Inside the Pump Factory, Part 1: The Aristocrat Group Pump and Dump

This is the first article in a series I am calling “Inside the Pump Factory.” These articles will show how a series of companies have been promoted in a way that appears to me to require the complicity of company executives. For this reason I am initiating coverage on Aristocrat Group Corp. (and will soon initiate coverage on other companies promoted by the same stock promoters). My rating on Aristocrat Group is Strong Sell and I have a medium-term (over the next few months but within a year) price target of $0.10, although the stock should eventually go much lower.

I believe that Aristocrat Group is being promoted by the same stock promoters that promoted First Titan Energy (OTCBB: FTTN), GTSO Resources (OTCBB: GTSO) and Rainbow Biosciences (OTCBB: RBCC).  After a brief review of Aristocrat Group’s fundamentals and a description of the current stock promotion on it, I will return to prove the connection between these companies.

As far as any fundamental analysis of Aristocrat Group goes, it is pitifully easy. With 62,250,000 shares outstanding and a recent stock price of $1.50, the company has a market capitatlization of $93 million. The company has total assets of $1,243 as of July 31st (per their recent 10-K) and liabilities of $9,118. I know high school students with more impressive balance sheets. What is the company doing with its pitifully small amount of money? At first, it looks like it must be buying advertisements on Yahoo! Below is a screenshot of an advertisement I saw for it today.

ascc
(highlighting of the ASCC advertisement added by me; click image to enlarge)

The link takes you to the company’s investor relations page, or more specifically, http://www.luxuriabrands.com/investors?utm_source=MSN&utm_medium=CPC&utm_term=Company&utm_content=NewsAd122&utm_campaign=ASCC. Unlike most online stock promotion advertisements, the link does not take you to a stock promoter’s website but rather to the company’s website. So this is why it seems that the company is paying for the stock promotion ads.

The Luxuria Brands website is very slick and very promotional. Take a look at this image below that I took from the website’s Investors page:
ascc_price_target

I have seen companies pay for stock promotion campaigns before, and I have seen stock promoters paid by companies issue outrageous price targets. But I cannot remember ever having seen a company touting itself so blatantly on its own website.

From the same page:

ASCC’s Proprietary Formula Could Turn $5000 into $50,000  ASCC is on target to producing smooth, unflavored vodka that uses domestically-grown potatoes as its main ingredient—integral in appealing to consumers with allergies to certain grains. The market demand for our gluten-free vodka could boost investor gains by 400% or more!

Luxuria Brands is working to promote national market modernization trends in product branding beginning with an American-made premium vodka line, while helping to spur economic prosperity within the U.S. ASCC will expand into the music industry, branding in-demand products on a global scale!

As vodka’s popularity continues to spike, consumers and investors are likely to reap very high ROIs in the first few months of production.

While all companies like to accentuate the positive, I must repeat that I have not previously seen such direct references to the stock price (rather than the actual business). What is worse is that the company makes specific predictions about their stock price (“… could boost investor gains by 400% or more”), and about their business performance (saying that they are “poised to capture 3-5%” of the vodka market, an outrageous prediction).

marketshare

Even PacWest Equities, which rightly drew my ire for many failings, did not make specific and absurd predictions about market share that they would take and price gains that the stock would see. But all this, while highly irregular and inappropriate, misses the more important point. That point is that the company cannot be paying for these ads — it does not have enough cash and has disclosed nothing in its filings about paying for “investor relations” or “stock promotion” services. A quick search of Aristocrat Group’s most recent 10-K revealed no usage of either phrase. Furthermore, the recent 10-K shows that all expenses were under “general and administrative” expenses; stock promotion would not be considered a G&A expense. That brings me to a sinister conclusion: the company is acting in concert with the stock promoters. There is no other logical conclusion that I can think of, especially considering that the company’s two websites are on the same server as the websites of other companies pumped via the same method that I mentioned above (search the YouGetSignal reverse IP tool for the company’s luxuriabrands.com and aristocratgroupcorp.com websites and you find that they are hosted on the same server as the corporate websites of RBCC and FTTN and GTSO and many other penny stock companies). See this screenshot:

yougetsignal

As mentioned above, First Titan Energy and Rainbow Biosciences have been promoted in the same manner, via online ads. At least one of the companies, Rainbow Biosciences (OTCBB: RBCC) is still being promoted in the same fashion. I cannot confirm that the other companies whose websites show up above were promoted in the same manner but I believe that to be the case. (One important aside: large websites like bhphotovideo.com, nextag.com, shopzilla.com, and bizrate.com are often hosted across many different servers and IPs, and I can safely state that they have no relationship with the other websites shown above.) Below is a screenshot of a search on Bing that yielded a Rainbow Biosciences advertisement:

rbcc
(highlighting of the RBCC advertisement added by me; click image to enlarge)

I find this direct link between all these companies’ official websites and online stock promotion ads to be quite disturbing. Are the executives of all these companies cooperating with the stock promoters? Are all these companies put together and run from behind the scenes by a small cabal of deal-makers and promoters for the sole purpose of being pumped and dumped? While I believe one of these explanations must be true, extraordinary claims demand extraordinary evidence, which I will aim to provide in future articles in this series. In the meantime, I recommend that investors steer clear of all of these promoted, worthless companies.

 

Disclosure: It is the policy of MorningLightMountain LLC for no authors of articles nor anyone connected to the company or their immediate relatives to have positions in any stocks covered on the OTCMicroCapResearch.com website, from the time coverage is initiated until coverage of a company is officially dropped. This ensures that there will be no bias nor conflicts of interest for the authors of articles on this website. Furthermore, information about upcoming research reports will not be given to anyone prior to public notice being given via this website’s Twitter account or on this website itself (this report was published on Wednesday, December 19th, at 1:58pm EST). OTCMicroCapResearch.com never gets paid to analyze companies.

Another K. Hill Livestock press release from PacWest Equities

PacWest Equiteis (Pinksheets: PWEID) released yet another press release today, this time about a distribution agreement its World Eco Source subsidiary has with K. Hill Livestock. There are still no details on K. Hill Livestock and none of the press releases have had a quote from anyone at K. Hill Livestock. Does the company exist? I do not believe so, as I stated in my second report on PacWest Equities — there is no evidence that K. Hill Livestock exists outside of PacWest Equities’ press releases. Like I said before, I could be wrong, but considering everything else that is sketchy about the company (that I detailed in that report), I believe nothing they say unless there is proof. Below is the full press release (except for the legal boilerplate):

November 12, 2012 10:10 ET

PacWest Equities, Inc. to Team With K. Hill Livestock for Distribution Rights for Hawaii in a Deal Worth up to $12 Million US in Annual Sales

LAS VEGAS, NV–(Marketwire – Nov 12, 2012) -  PacWest Equities, Inc. (PINKSHEETS: PWEID) through its subsidiary, World Eco Source Corp. (“WES”), announced today the signing of a Teaming Agreement with K. Hill Livestock as an exclusive dealer for the state of Hawaii for WES’ proprietary MobileFeed® and MobileFood® units. Both parties involved recognize the demand for a sustainable economical and reliable feed source for not only livestock, but also for human inhabitants on the under developed areas of rural Hawaii. The units will be shipped to Kawaihae Harbor and distributed from Kailua-Kona, HI. “We see tremendous growth potential throughout all of the Pacific Islands including US territories of Samoa and Saipan, where populations and livestock are heavily dependent on import of goods,” stated Mr. Geoffrey Bagatelos, President of PacWest Equities, Inc. He added, “Hawaii has limited resources available for large scale feeding operations that force the import of expensive feed stock, and this agreement will allow for ample amount of feed to supply a large herd and stabilize fluctuating expenses of import due to volatile fuel costs.”

The World Eco Source MobileFeed® and MobileFood® units provide turnkey systems for either the production of livestock based consumables or human based protein and vegetable consumables. The MobileFeed® units are truly a sustainable green life cycle farming system. Using solar powered and water conservation growing systems, one trailer can produce 1500 pounds daily of organically grown grass for year round livestock consumption, lowering feed costs by 200% while producing Certified Organic, Grass Fed livestock, increasing profitability of the final product.

The MobileFood® units enable the rapid production of certified organic vegetables and proteins for humans through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice versa. Growing tilapia side by side with vegetables, and using the same water from the fish to fertilize the greens is not something new, but by combining the hydroponic know-how with World Eco Source patented technologies, the outputs have finally become commercially feasible.

And as usual with PacWest Equities’ press releases, the above release has no details about anything else — price, where the units were manufactured, what kind of inventory K. Hill will hold, what kind of vendor financing may be provided to buyers, etc. I am very skeptical of everything PacWest Equities says. I continue to have a strong sell rating on the stock with a sub-penny target price.

Disclosure: It is the policy of MorningLightMountain LLC for no authors of articles nor anyone connected to the company or their immediate relatives to have positions in any stocks covered on the OTCMicroCapResearch.com website, from the time coverage is initiated until coverage of a company is officially dropped. This ensures that there will be no bias nor conflicts of interest for the authors of articles on this website. Furthermore, information about upcoming research reports will not be given to anyone prior to public notice being given via this website’s Twitter account or on this website itself (this report was published on Wednesday, November 12th, at 11:43am EST). OTCMicroCapResearch.com never gets paid to analyze companies.

