10,600,000 shares for an average price of $1.14/share they stand to make over $10 million from their holdings. Obviously, if they can unload those shares at an even higher average price than $1.14/share they will make even more money. Taking this into consideration, it is possible that before the S-1 is made effective and any actual paid promotion starts, we could continue to see some interesting price action with our insiders possibly working the price up to build the chart and increase the value of their holdings.