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Why the COLV Pump & Dump Is Already Failing

StockTips continues its path to irrelevancy as a penny stock promoter with its "pick" of Coastal Integrated Services

June 2, 2015: On Sunday, 31 May 2015, "Mike Statler" of StockTips delivered his new pick as promised.  The pick, described as "a tiny beverage stock that could be like rocket fuel for your portfolio," is Coastal Integrated Services, Inc. (COLV).  "Mike"--who is in reality is an "actor… compensated solely on a contract basis for participating in this campaign"--begins his voiceover pitch by informing listeners of the advantages of trading his enormously successful plays.  StockTips' self-praise is unwarranted.  Those who found themselves trapped in Telupay International (TLPY) back in March may feel they were suckered rather than handed a surefire winner.  We suggested the stock might fall off a cliff before the promo officially began, and explained why a few days later.  Less than a week after StockTips announced TLPY, it was trading far lower than before the pump began.

That the same appears to have already happened on Day One of the promotion should not come as a surprise to anyone. The purpose of any promotion is to deliver the kind of volume that allows large shareholders to dump.  Prior to the start of this campaign, Coastal's average daily volume was a mere 25,404 shares, so "Mike" has his work cut out for him.

It's worth noting that volume picked up a little in the past seven trading sessions, perhaps indicating some activity by frontloaders. We have no way of knowing if one of those opportunists may have been whoever's behind StockTips. Nothing is said about stock purchases or ownership by the promoter in the disclaimer attached to the COLV alert, but we are informed that StockTips' parent company, Amerada Corp, "expects" to receive a cool $4.5 million as a marketing budget for the campaign from Laluna Services, Inc, an "unaffiliated 3rd party."  Laluna is invariably StockTips' third party payor. It's doubtful anyone is forking over that much money to "Mike Statler"; the number is clearly designed to impress the naive and to convince them that COLV must be something special.

Undoubtedly, any frontrunners divested themselves of their COLV position, but not necessarily at a profit. The first day of the promotion was a disaster for anyone who got into stock early in the session. The day's first trade went off at $.1401, a 40% increase over Friday's close. By 9:35:24 the stock price had already reached their intraday high of $.141. It was all downhill from there. COLV did not experience the volatility that are characteristic of past StockTips plays. Shortly after 10:30am volume dried up and the stock churned listlessly until a selloff began at 3:00pm.

COLV's undeniably poor performance came as a surprise to some, but more experienced penny players seem to have expected it. The penny crowd has been wary of StockTips plays for quite awhile now. Traders were disconcerted by last year's disastrous Pingify (PGFY) campaign, which ended in an abrupt SEC suspension; the aborted Telupay International (TLPY) this past March reinforced their doubts about StockTips. In addition, COLV itself has been pumped and dumped at least five times since December 2011, and none of those pumps had resulted in big gains for players.

The product

Though StockTips says COLV is a "tiny beverage company," it isn't a beverage company at all.  It makes lids for beverages bought at convenience stores, coffee shops, and fast food restaurants.  While lids don't sound sexy, these are, as one might expect, special.  At the company website we learn that they're called Simply Lids™.  What makes them different from ordinary lids is that the opening from which one drinks is covered by a tab called Simply Slider™ that can be moved back and forth.  Other types of lids, once opened, cannot be closed, leaving a thirsty coffee-drinker at risk of spilling his morning Joe on his way to work.  If Simply Lids catch on, his worries will be over.  The tabs offer another benefit:  their rounded rectangular shape allows them to be used to display logos or other types of advertising.

The idea may have promise, but the company is financially troubled.  As of 31 March 2015, COLV had $794 cash.  That amount was also its total net assets. There were no revenues.

At a different official website, the company describes its product as the "patented 2015 Simply Lid." No patent number is given, and we were unable to find such a patent through online searches.  The most recent quarterly report, filed on 12 May 2015 for the period ended 31 March, states vaguely that "the issuer owns various patents and patents pending related to it disposable beverage lids," adding that it also owns a prototype manufacturing mold.

Simply Lids claims proudly that it was an Edison Awards nominee in 2012.  That sounds impressive, but a look at the process shows that anyone can nominate himself or someone else in the hope of ending up a winner.  The company did snag third place in the non-consumable Best New Products division at the Seattle 2011 Coffee Fest trade show.  Last year, Simply Lids tried again for an Edison Award, nominated this time by Harry Epstein of Havi Global Solutions, a procurement company with whom COLV recently signed a non-disclosure agreement.  In another potentially positive development, in April the company received a quoting request from Armstrong Paper, a California distributor of packaging supplies.

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