stock ticker: LFSI

Stocklemon Tastes Something Sour in Lifestyle Innovations.

Once Stocklemon compiled all of the research on Lifestyle Innovations, Inc. (“Lifestyle Innovations”) we realized that it was more than enough to fill up a book, thus deciding what to write and when was an editorial decision. This is the first of a two part report in which we intend to discuss the potential SEC violations of Lifestyle Innovations Inc. (otcbb: LFSI) and its placement agent Richmark Capital Corporation.

Richmark Capital

Lifestyle Innovations is currently raising funds through the placement agent of Richmark Capital Corporation (“Richmark Capital” or “Richmark“). Richmark Capital is a broker dealer out of Texas whose founder is a gentleman by the name of Doyle Mark White. Not only is Richmark the placement agent, but they also have been the most active market maker in this security.
http://www.otcbb.com/asp/tradeact_mv.asp?Issue=lfsi&searchby=issue&sortby=volume&Month=8-1-2002&downloadname=mv200208.exe

Richamrk and Mark Doyle White have had their problems with the SEC in the past. Just earlier this year Mr. Whites served a 90 day suspension from the SEC for violations of securities law. The gist of the violation was the selling of securities to clients without the proper disclosure of the relationship between Richmark and the company. The attached link gives a detailed description of the infractions made by Richamrk and Mr. White. http://www.sec.gov/litigation/aljdec/id201rgm.htm

Has Richmark learned their lesson?

What is the true relationship between Richmark and Lifestyle? Is Richmark only an investment banker for Lifestyle, or does it run deeper? Here is what Stocklemon has discovered.

In the Private Placement Memorandum put towards potential investors, it is stated that the only current shareholder with more than 10% is a gentleman by the name of Randy Howell who currently owns 2,571,428 shares of Lifestyle Innovations. Randy Howell received his stock as his company Brittany Enterprises was sold to Princeton Mining (the original shell of LFSI), over a year ago. But who is Randy Howell and what is Brittany Enterprises?

Brittany Enterprises is a Nevada Corporation registered to the name Diane Golightly.
http://sos.state.nv.us/corp_nme.asp

Diane Golightly is the sister of Mark Doyle White
Randy Howell is the brother-in law of Mark Doyle White

Doyle Mark White’s family currently owns almost $10 million dollar in stock for nothing but the marginal leases on 2 apartments in Dallas.
Therefore, we now realize that the company is actually controlled by related parties to the founder of Richmark Capital. Where is the disclosure? Don’t the investors have a right to know this information

Is Richmark one of America’s Weakest Brokerage Firms?

Before anyone accuses Stocklemon of slander, we refer to the Weiss Ratings. Every quarter, Weiss evaluates the financial strength of more than 15,000 institutions, including stocks, brokerage firms, insurance companies, mutual funds and HMO’s. According to Weiss Ratings’ last report dated as of September 13, 2002, Richmark Capital is one of America’s WEAKEST BROKERAGE FIRMS.

http://www.weissratings.com/HL_broker.asp

According to Weiss, “A weak brokerage firm represents a potential for financial loss to its clients, as well as a number of headaches and hassles. After all, a financially desperate broker is more concerned about staying afloat today then he is about your financial well-being tomorrow.”
http://www.weissratings.com/HL_broker.asp 

Conclusion

The majority shareholder in Lifestyle is a direct related party and has not been disclosed by the underwriter. Furthermore, the underwriter is a company with a history of violations and the dubious ranking as one of America’s weakest brokerage firms. Stocklemon believes that this is a true caveat emptor situation. Stay tuned for Part II in which we intend to disclose even more related party transactions as well as the business and cash flow issues of Lifestyle Innovations.

stock ticker: MXES

Outstanding Shares- 41.7 million
Market Capitalization- $118,000,000
Current Assets-$10,582
Working Capital Deficit- $1,395,000
9 Month Oil Revenue- $71,491
All Figures from the 7/10/02 10Q

A Stock Promotion Fairy Tale…….

