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Deal Flow
On March 21, 2012, Raystream Inc. (the “Company”) entered into various financing documents with JMJ Financial (the “Financing Documents”) providing for the sale, by the Company, of up to $1.58 million of 5% convertible promissory notes (the “Promissory Notes”) as well as warrants issuable prorated on the amounts actually funded to the Company. The Promissory Notes are due on March 21, 2015 and $400,000 has already been advanced to the Company.
In addition, the Financing Documents include customary representations, warranties and covenants and also grant a security interest in favor of JMJ Financial over the Company’s assets. The Promissory Note can be converted, at the holder’s option, into the Company’s common stock at the lesser of $0.40 or 70% of the lowest trade price in the 20 trading days previous to the conversion. In connection with this financing, Unlimited Trade, an existing stockholder, has agreed to provide financing to match the first $500,000 under the same terms as those in the Financing Documents.
Investor Alert
On December 21, 2011, a lawsuit alleging breach of contract, tortious interference with prospective relations, trade secret misappropriation and civil conspiracy was filed in the 191st Judicial District Court of Dallas County, Texas against the Company; Brian Petersen, its Chief Executive Officer; Roman Rumpf, its Chief Technology Officer; and Nadia Christian, its Vice President of Marketing (among others) by SecTel, Inc., Joel Warren, and Chase Tabor (No. DC-11-15923). The Plaintiffs contend, among other things, that Mr. Petersen (and potentially Ms. Christian) executed a “
Nondisclosure, Noncircumvent, and Noncompete Agreement” with Plaintiff SecTel, Inc. prior to the formation of the Company, and subsequently breached that agreement by obtaining and using SecTel’s trade secrets and business model to benefit the Company. Plaintiffs seek to recover an unspecified amount of damages, including interest, costs, and any other equitable relief that the Court may deem proper. The Company, Mr. Petersen, and Ms. Christian have retained litigation counsel and intend to vigorously defend against these claims; however, it is not possible at this time to predict whether the Company will incur any liability, or to estimate the damages or the range of damages, if any, that the Company might incur in connection with this matter.
Investor Alert
As RAYS seems like it has tried to scrape together a few positive days, we would like to remind you of the controversy surrounding the company, and why we feel that the company's days are numbered.
Investors who have placed long bets on Raystream (RAYS) should know that the SEC is stepping up its efforts to get in front of pump and dump schemes taking place on U.S. shores…
Dec. 20, 2011
[...] Mitchell J. Stein was controlling most of the company’s business activities, hiring promoters to tout Heart Tronics stock on the Internet , and reaping nearly $8 million from secret trades that he orchestrated unbeknownst to investors. [...]
Dec. 16, 2011
Some issues referenced in this case include:
False and misleading statements in press releases, SEC filings, and promotional materials
A product claimed to be "something special " and to outperform the other competitors
Selling unregistered shares to investors
Panamanian companies that sold shares during the scheme
A person who has inspired a motion picture (Daniel Ruettiger)
In addition to the fact that RAYS has not disclosed that is has already lost one of its three alleged customers, we could not help notice the parallels that each one of the points above has with the RAYS case.
False and Misleading Statements
Again, RAYS clearly stated in its SEC filings that “No other company specializes in HD compression technology.” We found this to be false.
Special Product
RAYS is portraying itself to be a pioneer in video compression when it is in fact relying on already existing technology.
Unregistered Shares / Convertible Loan
On September 19, 2011 after only two months of possession of its loan and with essentially no trading market for RAYS shares, Unlimited Trade (largest and newest shareholder) opted to convert its loan into 5 million (unregistered) shares of common stock at $0.40 (equal to $2 million or the amount of their original loan), well below the going market price of RAYS at the time.
Famous Character
There was a movie made about Tan Siekmann, an individual tied to Unlimited Trade, Raystream’s largest shareholder. Siekmann’s past is checkered with failed businesses, one of which eerily shows characteristics of a pump and dump scheme of its own.
Panamanian Company Ties
Information on Panama-based Unlimited Trade brings to light questionable share transactions seemingly structured to line the pockets of various parties.
While other truth seekers have already touched upon the RAYS story, we have gone a step further to point out information that investors MUST read to learn about the web of deceit constructed by RAYS and certain parties. Because we know that RAYS will continue to assault the public with information on its role in “revolutionizing” video compression technology, we intend to go step for step with the company so they cannot escape the legal consequences of their actions.
See entire Pump and Dump report here: http://geoinvesting.com/companies/duediligence/raystream_rays_pump_and_dump_report_december_2011.aspx
Our next follow up after they announced Grencomm as a new customer - As Raystream's Customer's Mount, so does Skepticism
Disclosure: We have covered our short position in RAYS on Jan 20, 2012.