More contempt for the investing public from PacWest Equities (Pinksheets: PWEID)

On Monday night PacWest Equities (Pinksheets: PWEID) released a press release touting the great sales gains made by their PurGro Electronics subsidiary. The company continues to show a complete and utter disregard for investors by publishing only the most positive information and failing to give out any other information. The press release states in part:

3rd Quarter Sales for its wholly owned subsidiary, PurGro Electronics, showed a 430% increase in sales over 3rd quarter results for 2011, following the consistent sales growth trends set in the previous two quarters.

What were the sales? What were the prior months’ sales? How many shares were issued to purchase PurGro Electronics LLC? We have no clue — yet still the stock goes up. At a recent price of $0.68 that gives the company a $1.3 billion market cap (using my estimate of 500,000,000 post-split shares issued to pay for PurGro).

The stock promotion of PacWest Equities has grown larger — I received an email this morning from “The Penny Stock Pillager,” which has published pump mailers for past pump and dumps, disclosing $300,000 in compensation to promote PacWest Equities. See the disclaimer online here or below:

Read my prior articles on PacWest Equities:
Is PacWest Equities (Pinksheets: PWEID) a bona fide company? Or is it being run for the purpose of selling shares?
Coverage initiated on PacWest Equities (OTCBB: PWEI) — Strong sell, price target $0.06

Disclosure: It is the policy of MorningLightMountain LLC for no authors of articles nor anyone connected to the company or their immediate relatives to have positions in any stocks covered on the OTCMicroCapResearch.com website, from the time coverage is initiated until coverage of a company is officially dropped. This ensures that there will be no bias nor conflicts of interest for the authors of articles on this website. Furthermore, information about upcoming research reports will not be given to anyone prior to public notice being given via this website’s Twitter account or on this website itself (this report was published on Wednesday, November 5th, at 1:34pm EST). OTCMicroCapResearch.com never gets paid to analyze companies.

 

Is PacWest Equities (Pinksheets: PWEID) a bona fide company? Or is it being run for the purpose of selling shares?

PacWest Equities (Pinksheets: PWEID) is a wildly-overvalued, promoted company with little in the way of a real business, destined to fall 95% once the stock promotion ends (as I argued in my first report on the company). But far more importantly and more sinisterly, I believe that the company is being operated for the purpose of promoting itself and helping insiders (specifically, the former owners of PacWest Equities’ subsidiary World Eco Source) sell tens of millions of shares, rather than being operated as a bona fide company with the goal to make products, sell them, and eventually make profit that can be distributed to shareholders. Anyone who owns shares of PacWest Equities as an investment is a fool and deserves to lose their investment. Any traders who cynically play the stock promotion game and bought shares have made a great trade the last two weeks, but many of those traders will lose not only their gains but also their principal when the stock craters in the near future. As per the policy of this website, I do not have any position in PacWest Equities; I also am not aware of anyone who is short the stock at the moment. Note that as of the day this article is published (November 5th, 2012), PacWest Equities (Pinksheets: PWEID) has just completed a 3 for 1 forward split and will trade as PWEID for the next two weeks (it will then revert to PWEI). All share prices and share counts in this article have been adjusted to account for the split. Articles and filings I link to in this article all use pre-split prices and share counts.

Before I lay out my case against PacWest Equities, let us review what happened after my first report on PacWest Equities was published. That report was posted on this website on October 16th prior to the market open, following which the stock opened at $0.22 then hit a high of $0.243 before dropping to a low $0.0467 and closing at $0.0598. While I would love to take credit for causing the drop, the stock was ripe for a fall and tweets (at 10:17am EST) followed by a report by Infitialis on SeekingAlpha accusing the company of illegally registering 465,000,000 shares for sale (155,000,000 shares pre-split) certainly helped to drive the stock lower. In light of its quick drop I decreased my technical price targets for the stock the next day; in hindsight, that was woefully wrong, as the stock bounced all the way back and closed at $0.3467 on Friday. But it is truly rare to see a pump and dump recover from such a steep drop on such serious accusations, and while my near-term price predictions were wrong, all my fundamental criticisms of PacWest Equities remain valid.

I believe Infitialis’ accusations to be credible, and while I am far from a securities law expert, even a small possibility of their accusations being correct makes me drop my estimation of the fundamental value of PacWest to $1,500,000; two-thirds of that value is due to the company being listed on the Pinksheets (rather than being a private company); the remaining $500,000 in value is attributable to the newly-acquired PurGro business (valuing it at one-third of sales). I now believe that all the existing ‘businesses’ owned by PacWest Equities other than PurGro are essentially worthless. I have thus reduced my fundamental price target on PWEI to $0.001 (one-tenth of a cent). Also, Infitialis was not the only person to argue that those shares were illegally issued: “Nodummy” of PromotionStockSecrets.com wrote, “I don’t even think that 155,000,000 newly issued shares [465,000,000 post-split shares] can be free trading throwing up a major red flag.”

After publishing my first report on PacWest I found more a lot negative information about the company: enough to convince me that World Eco Source Corp., the PacWest Equities subsidiary that is the subject of recent press releases and whose former owners owned 465,000,000 shares of PacWest just a month ago (155,000,000 pre-split shares), is not being operated as a bona fide business with the goal of making sales and profits but is simply being operated so as to generate hype that can be used to sell those 465,000,000 shares to naive individual investors. Let me be clear that I do not have evidence that proves that the company is lying in its press releases and it may be telling the truth — but I strongly believe that the company is not being operated with earnest intent to make a profit (utilizing the second definition of bona fide according to Merriam Webster). In the rest of this article I will present a large array of evidence that backs up my belief.

Registered Trademarks?

One thing I noticed is that while the company indicates by using the ® symbol that it has registered trademarks on the terms “MobileFeed” and “MobileFood”, those are not registered trademarks in the United States. Here is an excerpt from the company’s October 25th press release:

 PacWest Equities, Inc. (PINKSHEETS: PWEI) through its subsidiary World Eco Source Corp. announces plans for the initial filing for a U.S. Patent on its highly-advanced MobileFeed® and MobileFood® systems “Feed Tube”, a revolutionary cylinder used to maximize production in their proprietary systems, which would replace the international market’s current use of highly-inefficient tray systems.

A search of the U.S. Patent and Trademark Office records shows no trademarks or servicemarks for “MobileFeed”, “Mobile Feed”, “MobileFood”, or “Mobile Food”. Specifically, I searched those words/phrases in the ‘combined word mark’ field, requiring that all search terms be in the word mark. It is illegal to use the “®” symbol on a mark that is not a registered trademark, although it is acceptable to use that symbol if the trademark is registered in a foreign country. World Eco Source is based in Belize so it is possible that it has registered those trademarks in Belize (I could not find a way to search Belize trademarks online). But as its prior press release announced, it has done business in Hawaii, so to not have registered its trademarks in the United States is at the very least quite stupid. For comparison, I registered the service mark of “Everyday Investor” (the name of my defunct value-investing newsletter) back in 2006 without the aid of an attorney; it only took me a few hours of work and a nominal fee.

Stock Promoters Got the News First

Another thing I noticed about PacWest Equities is that the timing of its first recent press release (as I mentioned in my initial report, this press release was the first time PacWest named the company it had acquired for 465,000,000 shares — 155,000,000 pre-split shares — in April). The press release was issued at 4pm EDT on October 9th. However, the stock promotion emails that I received at 9:30am EDT that same day said the following (bold added by me):

Hi Everyone,

It’s taken some time but we are ready to announce our BRAND NEW HUGE pick. Our past picks have shown our subscribers gains of over 1000% and we believe that this one will blow everyone away. Our new pick is:

PWEI – PacWest Equities Inc.

PacWest Equities Inc. may soon be known as one of the leaders in green technology. PWEI specializes in working with companies to bring together resources needed so they are able to reach the next level.

World EcoSource Corp., a PacWest Equities Inc. company, is a technology based company which has developed the MobileFeed and MobileFood systems helping offset deficient worldwide food production for both animals and humans.

Each system provides turnkey solutions for either the production of fodder for livestock or protein and vegetables for humans.

In recent years due to the global warming, many countries have been affected by water shortages, drought and adverse climatic conditions.

It is estimated that $40 Billion dollars annually is spent on rotating livestock from summer to winter pastures. The MobileFeed system could essentially eliminate this expense completely!

On the human side of things, aquaponic systems are an economical, efficient, and environmentally friendly way to harvest large amounts of vegetables and high-protein fish for healthy dining and nutrition.

The MobileFood system combines the latest technology with the finest in hydroponic growing techniques to bring Organic Vitamin Rich Proteins and Vegetables into a portable trailer.

Keep in mind that we’ve waited a long time to bring you this gem. Our team is dedicated to our subscribers and is committed to bringing winners every time we send a pick!

We are asking all subscribers to put PWEI on your radar immediately and be on the lookout for more exciting updates!

Happy Trading!

The PennyStockHeroes Team

This shows that the stock promoters knew the news about the acquisition before it was officially announced in the press release or in any sort of filing with OTCMarkets.com. This is obviously another huge red flag and it leads me to believe that the former owners of World Eco Source are behind the stock promotion.

