Thoughts, Comments and Research on Publicly Traded Companies and Internet Stock Message Boards

Saturday, December 17, 2005

[PLNI]: A Promoter Attempts to Justify Massive Company Share Issuance


Below you will find a copy of a post on the Silicon Investor message boards by the promoter "rrm_bcnu" ("rrm_bn4u" on the Raging Bull message boards) attempting to justify the 70% stock price drop in PLNI (to a low on Friday of $0.0043/share) during the last few months. During this period the company issued 500 million common shares in 3 months, to increase its total outstanding to 2.3 billion shares. In addition, total authorized common shares were also increased substantially, from 2 billion to 5 billion in October 2005, without informing the shareholders, while the company was publicly stating that it was going to begin a "share buyback" program.

Some comments on the rrm_bcnu posted message:

1. In dicussing the "Personal Reorg Chapter 11" of James Turek, the CEO of PLNI, rrm_bcnu fails to mention that Turek's bankruptcy is still undischarged. He also fails to mention that as part of the Reorganizaiton Plan, PLNI will have to issue treasury stock to satisfy $4.7 million in unsecured claims ( In addition, rrm_bcnu also fails to mention that International Plastics and Wicklund Holding Company, two predecessor companies in the same business as PLNI and managed by Turek, also filed for bankruptcy.

2. rrm_bcnu further goes on to copy and paste a definition of Outstanding Shares from the following website -, but says that it is in his opinion ("IMHO") and mixes it with statements that not only show his lack of knowledge of Corporate Finance and Accounting, but are actually false. He then proceeds to use the statement "true share valuation" without defining what it means, making some very naive and blatantly false conclusions such as:

"If you issue shares to buy hardware that allows to increase sales...that isn't dilutive to true valuation"


"So if Turek were selling shares would those sales be dilutive to your share value? NO!"

3. Forgetting that PLNI has issued 500 million shares in the last 3 months during the 70% drop in stock price, rrm_bcnu again falsely states that although the stock price has dropped significantly,

"However, the true valuation of your shares would not have changed, but the current share price would have temporarily declined."

4. rrm_bcnu asks as to who is buying all the shares that have been sold into the market by Turek and/or PLNI and/or promoters. He fails to mention the paid promotional firms Apple and The Green Baron Report that have pumped and hyped PLNI to unsuspecting investors.

5. rrm_bcnu then goes on to mention SEMCO, but PLNI has yet to formally announce the closing of the acquisition of SEMCO. He also mentions Pro Mold, which again has yet to be acquired by PLNI, according to the latest false and misleading press release by PLNI:

6. Finally, rrm_bcnu states that PLNI would recover in stock price and be worth 10-20x its current stock price of $0.0046 (at the Friday closing). To show how ridiculous this projection is, 20 x $0.0046/share is a stock price of about 10 cents/share and with at least 2.3 Billion shares outstanding, rrm_bcnu says that PLNI is worth over $200 million. It gets even worse - only recently, this same person was projecting a $575 million valuation for PLNI by October 2006:
Remember that this is coming from the same person that has made the outlandish statements that Otc bulletin board companies have to pay about $1 million per company per audit in order to conform to Sarbanes-Oxley:

The Silicon Investor posted message by "rrm_bcnu"

From: rrm_bcnu
12/18/2005 12:05:55 AM
of 2378

I've read a lot of stuff about Jim Turek and a Personal Reorg Chapter 11 that is diluting the stock...

IMHO all stock currently held by investors, including restricted shares owned by Turek and other insiders, as well as those held by the public, are included in the company's Outstanding Shares. They are also known as "issued shares" or "issued and outstanding."

This number is shown on company's balance sheets under the heading "Capital Stock" and is more important than the Authorized Shares or Float. It is used in the calculation of many widely used metrics including "market capitalization" and "Earnings-per-Share (EPS)". Those metrics directly impact the stock price per share.

So even if Turek is forced to sell some of his personal shares, they are non-dilutive to your true share valuation. Only new shares issued from the Authorized Shares to the Outstanding Shares are dilutive (have a long term negative effect), and only then if they do not improve the company's cash flow. If you issue shares to buy hardware that allows you to increase sales... that isn't dilutive to true valuation.

Shares that have been repurchased by the company are not considered issued stock, and are removed from the Outstanding Shares total, thus improving the metrics and the PPS.

So if Turek were selling shares would those sales be dilutive to your share value? NO!

Would the sale of shares drive the price down? It's a chain of events... The higher the availability of shares for sale, the cheaper the Bid price. The more perceived panic or doubt, the more shareholders will offer their shares at a lower Ask. The lower the Ask, the lower the Bid... and the lower the resulting PPS. It seems simple to those of us whove been around a while.

However, the true valuation of your shares would not have changed, but the current share price would have temporarily declined. The stock becomes oversold and undervalued. That usually means that speculators and traders would purchase shares at the cheap price, and ride the price wave back up until the real valuation is exceeded by some value. The stock is then overbought and overvalued.

Why would anyone want to create such a negative impression? If you were playing the stock short you would want to buy-to-cover at the lowest possible price. Thus, it would pay you in the long run to short sell as many vapor shares as possible, and to spread confusion in the form of personal opinion... like the word that the company was continuing to dump shares into the OS and float, that it was lying to shareholders, that management is hosed, and that the entire BB deal is hosed up. Such manipulation is illegal if it is orchestrated to move the price lower for profit.

The key to understanding all this is the answer to the following question:

Who is buying all these shares? Every share sold has a buyer. If the company were really the pits, who would buy it? Few, if any, would risk real capital on a hoax. No buyers and lots of sellers equals a dramatically lower price. I mean the price would drop in a matter of minutes... days at the most. Look at HTDS when the knife fell. It was not a slow decline in price over months and weeks as someone struggled to shake loose a few "weak hand" shares.

Novice traders and investors whose sight is blurred by confusion just look at their cost basis and compare today's price. At some point we all do that. But that is the reason seasoned traders search for truth. What does the staff secretary at ProMold say about "24 hour production?" What does she say about Plasticon acquisition? What does the Sales Manager at Semco say about 2006 sales? What does he say about Plasticon acquisition? What does the Line Supervsor at R&S sayabout Plasticon products? What about his ordering? How about the BlueLynx folks.. do they confirm high order rates and what do they say about Plasticon?

Think about this whole event...

I still believe that the PLNI share price will recover based on what I have researched from ProMold, Semco, and BlueLynx. If just half of what the previous six months PR's have stated comes to pass, this stock will be a 10-20x runner in my opinion.





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