Once upon a time there was a tiny little exploration company named Power Exploration Inc. The company was trying to strike oil like Jed Clampet but it never seemed to happen. Power Exploration was publicly traded for three years with little or no activity in the stock price. But soon that would all change.
http://www.matrixenergycorp.com/

According to the Company’s SEC filings, (7/10/02 10Q)

On May 29, 2002, the Board of Directors of Power Exploration, Inc. (OTCBB: “PWEX”) voted to change the name of the company to Matrix Energy Services Corporation (OTCBB: “MXES”) in light of the recent re-organization of the Company. At the same meeting, the Board voted to implement the Corporation’s 2002 Stock Option Plan and the registration of 3,000,000 shares of the Company’s common stock in an S-8 registration statement to be used as payment to consultants assisting with future acquisitions

It seemed as if the company found something that was better than oil - S-8 stock.
It seems as if a name change and 3 million shares of S8 certainly made a difference.

Just look at the chart of historical prices on Matrix Energy

20-Jun-02	3.55	3.55	3.55	3.55	300	1.18
19-Jun-02	3.45	3.45	3.45	3.45	100	1.15
18-Jun-02	3.45	3.45	3.45	3.45	100	1.15
13-Jun-02	2.17	2.25	2.17	2.25	1,100	0.75
6-Jun-02	1.01	1.04	1.01	1.01	900	0.34
2-May-02	0.17	0.17	0.17	0.17	100	0.06
8-Apr-02	0.16	0.16	0.16	0.16	100	0.05

Let’s not forget that it is against SEC regulation for S-8 stock to be used for market making or stock promotion activities.
http://www.sec.gov/divisions/corpfin/forms/s-8.htm 

Who Received The S-8 Consultant Stock?

Reference the 7/9/02 10QSB

“On June 7, 2002 the Company entered into a Consulting Agreement with Allen Wolfson to provide services in exchange for 600,000 free trading, S-8 registered shares of the Company’s common stock valued at $606,000 and granted the consultant options to purchase up to 600,000 shares of the Company’s common stock valued at $516,360 using the Black-Scholes method, registered under the S-8 registration statement, at an exercise price of fifty cents ($0.50) per share…”

Who is Allen Wolfson?

Mr. Wolfson is a notorious stock promoter who has twice been sanctioned by the regulators. It can be read directly in the SEC Website,

“The Division charges that from January 1999 through at least March 2000, Allen Z. Wolfson fraudulently inflated the stock prices of BeautyMerchant.com (formerly known as ATR Industries, Inc.), Learner’s World, Inc., Rollerball International, Inc., Healthwatch, Inc. and HYTK Industries, Inc. The Division alleges that in connection with these manipulations, Wolfson obtained control of large blocks of shares, caused sham trades to be made to give the appearance of an increasing demand for the shares in the market, paid bribes to six brokers to create demand, and sold into that demand. The six brokers are also being charged today for their roles in the manipulation. The Division contends that the respondents received at least $7 million in illicit profits from these manipulations.”
http://www.sec.gov/divisions/corpfin/forms/s-8.htm
That was not the first time Mr. Wolfson has been associated with stock promotion. He was also charged with stock promotion in 1996. Mr. Wolfoson was one of many who was charged in an alleged “kickback” scheme.
http://www.sec.gov/litigation/admin/337357.txt
http://www.nasdaqnews.com/news/pr/ne_section96_41.html 

Mr. Wolfson’s Track Record.

Stocklemon has identified 9 companies that Mr. Wolfson has served as a consultant for over the past three years. Here is a current list as to where they are currently trading.

TSGO	$.0042	ELOC	$.017
ADOT	$.0015	NXIA	$.01
GTWY	$.0001	AXIA	$.09
YPNT	$.075	ETTC	$.05
MODM	$.01

The average price of the above stocks is 2.8 cents. How do you think this will end?

Conclusion

Stocklemon is under the belief that Matrix Energy is not only a lemon, but also a vehicle that is currently being used for stock promotion. The company has little assets and less of a sense of good judgment as they have associated themselves with a known stock promoter. Stocklemon believes that Matirx has illegally used S-8 consultant stock and will soon become a victim to either their own greed or to the SEC. We wish this was a fairy tale….but unfortunately it is not.