Either Nonsensical or Highly-Dilutive Acquisition Payment

I want to return to one of the problems I noted in my last report: the acquisition of PurGro Electronics LLC. PacWest issued a press release announcing that the purchase of PurGro has been completed (here is the earlier press release). Below is the full text of the press release (except for the descriptions of PacWest and World Eco Source and the legal boilerplate):

LAS VEGAS, NV–(Marketwire – Oct 15, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced that, through its wholly owned subsidiary, World EcoSource Corp., it has completed the acquisition of PurGro Electronics, LLC in exchange for cash and stock in a deal valued at US$15 Million in annual sales, along with the rights to 5 projected international patents in China, and 11 projected patents to file in the US. Included in the sale is PurGro Electronics’ current sales volumes, customers, and revenue streams, along with the projected revenue from the US and International patents, which could possibly exceed $50 Million in annual sales.

This purchase could propel World EcoSource to quickly become the leader of technology-based Organic Food Production companies. With unique MobileFeed® and MobileFood® systems for year round organic food production, even in the harshest of climates, the acquisition of PurGro’s technological advances in the automation of hydroponic growing systems make sense in this key acquisition.

PurGro’s proprietary, automated growing solutions virtually eliminate the need for human interaction in the growing cycle, with automatic temperature, humidity, and watering programming. Any variations in the preset optimum growing environment cause the system to immediately send out text and email alerts to prevent a disruption in the growing cycle. When combined with World Eco Source’s proprietary water and electrical conservation techniques, the economic gains make the MobileFeed® and MobileFood® systems sustainable and profitable.

PurGro, unlike World Eco Source, appears to have a real business. But I doubt the business will become more than a niche business. The company has $1.5m in annual sales (reported in the initial press release about the acquisition). Their products actually look useful to me — but being purchased by a glorified shell company with no assets is not the way to improve distribution and greatly grow sales. And PacWest Equities still has not given any details on how many shares were issued to pay for the company nor how much cash was used (if any — as I noted before, PacWest Equities had zero cash and zero current assets on their balance sheet in their most recent filing with OTCMarkets.com, so despite saying that they paid with “cash and stock” they must have paid solely with shares). In an email, I asked PurGro’s President, organizer (pdf) of the company (see its filings with the State of Georgia), and presumable owner, Greg Richter, if he could give any details on the purchase consideration, but he understandably declined to comment on those details.

Considering PacWest Equities’ lack of cash or other current assets, I have to assume that the entire purchase price of PurGro was in restricted shares. The press releases indicated that the deal was valued at $15 million, and the first press release about the purchase was on October 10th. Assuming that the company valued its stock at the prior day’s closing price of $0.0706 ($0.2118 pre-split), a $15m valuation implies that 212,464,587 shares (70,821,529 shares pre-split) were issued to purchase PurGro. That would mean an increase of 15% in PacWest Equities’ share count. Considering that PacWest Equities’ stock had barely traded prior to one day before the acquisition was announced, I believe it much more likely that the payment for PurGro is closer to 500,000,000 shares, somewhat more shares than were issued for the company’s previous acquisitions earlier this year (which had no sales and minimal assets). This would fit with PacWest Equities having increased its authorized share count to 2,000,000,000 shares on October 19th. So I estimate that 500,000,000 shares were issued to pay for PurGro, giving PacWest Equities 1,914,680,429 shares outstanding, resulting in the company having a $663 million market cap as of Friday’s close at $0.3467 ($1.04 pre-split).

Besides the problem of PacWest Equities not disclosing the payment for PurGro, they also added the silly and misleading statement that the acquisition came “along with the rights to 5 projected international patents in China, and 11 projected patents to file in the US”. This is actually less clear than the first press release about the earlier press release about the acquisition that stated that PurGro had “5 international patents pending in China and 11 patents to be filed in the US.” It is just dumb to describe patent applications that have not even been submitted to the USPTO, as I describe below.

Immaterial and Stupid Patent Press Release

PacWest Equities’ press release at 3:06pm EST on October 25th announced plans for filing a patent on its “Feed Tube” (entire press release except for the standard legal boilerplate is quoted below; emphasis added by me):

PacWest Equities, Inc. Announces Plans for Filing for a US Patent on Its MobileFeed® and MobileFood® Systems “Feed Tube” LAS VEGAS, NV–(Marketwire – Oct 25, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) through its subsidiary World Eco Source Corp. announces plans for the initial filing for a U.S. Patent on its highly-advanced MobileFeed® and MobileFood® systems “Feed Tube”, a revolutionary cylinder used to maximize production in their proprietary systems, which would replace the international market’s current use of highly-inefficient tray systems.

World Eco Source Corp. is expected to quickly become the leader of technology-based Organic Food Production companies. With a unique mobile Live Food and Live Fodder solutions for year round Organic Food Production, even in the harshest of climates, the technological advances of the Feed Tube and the automation of hydroponic growing systems should propel them out front in the $50 Billion Organic world food production race.

World Eco Source’s proprietary automated growing solutions virtually eliminate the need for human interaction in the growing cycle, with automatic temperature, humidity, and watering programing. Any variations in the preset optimum growing environment causes the system to immediately send out text and email alerts to prevent a disruption in the growing cycle. When combined with World Eco Source’s proprietary water and electrical conservation techniques, the economic gains make the MobileFeed® and MobileFood® systems sustainable and highly profitable.

The two statements I highlighted in bold are both mind-bogglingly stupid. First, a plan to file for a patent is not material news. A company that wants to keep its investors well-informed would not bother to issue a press release about that — it takes substantial time and money to put together a patent application that is to have any hope of succeeding, so the intent to file a patent application is not worthy of a press release (the submission of a patent application could be material). Even once a patent application has been completed, it can take years for it to be reviewed, revised, and finally accepted. So this press release has little substance but lots of hype — the word ‘patent’ sounds great, even if the company never gets around to filing that patent application.

The second statement that I boldfaced, at the end of the press release, is even more outlandish. The company asserts that its systems are highly profitable, and yet there is no data anywhere on their website or in their filings with OTCMarkets.com about tests of their technology including energy / water inputs and crop yield outputs, information that would be necessary to evaluate the potential profitability of their product. In fact, there are no details anywhere on their MobileFeed / MobileFood  product — all that exists on their website and in their press releases are vague generalities. As I stated in my first report on the company, they have precious few assets, so I have to wonder whether they even have a functional prototype of their product, let alone tests that would demonstrate its economics. In the absence of evidence to the contrary, I do not even believe that their MobileFeed/MobileFood product exists (except perhaps on paper in technical specifications).

No Evidence that Their Sole Customer Exists

As I wrote in my previous report, I could find no evidence that the one customer World Eco Source has actually exists. I researched further and I still have not found any evidence that “K. Hill Livestock” exists on the Big Island of Hawaii. I also sent an email to the company asking for contact information for K. Hill Livestock on October 22 and no one responded to my email. Below I detail how I searched for information on K. Hill Livestock.

First, I performed Google searches. A search for (“K. Hill Livestock” Hawaii -Pacwest) yielded no results. Removing the word “Hawaii” still gave me no results. There were 2000 results if I did not exclude results with “Pacwest” in them. So all the web pages with “K. Hill Livestock” as World Eco Source’s press release spelled the name, also mention PacWest. In other words, they just republished the press release. Next, I looked for ranching industry associations in Hawaii and found two. The Hawaii Cattleman’s Council does not have online information listing the names of members and they did not respond to an email requesting contact info on “K. Hill Livestock”. A website listing producers of grass-fed beef did not list K. Hill Livestock or anything that could reasonably be confused with that name (I searched for grass-fed beef because of this line from the press release: “one trailer can produce 1500 pounds daily of organically grown grass for year round livestock consumption”). The Hawaii Cattle Producers Cooperative Association, which has 50 members who own 58% of the state’s cows and heifers lists its members on its website but does not list any member with a name similar to “K. Hill Livestock.”

Next, I checked out the Hawaii Secretary of State’s business name search and searched for any business with the word “Livestock” in its name (here are all the results). This search finds corporations, LLCs, and trade names. Yet there is nothing with “Hill” and “Livestock” in the name that is registered with the Hawaii Secretary of State. It is possible that “K. Hill Livestock” is not a registered name and instead “K. Hill” is just the owner’s legal name. In this case registration may not be necessary (I am not sure).

It is possible that “K. Hill Livestock” exists and that they ordered five MobileFeed units. But I have found no evidence that they exist and when considering the other evidence that I summarize below that raises significant doubts about World Eco Source, I do not believe that they exist.

