Singlepoint's 'Slim And Shady' Finances May Point To Marijuana Pump And Dump

Singlepoint Inc SING is an over-the-counter traded nano-cap technology company focused on mobile payments. The stock more than doubled in price over the past month, taking year-to-date gains to more than 225 percent. However, shares still trade around $0.016, meaning it's unequivocally a penny stock.

Why So High?

Since the beginning of November, Singlepoint has been releasing (and been mentioned in) several press releases promoting SingleSeed, a subsidiary of the company aimed at providing credit card processing solutions for the legal marijuana industry.

"The bottom line, shareholders, is that we know this business, we have amassed a customer base in this business and we are prepared to aggressively enter this market with resources and legislation that were previously unavailable to us,” CEO Greg Lambrecht said.

In addition, the firm paid to be covered on MoneyTV both right before the elections and right after them, as well as for other stock promotion services. In fact, Alan Brochstein, founding partner at New Cannabis Ventures and founder at 420 Investor, told Benzinga, the company spent $44,835 on investor relations during Q3, while it made less than 1 percent of that in revenue.

Meanwhile, the payments solution that is being pumped so much, and that would allow Singlepoint to be a "first mover" in the cannabis market, is still being developed.

Slim And Shady Finances

“I believe that the company is very opportunistic,” Brochstein commented. “It has been around for several years but still doesn't file with the SEC, a red flag. Also, after all this time as a public company, it had quarterly sales of just $396!”

Also, it looks like assets on the balance sheet aren't being properly reported. “They list total assets of $545,900, which includes $42,100 cash and $502,800 in investments, which are tied to acquisitions made in the online sports gambling space. The company's alleged customer list isn't listed as an asset.”

Finally, Brochstein noted, on August 11, the CEO gave himself 7 million shares of Class A Convertible Preferred Stock. He then converted 4.75 million of these shares on August 31, getting 28.5 million common shares.

“This is over 5 percent of the common shares outstanding, but he wasn't listed as a 5 percent holder in the filing,” Brochstein continued.

Pump And Dump?

"So, does this look like a pump and dump case?" Benzinga asked the expert.

The OTC is very risky, he started by warning. Furthermore, those risks become compounded “when companies don't file with the SEC and are highly promotional.”

“I would conclude that it looks like a potential pump and dump; it has all the signs of a potential pump and dump, as opposed to be a definitive ‘yes, this is a pump and dump,’ because, the one part I haven’t proven is the dump,” Brochstein explained. However, “given the timing of the excessive promotions and the lack of substance to the company [...] Singlepoint does have all the signs of a potential pump and dump.”

“I have to confess, it’s hard for me on these non-SEC-filing companies to track down insider sales [because they just fill out] form 144, which is a paper form that doesn’t show up in most information services. So, I don’t know if the CEO sold his stock or not. But, here’s the thing: sometimes, with these pump and dumps, it’s not that officers and the directors are selling, it’s the financiers, which don’t have to necessarily disclose their moves anyways.”