Pump and Dump Watch
Here we are again with another set of customer contracts for Raystream (RAYS) and their so called “proprietary real time HD video streaming application.” This past December they signed the Christian Broadcasting Network (“CBN”) for a “trial run” of their software. We here at GeoInvesting
If a trial run wasn’t good enough for the fans of Raystream, the company recently announced a new “contract” that was signed last week with Grencomm Limited, a media content company that registered in 2006 but did not become fully operating until 2011. It is based out of the Caribbean Island Nation of Grenada (population 100,000). We decided that it was necessary to take a closer look at this Island Nation company and familiarize ourselves with the “where ”, “what ”, “when ” and “how ” of Grencomm.
See our update/commentary here.
Pump and Dump Watch
DALLAS--(BUSINESS WIRE (OTC BB: RAYS), a global HD video compression services company, is entering a 30-day evaluation period with Cinefly, an Internet television site that offers instructional, travel and destination, documentary, and conservation films from around the world that are dedicated to the sport of fly fishing. Cinefly also provides industry news, fishing gear reviews, vodcasts, and new movie release trailers, as well as download-to-own movies and DVD/Blu-ray titles.
“Cinefly has always been dedicated to providing its audience with the best possible viewing experience, which makes Cinefly a particularly well suited evaluation partner for Raystream,” says Raystream CEO Brian Petersen. “Raystream’s proprietary High Definition video compression tools reduce the size of HD video files by an average of 70 percent. That means we can drastically decrease Cinefly’s bandwidth costs. But even more importantly, because our unique technology condenses HD video files without losing any image quality or color saturation, we can also help Cinefly offer incredibly sharp, crisp HD videos with amazing color that will truly wow their viewers.”
Cinefly’s Video-On-Demand (VOD) and live streaming videos are delivered with adaptive bitrate protocol, meaning the user's network and playback conditions are automatically adapted as conditions fluctuate, which offers the highest quality viewing experience on computers and mobile devices. Raystream’s technology can be used to compress Cinefly’s previously recorded HD video files, as well as for live streaming of HD video. The live streaming HD video is compressed in real-time as it is generated and prior to streaming over the Internet. Additionally, Raystream’s cloud-based compression tools even work with full HD 3D videos, allowing users to instantly view the compressed video on any 3D video-enabled device.
Pump and Dump Watch
DALLAS--(BUSINESS WIRE (OTC BB: RAYS), a global HD video compression services company, announces a variable use license agreement with Grencomm, a company that develops, produces and delivers news, sports and cultural entertainment globally. Grencomm will use Raystream’s proprietary compression technology to drastically reduce the size of HD video files it streams through its video-on–demand platform, RUSH TV -- Grenada's first online television station -- that has an audience spanning across more than 35 countries. Raystream’s unique compression tools will greatly reduce Grencomm’s bandwidth costs and eliminate the buffering issues, while maintaining the crisp, clear images and vibrant colors associated with high definition video.
“We are delighted to announce that Grencomm will be using Raysteam’s HD video compression solution. Not only will Grencomm be able to significantly decrease bandwidth costs while delivering a far better viewing experience to its large and rapidly growing international RUSH TV audience, but the clarity of the HD video images will remain exceptionally clear,” said Brian Petersen, Raystream’s CEO.
“Discovering Raystream was a godsend to us . We look forward to utilizing Raystream’s HD video compression technology to deliver high quality streaming video content to our viewers,” said Garvey Lousion, Grencomm’s Chief Financial Officer. “We actually derive two benefits from using Raystream’s HD video compression technology. First, we expect Raystream’s compression ability to greatly decrease our storage and bandwidth costs. Second, we are excited that we will be able to provide a more efficient stream to our viewers, especially in countries that have a low level of Internet capacity.”
Investor Alert
on 12/08/2011 we released a Pump and Dump Alert on Raystream (OTC BB:RAYS) @ $1.75 originally available to our premium members. The stock has now broken $1.00 to the downside.
Our early preliminary findings had caused us to view RAYS with suspicious eyes. We are continuing to gather evidence that point towards RAYS being part of a substantial Pump and Dump campaign. Of particular note is a "glowing research report " on RAYS published by the Stock Detective on March 30, 2011. The Stock Detective is the same outfit that was instrumental in rallying the stock price of another penny stock, Lithium Exploration Group (OTCQB:LEXG) , pumped from $1.32 to $10 on April 28, 2011, before the stock finally dumped hard. LEXG now trades at $0.89.
Go here to see our original alert.
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