All the Red Flags in a Pretty, Numbered List

  1. Two anonymous but highly-respected microcap researchers have alleged that the 465,000,000 free-trading shares (155,000,000 pre-split shares) issued for the acquisition of World Eco Source Corp were illegally issued. “Nodummy” of PromotionStockSecrets.com wrote, “I don’t even think that 155,000,000 [465,000,000 post-split] newly issued shares can be free trading throwing up a major red flag.” On SeekingAlpha.com, “Infitialis” wrote, “we believe that every single free trading share in circulation has been illegally issued.” I find their arguments to be highly persuasive.
  2. There is a massive stock promotion (pump and dump) campaign underway, touting the stock of PacWest Equities (Pinksheets: PWEI). This stock promotion is run by a Belize-based company that discloses that it was paid $500,000 to promote the stock. I discussed the promotion in detail in my first report on PWEI.
  3. PacWest Equities trades on the Pinksheets and does not report to the SEC. This means that it is not required to file timely, audited financial statements. It only reports limited information to OTCMarkets.com and none of its recent financial statements has been audited.
  4. PacWest Equities took six months to issue a press release or even name the company that it acquired with 465,000,000 shares (155,000,000 pre-split shares) back in April 2012. The first mention of what the company acquired with those shares was in a press release on October 9th, 2012. This is for a transaction that grew the company’s share count by 48%.
  5. PacWest issued no press releases for months prior to its stock promotion, despite having acquired World Eco Source (the subject of many of its press releases) in April. Yet since the stock promotion began on the morning of October 9th, the company has issued ten press releases in under four weeks.
  6. The stock promoter Victory Mark Corp. Ltd. touted the news announced in the company’s October 9th press release prior to that news being released by the company in a press release at the end of the day.
  7. There are no details on the company’s website nor in its press release about its MobileFeed / MobileFood products. Only vague generalities are given. Despite this, the company strongly asserts, “When combined with World Eco Source’s proprietary water and electrical conservation techniques, the economic gains make the MobileFeed® and MobileFood® systems sustainable and highly profitable.”
  8. PacWest Equities had negligible assets prior to the World Eco Source acquisition and showed few assets after that acquisition, which means that World Eco Source has few assets.
  9. PacWest Equities has not had any cash or current assets on its balance sheet in the last two quarters, yet it stated in the press release announcing the acquisition of PurGro Electronics LLC that the deal was “in exchange for cash and stock.”
  10. The company has repeatedly issued press releases that lack substance and contain only hype. Good examples of this hype without substance are in the press release announcing the plan to file a patent application and in the description of the “projected patents” that its recent acquisition PurGro Electronics LLC is looking to file in China and in the USA. Speaking of patents, in its November 2nd press release, PacWest Equities refers to its “Patented GroBot Evolution” buts its October 10th press release refers only to “patents pending in China and 11 patents to be filed in the US,” not mentioning any actual US patents.
  11. The one sale reported by PacWest Equities, which is not even a completed sale but rather an “initial purchase order,” is to a company (K. Hill Livestock which is located on “the Big Island of Hawaii”) for which I can find no evidence that it exists. Furthermore, PacWest Equities did not respond to an email I sent on October 22nd asking for contact details for K. Hill Livestock.
  12. PacWest Equities did not give any information on how many shares it issued to pay for the acquisition of PurGro Electronics LLC. This means that there is no way for shareholders to know how dilutive this acquisition is. Meanwhile, PacWest Equities has issued three press releases about the acquisition of PurGro (PR 1, PR 2, PR 3) and how it will integrate PurGro’s products into its MobileFeed / MobileFood products.
  13. At a recent price of $0.3467 per share ($1.04 pre-split) and with 1,414,680,429 post-split shares disclosed as outstanding (as I state above, I believe that 500,000,000 shares were issued to purchase PurGro Electronics LLC), PacWest Equities has at least a $490 million market capitalization and more likely a $663 million market cap. This is despite the company having negligible assets and only $1.5 million in annual revenues (all sales coming from the recently-acquired PurGro Electronics LLC).
  14. World Eco Source has not registered any of its purported trademarks in the United States, despite using the “®” registered trademark symbol. If the company has not registered its “MobileFeed” and “MobileFood” trademarks in another country then it is violating US law by using that symbol. At best, the company was utterly stupid for not registering the trademarks in the USA.
  15. Essentially all the free-trading shares of PacWest Equities were issued to the prior owners of World Eco Source in the acquisition. According to the company’s initial company information and disclosure statement for the quarter ending September 30, 2012 (filed November 1st), there were 468,090,279 free trading shares outstanding (156,030,093 pre-split shares). So all but 3,090,279 of the free-trading shares (1,030,093 pre-split) were issued to the prior owners of World Eco Source. Considering that PacWest Equities’ stock has traded well over 300,000,000 shares (100,000,000 pre-split) over the last month, the prior owners of World Eco Source must be selling a large portion of their shares. Consequently, they must also be the ones who have paid for the stock promotion.

Conclusions

The facts above paint to me a very clear picture of a massive pump and dump that was not simply put together to help some investor in the company sell their shares. Rather, the stock promotion was paid for by company insiders (the former owners of World Eco Source) who timed the promotion to begin at the same time as the company began issuing a flurry of press releases hyping up their business prospects.

Who is selling stock? It has to be the former owners of World Eco Source Corp. There is no other possibility: they are the only ones who own enough free-trading shares. Who paid the promoters? It would only make sense for the people selling shares (the former owners of World Eco Source Corp.) to pay for a stock promotion. What subsidiary company has been the subject of the many of the hyped-up press releases put out by PacWest Equities? World Eco Source Corp.

Has the management of World Eco Source Corp (and PacWest Equities, since the acquisition) run the company in a manner that would be expected to maximize earnings or maximize sales? I believe that the answer to that question is clearly no. Time and again the companies have acted in ways that are not compatible with sensible business practices. There is no detailed information about the MobileFeed / MobileFood system on the company’s website, which would be useful to acquire customers (compare the World Eco Source website with the new subsidiary, PurGro, which has a very detailed website). There are no significant assets that would be necessary to produce any sort of product, let alone produce prototypes and run studies to determine the economic feasibility of their product. There are no booked sales — only one “initial purchase order” from a company that I cannot verify even exists. The company has repeatedly failed to disclose material information to investors (i.e., disclosing the acquisition of World Eco Source in a press release over five months after it occurred and failing to disclose the number of shares issued to pay for the acquisition of PurGro Electronics LLC). Yet PacWest Equities has had no problem issuing ten press releases in four weeks — an action that I believe clearly shows the company is trying to promote its stock rather than its products.

PacWest Equities’ stock will fall over 99% from its current price over the next few months. At that point, some of the investors who believe in the company will complain, asking how the SEC could let something like this happen. The fact of the matter is that it is quite possible that nothing illegal has happened or will happen. While PacWest Equities has failed to disclose useful information, they are not required to because they do not file reports with the SEC. The most important information — the lack of assets and sales — has been disclosed. As long as the company has not lied in its press releases, they have not violated the law. And the former owners of World Eco Source will have enriched themselves by over $30 million (assuming that they sell all 465 million shares at an average price of $0.0667) and they will laugh all the way to the bank.

 

Disclosure: It is the policy of MorningLightMountain LLC for no authors of articles nor anyone connected to the company or their immediate relatives to have positions in any stocks covered on the OTCMicroCapResearch.com website, from the time coverage is initiated until coverage of a company is officially dropped. This ensures that there will be no bias nor conflicts of interest for the authors of articles on this website. Furthermore, information about upcoming research reports will not be given to anyone prior to public notice being given via this website’s Twitter account or on this website itself (this report was announced on Twitter on October 26th after the market close and was published on Monday, November 5th, prior to the market open). OTCMicroCapResearch.com never gets paid to analyze companies.

As of the time this article was published the author was not aware of any of his acquaintances or people in stock chatrooms he participates in having positions long or short in PWEID (he was notified immediately after this article was published by one person in the TimAlerts chatroom he moderates that that person is short PWEID). No member of MorningLightMountain LLC has any relationship with PromotionStockSecrets.com or Infitialis.

For the archives: PacWest Equities’ press releases

October 9, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
October 09, 2012 16:00 ET
PacWest Equities, Inc. Acquires World Eco Source Corp.
LAS VEGAS, NV–(Marketwire – Oct 9, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced that it has acquired World Eco Source Corp. of Belize City, Belize. The stock symbol of PWEI will not be changed. World Eco Source Corp. is a technology-based company which has developed the MobileFeed® and MobileFood® systems helping offset deficient, worldwide food production for both animals and humans.

The World Eco Source MobileFeed® and MobileFood® units provide turnkey systems for either the production of livestock-based consumables or human-based protein and vegetable consumables. The MobileFeed® units are truly a global sustainable, green life cycle farming system. Using both solar power and water conserving growing systems, one trailer can produce 1,500 pounds daily of organically grown grass for year round livestock consumption, thus lowering feed costs by 80% while producing Certified Organic, Grass Fed livestock and increasing profitability of the final product.

The MobileFood® units enable the rapid production of certified, organic vegetables and proteins for humans through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice-verse. Raising Tilapia side-by-side with vegetables and using the same water from the fish to fertilize the greens is not something new, but by combining the hydroponic know-how with World Eco Source patented technologies, the outputs have finally become commercially feasible.
About PacWest Equities, Inc.
PacWest Equities, Inc. specializes in working with under performing companies and bringing together the resources needed for them to attain financial stability and growth. Our focus is on companies showing a positive upside while struggling to bring new bio-technologies and unique products to market.
Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the Company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the Company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not, undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

October 10, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
October 10, 2012 09:00 ET
PacWest Equities, Inc. Announces Letter of Intent to Acquire PurGro Electronics, LLC for Cash and Stock Valued at US$15M
LAS VEGAS, NV–(Marketwire – Oct 10, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced that it has entered into a Letter of Intent to purchase PurGro Electronics, LLC in exchange for cash and stock, in a deal valued at US$15M. Included in the proposed transaction are PurGro’s current sales volume of $1.5M annually along with 5 international patents pending in China and 11 patents to be filed in the US.

This acquisition could propel the Company and its wholly owned subsidiary, World Eco Source Corp., to quickly become the leader of technology-based Organic Food Production companies. When coupled with World Eco Source’s unique MobileFeed® and MobileFood® systems for year round organic food production, even in the harshest of climates, PurGro’s technological advances in the automation of hydroponic growing systems make sense in this key acquisition.

