stock ticker: IPA

Extra Extra Read All About It

Interpharm’s (IPA) Director, Treasurer, Investor Relations, General Council, and Corporate Offices linked to  major Boiler Room Stock Fraud.

On October 16, 2003, the National Association of Securities Dealers (NASD) brought forth legal action against Yankee Financial accusing them of boiler room operations whose victims were unsuitable investors and the elderly.  One of the unsuitable stocks they were pushing on their clients was Western Media Group.
http://www.nasdr.com/news/pr2003/release_03_044.html

http://www.reuters.com/financeQuoteCompanyNewsArticle.jhtml?storyID=3629131&ric=WMGC.OB&infotype=news&compname=WESTERN+MEDIA+GP

Western Media is the Sister Company to Interpharm

Western Media Group has the same address on their SEC filings as Interpharm Corporate Headquarters.  (69 Mall Drive Commack, NY)

Western Media Group is controlled by many of the same people that control Interpharm. (Munish Rametra)

Western Media has the same fax # as Interpharm Holdings

Western Media has the same contact person as Interpharm Holdings (Munish Rametra)

All three directors of Western Media earned a finder’s fee for the merger of Interpharm into Atec.

“The Parties hereby acknowledge that Munish Rametra, Avreo Vuono, James Rose and Konrad Kim acted as finders with respect to the Transaction and shall be entitled to $100,000, in total, payable by ATEC within three business days after the Closing as a finder’s fee” (Filing DEF 14A 5/2/2003)

How involved is Munish Rametra with Western Media and could he be involved with giving stock to Yankee Financial?  Let’s look at the stock dealings between Mr. Rametra and Western Media Group.  Is it ironic that the S-8 stock given to Rametra coordinates time wise with volume in Western Media Group? 

According to SEC Filings,

In November, 2001, the Company issued 1,080,000, 1,035,000 and 900,000shares of restricted common stock to Munish Rametra, Ray Vuono and James Rose, respectively, pursuant to the consulting agreements described above.

In April, 2003, the Company issued a total of 596,528 shares of common stock to Munish Rametra , Ray Vuono, James Rose and David Kafrissen as compensation pursuant to their consulting agreements. The issuances were accomplished in reliance upon Section 4(2) of the Act in private transactions.

In May, 2003, the Company issued a total of 92,449 shares of common stock to Munish Rametra, Ray Vuono and James Rose as compensation pursuant to their consulting agreements. The issuances were accomplished in reliance upon Section 4(2) of the Act in private transactions.

In June, 2003, the Company issued a total 61,634 shares of common stock to Munish Rametra, Ray Vuono and James Rose as compensation pursuant to their consulting agreements. The issuances were accomplished in reliance upon Section 4(2) of the Act in private transactions.

The Insider Selling Continues

Two days before the NASD released the charges against Yankee Financial, Surinder Rametra, the father of Munish Rametra filed to sell another 75,000 shares of Interpharm.  The insider selling of the stock has been relentless and has not taken price into consideration. http://www.nasdaq.com/asp/Holdings.asp?symbol=IPA&selected=IPA&page=holdingssummary

Rametra Is No Stranger to Stock Fraud

Stocklemon believes that Manish Rametra is the puppeteer of Interpharm Holdings.  He signs his name of the filings and takes all investor phone calls.  We believe that he is also pulling the strings of Western Media Holdings.  Lets us not forget that Rametra is no stranger to Stock fraud.  A securities fraud case was settled against ATEK, the predecessor to IPA in February of 2003.  That case was brought against Ashok and Surinder ( yes the same guy who just sold 75,000 shares) Rametra.
http://bankrupt.com/CAR_Public/021003.mbx

Cockroach  Theory

http://www.investopedia.com/terms/c/cockroachtheory.asp
This is a market theory that bad news tends to be released in bunches.  Stocklemon believes that the charges against Yankee Financial is just the start of bad news that will be released about Western Media Group and its principals.  The NASD does not have jurisdiction over companies or individuals, just brokerage firms.  Therefore, they refer potential cases to the SEC or to the Justice Department.  That is why in the stated case; the names of people involved in the companies are not mentioned.

