What happens when you try to reap huge benefits using the same old formula over and over again? More often than not, chances are that this strategy will only work for a limited time frame. Take the stock of Preventia, Inc. (OTC:PVTA), for example. It gained a 400% when it got first promoted last Monday. Yet, every subsequent pumping effort has since yielded results that are disappointing at best. And the efforts were quite a few, by the way.
Although PVTA gained 18% in value following the latest batch of touting emails, this run was nohwere near the 408% jump on Jul. 9. It was on Jul. 9 that the heavy, $450-thousand promotional campaign in support of PVTA kick-started. In fact, the first email hit our database exactly 2 minutes before the beginning of the very session, leaving general investors little time to take adequate precautions. While day 1 brought substantial gains, it was followed by several downs as PVTA subsequently lost 7.5%, 20.6%, and 14% on Jul. 10, 11 and 12, respectively.
Just as everybody started to believe last Friday that the campaign had already run its course, a new series of emails resurfaced around noon time, together with a new corporate press release. The latter disclosed the sealing of a 5-year agreement between Preventia Group Corp. and Private Trading Systems, Corp. As it turns out, both entities appear to be related third parties in a way as the former is actually a subsidiary of Preventia, Inc. and the latter is wholly-owned by Private Trading Systems, Plc. For those of you who do not remember, Preventia, Inc. signed a licensing agreement with Private Trading Systems, Plc. on Jun. 30 for the distribution of a trading system aimed at facilitating securities trade between market players. As we pointed out last time, the bond between the two mother companies runs much deeper as Private’s CEO Terence P. Ramsden, a convicted investment fraudster, holds a 25% stake in Preventia.
The 5-year services agreement will cost Preventia, Inc. a flat monthly fee of $30 thousand. Given the nature of the relationship between the two companies, the agreement will hardly change the financial situation of Preventia, Inc. as the fee in question will only move from one corporate account to another. At first sight, this is hardly an issue investors should worry about had PVTA’s financial statements not painted such a bleak picture. For the time being, PVTA appears to be unable to afford a monthly expense like this for a service that has yet to prove successful.
The big question here is: Who will reap the benefits of this agreement? Will it be the company itself? If that should be the case, the $1.8 million fee payable for the nest 60 months will be more or less justified. In the event of a negative development, the winner will be Ramsden. After all, he is more closely connected to Private Trading Systems Corp. through Private Trading Systems, Plc.