PurGro’s proprietary, automated growing solutions virtually eliminate the need for human interaction in the growing cycle, with automatic temperature, humidity, and watering programming. Any variations in the preset optimum growing environment cause the system to immediately send out text and email alerts to prevent a disruption in the growing cycle. When combined with World Eco Source’s proprietary water and electrical conservation techniques, the economic gains make the MobileFeed® and MobileFood® systems sustainable and profitable.

About PacWest Equities, Inc.
PacWest Equities, Inc. specializes in working with under performing companies and bringing together the resources needed for them to attain financial stability and growth. Our focus is on companies showing a positive upside while struggling to bring new bio-technologies and unique products to market.
About World Eco Source Corp.
The World Eco Source MobileFeed® and MobileFood® units provide turnkey systems for either the production of livestock-based consumables or human-based protein and vegetable consumables. The MobileFeed® units are truly a global sustainable, green life cycle farming system. Using both solar power and water conserving growing systems, one trailer can produce 1,500 pounds daily of organically grown grass for year round livestock consumption, thus lowering feed costs by 80% while producing Certified Organic, Grass Fed livestock and increasing profitability of the final product.
The MobileFood® units enable the rapid production of certified, organic vegetables and proteins for humans through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice versa. Raising Tilapia side-by-side with vegetables and using the same water from the fish to fertilize the greens is not something new, but by combining the hydroponic know-how with World Eco Source patented technologies, the outputs have finally become commercially feasible.
Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the Company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the Company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not, undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

October 11, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
October 11, 2012 13:35 ET
PacWest Equities, Inc. Announces Its Entry Into the $50 Billion a Year Organic Food Production Market Through Its Wholly Owned Subsidiary, World Eco Source Corp.
LAS VEGAS, NV–(Marketwire – Oct 11, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced its entry into the $50 Billion a year Organic Food Production market with an initial purchase order for 5 units of its wholly owned subsidiary World Eco Source Corp.’s MobileFeed® trailers to be delivered on the Big Island of Hawaii for K. Hill Livestock, a family-owned cattle and swine operation. “Today signals our first foray into this exciting, worldwide market, as we are now able to bridge the large gap between ‘Organic’ and ‘Grass-fed’ beef, finally giving consumers what they want, organically grown, grass fed livestock delivered to their dinner table in an economical fashion,” stated CEO Geoffrey Bagatelos.

With the purchase of the units, K. Hill Livestock will now supply a self- sustainable feed supply to hobby animals as well as livestock for consumption. Hawaii has limited resources available for large scale feeding operations that force the import of expensive feed stock, and this agreement will allow for ample amount of feed to supply a large herd and stabilize fluctuating expenses of import due to volatile fuel costs, a problem faced by most of the worldwide market in today’s economy.

The World Eco Source MobileFeed® and MobileFood® units provide turnkey systems for either the production of livestock-based consumables or human-based protein and vegetable consumables, in even the harshest growing environments. The MobileFeed® units are truly a sustainable green life cycle farming system using solar powered and water conservation growing systems.

About PacWest Equities, Inc.
PacWest Equities, Inc. specializes in working with under performing companies and bringing together the resources needed for them to attain financial stability and growth. Our focus is on companies showing a positive upside while struggling to bring new bio-technologies and unique products to market.
About World Eco Source Corp.
The World Eco Source MobileFeed® and MobileFood® units provide turnkey systems for either the production of livestock-based consumables or human-based protein and vegetable consumables. The MobileFeed® units are truly a global sustainable, green life cycle farming system. Using both solar power and water conserving growing systems, one trailer can produce 1,500 pounds daily of organically grown grass for year round livestock consumption, thus lowering feed costs by 80% while producing Certified Organic, Grass Fed livestock and increasing profitability of the final product.
The MobileFood® units enable the rapid production of certified, organic vegetables and proteins for humans through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice versa. Raising Tilapia side-by-side with vegetables and using the same water from the fish to fertilize the greens is not something new, but by combining the hydroponic know-how with World Eco Source patented technologies, the outputs have finally become commercially feasible.
Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the Company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the Company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not, undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

October 15, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
October 15, 2012 17:54 ET
PacWest Equities, Inc. Completes Acquisition of PurGro Electronics, LLC Including Approximately US$15 Million in Annual Sales and 11 Potential Revolutionary US Patents
LAS VEGAS, NV–(Marketwire – Oct 15, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced that, through its wholly owned subsidiary, World EcoSource Corp., it has completed the acquisition of PurGro Electronics, LLC in exchange for cash and stock in a deal valued at US$15 Million in annual sales, along with the rights to 5 projected international patents in China, and 11 projected patents to file in the US. Included in the sale is PurGro Electronics’ current sales volumes, customers, and revenue streams, along with the projected revenue from the US and International patents, which could possibly exceed $50 Million in annual sales.

This purchase could propel World EcoSource to quickly become the leader of technology-based Organic Food Production companies. With unique MobileFeed® and MobileFood® systems for year round organic food production, even in the harshest of climates, the acquisition of PurGro’s technological advances in the automation of hydroponic growing systems make sense in this key acquisition.

PurGro’s proprietary, automated growing solutions virtually eliminate the need for human interaction in the growing cycle, with automatic temperature, humidity, and watering programming. Any variations in the preset optimum growing environment cause the system to immediately send out text and email alerts to prevent a disruption in the growing cycle. When combined with World Eco Source’s proprietary water and electrical conservation techniques, the economic gains make the MobileFeed® and MobileFood® systems sustainable and profitable.

About PacWest Equities, Inc.
PacWest Equities, Inc. specializes in working with underperforming companies and bringing together the resources needed for them to attain financial stability and growth. Our focus is on companies showing a positive upside while struggling to bring new bio-technologies and unique products to market.
About World Eco Source Corp.
World EcoSource Corp. is a technology-based company which has developed the MobileFeed® and MobileFood® systems helping offset deficient worldwide food production for both animals and humans.
The World EcoSource MobileFeed® and MobileFood® systems provide turnkey systems for either the production of livestock-based consumables or human-based protein and vegetable consumables. The MobileFeed® units are truly a global sustainable, green life cycle farming system. Using both solar power and water conserving growing systems, one trailer can produce 1,500 pounds daily of organically grown grass for year round livestock consumption, thus lowering feed costs by 80% while producing Certified Organic, Grass Fed livestock and increasing profitability of the final product.
The MobileFood® units enable the rapid production of certified, organic vegetables and proteins for humans through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice versa. Raising Tilapia side-by-side with vegetables and using the same water from the fish to fertilize the greens is not something new, but by combining the hydroponic know-how with World Eco Source patented technologies, the outputs have finally become commercially feasible.
Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the Company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the Company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not, undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

October 19, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
October 19, 2012 11:31 ET
World Eco Source Foods Corp. Unit of PacWest Equities, Inc. Announces Initial Purchase Order for up to 5 MobileFeed® Trailers in a Deal Worth Almost $1 Million USD
LAS VEGAS, NV–(Marketwire – Oct 19, 2012) -  PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced that its subsidiary, World Eco Source Corp., has received an initial purchase order for 5 units of its proprietary MobileFeed® trailers to be delivered on the Big Island of Hawaii for K. Hill Livestock, a family cattle and swine operation. With the purchase of the units, K. Hill Livestock will now supply a self- sustainable feed supply to hobby animals as well as livestock for consumption. Hawaii has limited resources available for large scale feeding operations that force the import of expensive feed stock, and this agreement will allow for ample amount of feed to supply a large herd and stabilize fluctuating expenses of import due to volatile fuel costs.

The World Eco Source MobileFeed® and MobileFood® units provide turnkey systems for either the production of livestock based consumables or human based protein and vegetable consumables. The MobileFeed® units are truly a sustainable green life cycle farming system. Using solar powered and water conservation growing systems, one trailer can produce 1500 pounds daily of organically grown grass for year round livestock consumption, lowering feed costs by 200% while producing Certified Organic, Grass Fed livestock, increasing profitability of the final product.

The MobileFood® units enable the rapid production of certified organic vegetables and proteins for humans through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice versa. Growing tilapia side by side with vegetables and using the same water from the fish to fertilize the greens is not something new, but by combining the hydroponic know-how with World EcoSource patented technologies, the outputs have finally become commercially feasible.

About PacWest Equities, Inc.
PacWest Equities, Inc. specializes in working with underperforming companies and bringing together the resources needed for them to attain financial stability and growth. Our focus is on companies showing a positive upside while struggling to bring new bio-technologies and unique products to market.
About World Eco Source Corp.
World Eco Source Foods has developed an environmentally conscious, Certified Organic, Mobile Food and Feed Solutions system to help offset the growing problem of worldwide food production, using a fraction of the water of typical crops in a hydroponic, solar powered environment to create a truly sustainable green life cycle farming system. Using solar powered water conservation growing systems, one trailer can produce 1500 pounds daily of organically grown grass for year round livestock consumption, lowering feed costs by 200% while producing Certified Organic, Grass Fed livestock, increasing profitability of the final product. The Certified Organic Hydroponic Human Food Systems enable the rapid production of vegetables and proteins through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice versa.
Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the Company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the Company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

October 22, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
October 22, 2012 14:00 ET
PacWest Equities, Inc. Proposes 3-for-1 Forward Split
LAS VEGAS, NV–(Marketwire – Oct 22, 2012) -  PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced that it has filed with the Financial Industry Regulatory Authority, Inc. (“FINRA”) a request for a 3-for-1 forward split of its Common Stock. When approved by FINRA, the forward split will have a record date of October 18, 2012.

About PacWest Equities, Inc.
PacWest Equities, Inc. specializes in working with under performing companies and bringing together the resources needed for them to attain financial stability and growth. Our focus is on companies showing a positive upside while struggling to bring new bio-technologies and unique products to market.
About World Eco Source Corp.
World Eco Source Corp., a wholly owned subsidiary of PacWest Equities, has developed an environmentally conscious, Certified Organic, Mobile Food and Feed Solutions system to help offset the growing problem of worldwide food production, using a fraction of the water of typical crops in a hydroponic, solar powered environment to create a truly sustainable green life cycle farming system. Using solar powered water conservation growing systems, one trailer can produce 1500 pounds daily of organically grown grass for year round livestock consumption, lowering feed costs by 200% while producing Certified Organic, grass-fed livestock, increasing profitability of the final product. The Certified Organic Hydroponic Human Food Systems enable the rapid production of vegetables and proteins through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice versa.
Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the Company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the Company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

October 23, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
October 23, 2012 08:00 ET
PacWest Equities, Inc. Provides Additional Details Pertaining to Recently Announced Dividend
LAS VEGAS, NV–(Marketwire – Oct 23, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) (the “Company”) is pleased to provide further details pertaining to the recently announced dividend (a/k/a forward split) to shareholders of its common stock.

The Company has set the record date for the dividend as at October 18, 2012. However, the dividend does not become effective until such time as approved by FINRA. In the meantime, the Company’s shares of common stock will continue to trade on a pre-dividend basis.

On the date that the dividend is declared effective by FINRA, each shareholder of record will be entitled to exchange their existing shares for three new shares. As the dividend shares are payable upon surrender, it is anticipated that registered brokerage firms will have the dividend transaction processed automatically in customer accounts shortly after FINRA declares the dividend effective. Shareholders holding physical certificates representing their shares are NOT required to submit their certificates for exchange to receive full credit for dividend shares. Physical certificate holders may contact the Company’s transfer agent, First American Stock Transfer Inc., to facilitate the exchange of their old certificates for post-dividend shares should they wish to do so.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities.

Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to’” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

October 25, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
October 25, 2012 15:06 ET
PacWest Equities, Inc. Announces Plans for Filing for a US Patent on Its MobileFeed® and MobileFood® Systems “Feed Tube”
LAS VEGAS, NV–(Marketwire – Oct 25, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) through its subsidiary World Eco Source Corp. announces plans for the initial filing for a U.S. Patent on its highly-advanced MobileFeed® and MobileFood® systems “Feed Tube”, a revolutionary cylinder used to maximize production in their proprietary systems, which would replace the international market’s current use of highly-inefficient tray systems.

World Eco Source Corp. is expected to quickly become the leader of technology-based Organic Food Production companies. With a unique mobile Live Food and Live Fodder solutions for year round Organic Food Production, even in the harshest of climates, the technological advances of the Feed Tube and the automation of hydroponic growing systems should propel them out front in the $50 Billion Organic world food production race.

World Eco Source’s proprietary automated growing solutions virtually eliminate the need for human interaction in the growing cycle, with automatic temperature, humidity, and watering programing. Any variations in the preset optimum growing environment causes the system to immediately send out text and email alerts to prevent a disruption in the growing cycle. When combined with World Eco Source’s proprietary water and electrical conservation techniques, the economic gains make the MobileFeed® and MobileFood® systems sustainable and highly profitable.

Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to’” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

November 2, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
November 02, 2012 11:40 ET
PacWest Equities, Inc. Announces Integration of Its Patented GroBot Evolution With Web Server, Wi-Fi Hotspot and Wireless Interface for Its Advanced MobileFeed® and MobileFood® Systems
LAS VEGAS, NV–(Marketwire – Nov 2, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) announced today the integration of its Patented GroBot Evolution, a completely automated computerized growing controller, with integrated Web Server, Wi-Fi Hotspot and Wireless Interface, in all of World Eco Source’s MobileFeed® and MobileFood® trailer system applications. “Being able to completely automate our already advanced growing environment will not only greatly reduce the labor factor in growing operations worldwide, but it will dramatically reduce the element of human error from the growing cycle, making for more consistent yields,” stated Geoffrey Bagatelos, President of PacWest Equities, Inc.

World Eco Source’s proprietary automated growing solutions virtually eliminate the need for human interaction in the growing cycle, with automatic temperature, humidity, and watering programming. Any variations in the preset optimum growing environment causes the system to immediately send out text and email alerts to prevent and disruption in the growing cycle. When combined with World Eco Source’s proprietary water and electrical conservation techniques, the economic gains make the MobileFeed® and MobileFood® systems trailers even more sustainable and profitable.

About World Eco Source Corp.
World Eco Source Corp., a wholly owned subsidiary of PacWest Equities, Inc., is a technology-based company which has developed the MobileFeed® and MobileFood® systems helping offset deficient worldwide food production for both animals and humans.
The World Eco Source MobileFeed® and MobileFood® systems provide turnkey systems for either the production of livestock based consumables or human based protein and vegetable consumables. The MobileFeed® system for animals is a truly sustainable green life cycle farming system. Using solar powered water conservation growing systems, one trailer can produce 1500 pounds daily of organically grown grass for year round livestock consumption, lowering feed costs by 200% while producing certified organic, grass fed livestock, increasing profitability of the final product.
The MobileFood® system for humans enables the rapid production of certified organic vegetables and proteins for humans through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice versa. Growing tilapia side by side with vegetables, and using the same water from the fish to fertilize the greens is not something new, but by combining the hydroponic know-how with World Eco Source patented technologies, the outputs have finally become commercially feasible.
World Eco Source Corp. is expected to quickly become the leader of technology-based Organic Food Production companies. With a unique mobile Live Food and Live Fodder solutions for year round Organic Food Production, even in the harshest of climates, the technological advances of the Feed Tube and the automation of hydroponic growing systems should propel them out front in the $50 Billion Organic world food production race.
Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words or phrases “would be,” “would allow,” “intends to’” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

November 2, 2012 (on MarketWire)

SOURCE: PacWest Equities, Inc.
November 02, 2012 17:45 ET
PacWest Equities, Inc. Announces Effectiveness of Forward Split/Dividend of Its Common Stock
LAS VEGAS, NV–(Marketwire – Nov 2, 2012) -  PacWest Equities, Inc. (PINKSHEETS: PWEI) (the “Company”) is pleased to provide further details pertaining to the recently announced 3-for-1 dividend (a/k/a forward split) to shareholders of its common stock.

The Financial Industry Regulatory Authority, Inc. (“FINRA”) has approved this action effective the opening of trading November 5, 2012. The stock will trade under the temporary symbol “PWEID” for a period of 20 business days after which it will revert to the symbol “PWEI”.

Although the Company previously set the record date for the dividend as at October 18, 2012, the payment date as declared by FINRA has been for the close of business today, November 2, 2012. All shareholders owning shares at the close of business today, November 2, 2012, will be eligible to receive the dividend.

As the dividend shares are payable upon surrender, it is anticipated that registered brokerage firms will have the dividend transaction processed automatically in customer accounts shortly after FINRA declares the dividend effective. Shareholders holding physical certificates representing their shares are NOT required to submit their certificates for exchange to receive full credit for dividend shares. Physical certificate holders may contact the Company’s transfer agent, First American Stock Transfer Inc., to facilitate the exchange of their old certificates for post-dividend shares should they wish to do so.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities.

Safe Harbor
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.The words or phrases “would be,” “would allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “anticipate,” “expect,” “estimate,” “project,” “indicate,” “could,” “potentially,” “should,” “believe,” “considers,” or similar expressions are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These include the Company’s historic lack of profitability, end user customer acceptance and actual demand, which may differ significantly from expectations, the need for the Company to manage its growth, the need to raise funds for operations and other risks within the regulation of the industry. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its future performance. The Company does not undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

Disclosure: It is the policy of OTCMicroCapResearch.com to only publish research when neither the author nor any member of its owner, MorningLightMountain LLC, has a direct or beneficial interest in any account that has any position long or short in the securities discussed. OTCMicroCapResearch.com never gets paid to analyze companies and nobody except for the author and editor of this website is notified of research to be published on this website prior to the time it is published or announced on Twitter. As of the time this article was published the author was not aware of anyone in stock chatrooms he participates in that are long or short PWEI.

Coverage initiated on PacWest Equities (OTCBB: PWEI) — Strong sell, price target $0.06

Update 10/17/2012: Following the huge crash in PWEI stock yesterday I have greatly reduced my technical price targets; my two-week price target is now $0.04 and my one-month price target is now $0.01.

For my inaugural research report, OTCMicroCapResearch.com reports on PacWest Equities Inc. (Pinksheets: PWEI). This company is one of the most blatantly worthless companies that I have ever seen and the only reason the stock has traded significant volume recently is due to a $500,000 stock promotion (pump and dump) campaign. At a closing price yesterday of $0.665 and with 471,560,143 shares outstanding, the company has a market capitalization of $313 million, yet by my estimation it is worth at best $5 million (and that is being generous). Sanity will soon return to the stock price and current shareholders will likely face losses of 90% over the next month. This report will cover the pump and dump campaign and the company’s fundamentals. I will not discuss the various people who have been involved in the company: interested readers should consult this great article on PromotionStockSecrets.com that delves into the history of the company since it was incorporated. The anonymous person or persons behind Infitialis also have a report on PacWest coming soon [Edit 2:15pm EST 10/16/2012: Infitialis article published on SeekingAlpha at 2:20pm]; Infitialis has done great research on past pump and dumps such as Chimera Energy (OTCBB: CHMR). (This website has no connection to either Infitialis or PromotionStockSecrets.com.)

The Pump and Dump

Prior to four days ago, PacWest Equities Inc. (OTCBB: PWEI) had barely traded. Yet the stock traded over 90 million shares on October 9th. Did the company have some blockbuster news? No. While the company announced an acquisition that day, the press release was not sent out until the market close. The sole reason for the stock trading so much is that it has been promoted aggressively by a stock promoter by the name of Victory Mark Corporation Limited (hereafter referred to as ‘Victory Mark’) that purports to be based in Belize. The three websites of Victory Mark are PreferredPennyStocks.com, SelectPennyStocks.com, and HeroPennyStocks.com. These websites have advertised heavily on major search engines and elsewhere on the internet to get people to sign up for their stock touting newsletter, starting from the beginning of this year. Victory Mark discloses that they were paid $500,000 to promote PacWest. As with all pump and dumps, the purpose of the promotion is to find idiots to buy the stock so that large shareholders can sell their shares.

The compensation disclosure on PWEI:

Selectpennystocks.com is owned and operated by Victory Mark Corp LTD, 4 Lords Bank, Ladyville, Belize City, Belize. Questions regarding this website may be sent to info@Selectpennystocks.com. The company expects to receive $500,000 USD from a third party for publication of this information.

A screenshot of one of Victory Mark’s Google ads.


Victory Mark ad for PWEI on a Youtube video page (click to enlarge)

The first stock promotion emails I received on PWEI came at 9:30am on October 9th, 2012 with the stock at $0.158. As I write this the stock price ended the fourth day of the stock promotion at $0.665. At that price, the company has a $313 million market capitalization. The stock has already seen a huge price increase on extraordinary trading volume and it has already reached the highest peak market cap of any Victory Mark stock promotion (excepting the promotions that also involved Awesomepennystocks, another major stock promoter, which is not promoting PacWest). It is my estimation that the stock has hit its peak or is close to hitting its peak. Obviously I have no crystal ball and in the next few days the stock could do anything. But as with prior pumps by the same stock promoters, I expect the stock to drop 80% or more in the week after its peak. To be conservative, I will estimate that PWEI will take two weeks to drop and that it will only drop 60% over that time period. Therefore, my two-week technical price target is $0.26. My one-month technical price-target is $0.06, which is a similar percentage drop to the past Victory Mark Corp. Ltd. stock promotions.

Below are details on the other stocks that Victory Mark Corp. Ltd. has promoted by itself (they promoted NSRS, SNPK, and GWBU along with Awesomepennystocks.com). Marvel at the huge volume that this stock promoter brings and then the total destruction wrought upon witless investors and traders.

RARS - Rarus Technologies. The first emails I received promoting this stock arrived at 1:44pm EST on May 9th, 2012. Just prior to the stock promotion emails being sent out the stock traded at $0.32. The stock peaked at $0.59 that day, giving it a peak market cap of $256 million. By the end of the fourth day of the stock promotion, the stock was at $0.097, down 83% from its peak.

The compensation disclosure on RARS:

Selectpennystocks.com is owned and operated by Victory Mark Corp LTD, 4 Lords Bank, Ladyville, Belize City, Belize. Questions regarding this website may be sent to info@Selectpennystocks.com. The company expects to receive $20,000 USD from a third party for publication of this information.

CTDT – Sweet Water Resources. This company was promoted right after a ticker change from SWTR. The first promotion emails arrived in my inbox at 9:35am EST on July 9th, 2012 when the stock was at $0.105. The stock peaked at $0.41 four days later. At its peak price the company had a market cap of $29.9 million. Just six days after its peak, CTDT closed at $0.03, down 92% from its peak.

The compensation disclosure on CTDT:

Selectpennystocks.com is owned and operated by Victory Mark Corp LTD, 4 Lords Bank, Ladyville, Belize City, Belize. Questions regarding this website may be sent to info@Selectpennystocks.com. The company expects to receive $500,000 USD from a third party for publication of this information.

MDMC – Marine Drive Mobile. I received the first promotion emails on this company at 9:34am EST on July 23rd, 2012, when the stock was at $0.16. The stock price gradually moved up for almost two weeks before hitting a high of $0.505 on the same day it dropped precipitously. At its peak the company had a market cap of $19.3 million. Four days after hitting its peak, MDMC closed at $0.07, down 86% from its peak.

The compensation disclosure on MDMC:

Selectpennystocks.com is owned and operated by Victory Mark Corp LTD, 4 Lords Bank, Ladyville, Belize City, Belize. Questions regarding this website may be sent to info@Selectpennystocks.com. The company expects to receive $500,000 USD from a third party for publication of this information.

The trend from these prior promotions is quite clear: the stocks rise for awhile, usually a few days (but as few as one day in the case of RARS or as many as ten days with MDMC) before dropping precipitously and then continuing to drop until down more than 90% from its peak in a month.

Fundamental Analysis

The most important part of any fundamental analysis of PWEI is to note that the company does not file financial statements with the SEC. It has filed some limited financial statements with OTCMarkets.com, but those statements are lacking in detail. The lack of SEC filings is a huge red flag, and I cannot overemphasize that point. This means that the company does not have to have audited financial statements (and it doesn’t — the annual report filed in March, unlike annual reports filed with the SEC, is unaudited). Large shareholders do not need to file with the SEC when they sell stock, so there is no way to tell if large shareholders are unloading their shares onto the gullible public. Also, the company does not have to inform shareholders in a timely manner of material news — while the company would break the law by lying in press releases, it is free to keep shareholders in the dark. I will come back to this point in a little bit.

The most recent financial information the company has filed is an interim financial report published on October 11, 2012 that covers the quarter ending June 30, 2012. Per that report, as of June 30, 2012 the company had $476,160 in ‘other assets’, its only assets, and $23,582 in current liabilities, its only liabilities. The company had no revenue in the quarter and a net loss of $23,582. This is not what the financial statements of a $313 million company look like. But PacWest’s balance sheet is much worse than it looks at first glance. The company has no current assets (cash and bank accounts and accounts payable) and all its assets are simply lumped together as “other assets” with no details and no description elsewhere in the quarterly report. This lack of detail is worse than what I would expect from a $10,000 single-owner private company, let alone a public company with a $300 million market cap.

Going back to PWEI’s 2011 annual report gives details on 300 million shares the company issued for acquisitions and joint ventures. First let us look at the acquisition of ACT Clean Technologies, which was another publicly-traded company (on the pinksheets). This was paid for with 150,000,000 restricted shares. ACT Clean Technologies was involved in a pump and dump back in 2010 that led to the SEC suspending trading in its shares for two weeks. Due to the sordid past of ACT Clean Technologies and its lack of significant assets or sales in 2010 when it last filed financial statements, I ascribe zero value to its assets.

The other acquisition was of e-Green Marketing, for which PacWest paid 100,000,000 restricted shares. The acquisition of e-Green Marketing brought the company the Green Rhino all-purpose cleaning product. Then PacWest entered into a joint venture with Symbiotech to market Green Rhino to the military. While PacWest does have some nice-sounding copy about the great market opportunities they are pursuing with the acquisition and joint ventures, they are either poor opportunities (Green Rhino cleaner is in the brutally competitive all-purpose cleaner market) or vague. From the annual report:

For obvious reasons, we particularly favor and focus on the expanding “green market” products as a key component of our PacWest strategy. Our most recent example of this program is the acquisition of Green Rhino, Inc. and our partnering their products with other industry leaders and marketing /distribution programs.

Specifically, we have found Green Rhino™ provides an excellent product line of powerful biodegradable all-­‐purpose, non-­‐toxic cleaners that can be coupled with a heavy duty equipment parts and military weapons washing systems using our proprietary bio-­‐ remediation process. Green Rhino™ will be launching mid-­‐2012 to key markets nationally and simultaneously exposing these products to the international markets.

Pac West Equities is also initiating Joint Ventures with e-­‐Green Marketing and Symbiotech.

• e-­‐Green Marketing specializes in bringing clean technology and eco-­‐friendly products to market with the understanding that while the social and ecological benefits of going green are important so is the need to be profitable.

• Symbiotech is a Service Disabled Veteran Owned business formed to identify gaps in technology, primarily in government agencies, and match existing or emerging technologies to fill those gaps.

What exactly did PacWest get for 300 million shares? Unfortunately we cannot know for sure — the company has no filings between November 2010 and its annual report filed on March 20, 2012 and it does not give a detailed description of the assets of the purchased companies.  The company has had zero revenues through June 30, so sales of Green Rhino must be nil. And as mentioned above, the company’s total assets have a book value of less than $500,000, so the acquired companies must not have had much in the way of assets. Given the lack of sales and assets, I ascribe a very charitable value of $1,000,000 to the Green Rhino assets and ventures.

PacWest’s quarterly report for the quarter ended June 30 mentions another acquisition the company made: the company issued 155,000,000 shares for the acquisition of “another company” in April. The only details of this deal that was hugely dilutive to shareholders was this sentence: “In April 2012 the company again acquired another company for 155,000,000 shares of common stock.” Furthermore, these shares are described as free-trading shares (on page 14) whereas the shares for the earlier acquisitions were restricted shares. This acquisition was not described until the company put out a press release six months later, on October 9th! Even then, few concrete details were given. Needless to say, this is a profound failure to notify investors of a material event in a timely manner. What exactly did the company acquire? According to the press release (only the description of PacWest and legal boilerplate are omitted from the quote below):

LAS VEGAS, NV–(Marketwire – Oct 9, 2012) – PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced that it has acquired World Eco Source Corp. of Belize City, Belize. The stock symbol of PWEI will not be changed. World Eco Source Corp. is a technology-based company which has developed the MobileFeed® and MobileFood® systems helping offset deficient, worldwide food production for both animals and humans.

The World Eco Source MobileFeed® and MobileFood® units provide turnkey systems for either the production of livestock-based consumables or human-based protein and vegetable consumables. The MobileFeed® units are truly a global sustainable, green life cycle farming system. Using both solar power and water conserving growing systems, one trailer can produce 1,500 pounds daily of organically grown grass for year round livestock consumption, thus lowering feed costs by 80% while producing Certified Organic, Grass Fed livestock and increasing profitability of the final product.

The MobileFood® units enable the rapid production of certified, organic vegetables and proteins for humans through life cycle harmonic integration of fish farms and hydroponic vegetables, with one half of the system feeding/fertilizing the other half, and vice-verse. Raising Tilapia side-by-side with vegetables and using the same water from the fish to fertilize the greens is not something new, but by combining the hydroponic know-how with World Eco Source patented technologies, the outputs have finally become commercially feasible.

Whatever it is, it sounds great! But there are few details in the press release or on the company’s website. With the company’s ticker symbol on its homepage, World Eco Source’s website seems to be designed to sell the company’s stock rather than its products. A follow-up press release announcing a purchase order for one of its MobileFeed trailers contained few other details about the company’s products. Furthermore, I could not find any evidence of the existence of the customer, K. Hill Livestock. While I am not saying that they do not exist, they are most likely not a large operation (see this listing of large producers of grass-fed cattle in Hawaii).

Anytime I see a company with brilliant-sounding products that just happens to be a penny stock company, I take a step back and ask myself what kind of resources would be necessary to develop and manufacture such a fabulous product? The answer is usually a hefty sum of money, far more than that penny stock company has. And in cases like this where a penny stock company acquires another company with a supposedly great product, the question becomes this: if World Eco Source Corp. has such a great technology and potential business, why did they sell themselves to a company with almost no assets that does not even report financials to the SEC? One could argue that this is a reverse merger and World Eco Source Corp. just wanted PacWest’s public listing, but there are plenty of fully SEC-reporting companies available for such reverse mergers, and the prior owners of World Eco Source could have easily gotten a much better deal than receiving only 1/3 of the shares of the public company they reverse-merged into (which is the proportion of PacWest’s shares that they received). So if World Eco Source’s product were truly great, they would have many other options available to them, such as obtaining venture capital funding, selling out to a larger company, or reverse-merging into an SEC-reporting company where they could end up with more than 1/3 of the shares. For these reasons, I am highly dubious of World Eco Source having any viable business. For the sake of argument, especially considering how PacWest as a whole has under $500,000 in total assets, I ascribe a value of $1,000,000 to World Eco Source.

PacWest put out another press release the day after its press release about the World Eco Source acquisition. I really cannot overemphasize how absurd the press release is. Below is the relevant part of the press release (I exclude only the descriptions of PacWest and World Eco Source and the legal boilerplate):

LAS VEGAS, NV–(Marketwire – Oct 10, 2012) – PacWest Equities, Inc. ( PINKSHEETS : PWEI ) today announced that it has entered into a Letter of Intent to purchase PurGro Electronics, LLC in exchange for cash and stock, in a deal valued at US$15M. Included in the proposed transaction are PurGro’s current sales volume of $1.5M annually along with 5 international patents pending in China and 11 patents to be filed in the US.

This acquisition could propel the Company and its wholly owned subsidiary, World Eco Source Corp., to quickly become the leader of technology-based Organic Food Production companies. When coupled with World Eco Source’s unique MobileFeed® and MobileFood® systems for year round organic food production, even in the harshest of climates, PurGro’s technological advances in the automation of hydroponic growing systems make sense in this key acquisition.

PurGro’s proprietary, automated growing solutions virtually eliminate the need for human interaction in the growing cycle, with automatic temperature, humidity, and watering programming. Any variations in the preset optimum growing environment cause the system to immediately send out text and email alerts to prevent a disruption in the growing cycle. When combined with World Eco Source’s proprietary water and electrical conservation techniques, the economic gains make the MobileFeed® and MobileFood® systems sustainable and profitable.

PacWest has already shown in its financial statements that it has zero cash — and not just zero cash, but zero current assets (anything that can be quickly turned into cash). World Eco Source must also have zero cash because that is the company that PacWest acquired back in April for 155,000,000 shares, and if it had cash then that would have shown up on PacWest’s balance sheet as of the most recent quarterly report (June 30th). The company has not indicated that it has raised capital since then. So either the cash exists and PacWest has neglected to inform shareholders where it came from, or the cash doesn’t exist. If the cash doesn’t exist, then the acquisition cannot be in both stock and cash and the press release is a lie. So the best case scenario is that the company has neglected to inform shareholders of a capital raise that would likely have been quite dilutive.

Even despite all these questions, I will assign a multiple of two times sales to PurGro to value it at $3m. Adding this to $1m for the Green Rhino assets and $1m for World Eco Source gives me a sum of the parts valuation of PacWest of $5,000,000 (for a stock price of $0.01). Given its current market cap of $313,000,000, PacWest stock would have to drop 98% before I could consider it fairly valued. And keep in mind that my estimation of value is very generous, especially considering the paucity of information on PacWest and its acquisitions. Simply put, there is so little information available about PacWest or the companies it has acquired that attempting to value it is like playing pin the tail on the donkey on a football field. I recommend that investors avoid PacWest at all costs and that traders anticipate that at some point in the near future this stock will drop very far and very quickly.

Conclusion

It is my opinion that PacWest Equities (OTCBB: PWEI) is essentially worthless as an operating company and the only reason the company has a market cap of more than a few million dollars is that there is a huge stock promotion campaign underway. That promotion will end, likely soon, and the stock will tumble even before the promotion campaign ends. I remind readers that while stock promotions are referred to as pump and dumps, the pump phase is not separate from the dump. From the very beginning the individuals who paid for the promotion have been selling millions of shares and they will continue to sell shares even as the stock drops. In the end, the promoters and the shareholder(s) who paid them will make small fortunes while unwary investors will be left with painful losses.

Disclosure: It is the policy of OTCMicroCapResearch.com to only publish research when neither the author nor any member of its owner, MorningLightMountain LLC, has a direct or beneficial interest in any account that has any position long or short in the securities discussed. OTCMicroCapResearch.com never gets paid to analyze companies and nobody except for the author and editor of this website is notified of research to be published on this website prior to the time it is published or announced on Twitter (this report was announced on Twitter on Friday, October 12th after the market close and published prior to the market open on October 16th). As of the time this article was published the author was aware of a couple people in stock chatrooms he participates in that are short PWEI and several who are long PWEI. No member of MorningLightMountain LLC has any relationship with PromotionStockSecrets.com or Infitialis.

[After this article was published, at 1:12pm EST PWEI became shortable at Interactive Brokers, the author's broker. He sold 5,000 shares short at .305 and covered the position less than a minute later at .2989 for a profit of $13 after commissions. Following this trade I realized that this website's policy on trading covered securities should be more strict and starting now it will be the policy of this website for no one involved to trade any covered security until that security is officially dropped from coverage.]

The Reason for this website

Every day I see another pump and dump campaign. The budgets for these stock promotions can run into the millions of dollars. The stock manipulation can be quite blatant. The illicit profits are certainly in the hundreds of millions of dollars per year. There are those who speak the truth about these frauds, but by and large, the people most in need of the truth never see it. Rather than complain about slow regulators or blog in obscurity, I aim to distribute the research on this website to the widest audience possible.

How will I do that? I may syndicate some of the articles here on SeekingAlpha or other blog aggregation services. I may also issue press releases when I issue reports. Just as the stock promoters use rent-an-analyst companies to always get rosy analyst reports, I will issue research, but I will do so with absolutely no bias or payment.

To minimize my financial risk and to ensure that I appear as unbiased as I am, I will not publish any research on this blog on stocks in which I or those related to me or my company have a beneficial interest, long or short. I will continue to research stocks that I trade (I am a professional penny-stock short seller) but will only publish those reports on my trading blog. This website will have no ads except for a small ad for Profit.ly, for which I receive affiliate payments for anyone who signs up after clicking my link.

Let the games begin!

Michael Goode
Managing Member, MorningLightMountain LLC