Note:  We are not saying that it is definite that charges will be filed against Rametra or anyone involved with Western Media Group.  We just believe that where there is smoke there is fire.

Why do Boiler Rooms Sell Stock?

Stocklemon does not want to be the judge, jury, and executioner on Western Media, but there are some general reasons why Yankee Financial might have retailed this stock out to their clients.  Generally, the company will provide “cheap stock” to the brokerage firm, thereby allowing the brokerage firm to make the spread between the market price and the price they received the stock.  To the company it does not make a difference because in many cases, the stock is not worth the paper it is printed on.  Thereby, the company is an accomplice in the actions taken by the boiler room and must work with the brokerage firm that is retailing the stock to its customers.

Stock Fraud Has Real Victims

Stock fraud is not a joke and the victims are real.  Munish Rametra has to live with this situation that is printed here verbatim from the NASD complaint against Yankee Financial.  Does anyone involved have a conscience?

Customer DW

32.       In another example, Anderson, a broker in the firm’s Brooklyn branch (who sold customers approximately 4.4 million shares of SSTF for $5.5 million; 1.1 million shares of WMGC for $1.5 million; and 5.2 million shares of GCHR for $498,168), told customer DW, who he knew was an inexperienced investor interested only in conservative stocks, that WMGC was similar to Berkshire Hathaway and would be worth $2.00 to $2.25 a share by June 2002, even though he had no reasonable basis for this prediction.  At the time, the WMGC was selling for approximately $1.00 to $1.25 per share. 

33.       Anderson also failed to mention to DW that WMGC was in poor financial condition and was a very risky investment.  Based on Anderson’s recommendation, DW purchased a total of 65,000 shares of WMGC for approximately $92,000 in four accounts at Yankee, three of which were custodial accounts he established to pay for his children’s education.  The cost of these purchases represented approximately three-quarters of DW’s reported net worth.

Many Red Flags

Beyond the potential problems that might face the Rametra family, Stocklemon believes that Interpharm Holdings is still an overvalued company that is playing a game of smoke and mirrors with the investing public.

The following are some of the red flags that Stocklemon believes were copiously apparent after review of the Company’s 10k filing as of 9/20 2003.

Stocklemon believed that fully diluted there was 69 million shares of stock.  We now find out that the true number is 76,479,009.  This number is before the dillutive S-8 which will affect the following years.

• 50% of the Company’s sales are to two customers.  The first is to the Veterans Administration.  The other is unknown by us.  Regardless, we at Stocklemon believe that this is dangerous for any company to have such concentrated sales.  WHO IS THE OTHER CUSTOMER?????
• Minimal investment in research and development.  For the six-month period, ending June 30, 2003, the expenditures on research and development were approximately $185,600.  Stocklemon believes that this number is completely inadequate to support any real growth.
• No Ownership of Patents or Trademarks.

But How Was the Last Quarter???

Please don’t take our word for it, take a careful look at the table below that was pulled directly from IPA’s 10k.  The net income for the quarter was $243,000, which gave IPA a diluted EPS of the quarter of -.  Yep – , that is a number that is non existent.below .005.

	Sept. 30, 2002	Dec. 31, 2002	March 31, 2003	June 30, 2003
	———————-	———————-	———————-	———————-
Sales, net	$5,932,585	$6,636,220	$7,191,002	$7,762,436
Gross profit	1,074,386	1,208,827	1,366,290	1,372,326
Net income	191,693	247,924	480,575	243,070
Basic EPS	$.02	$.04	$.08	$.02
	========	========	========	========
Diluted EPS	$.01	$.01	$.01	$ –
	========	========	========	========

Tobin Smith and Changewave

Stocklemon believes that Tobin Smith had nothing but good intentions when he recommended Interpharm in the Changewave newsletter.  He runs a respectable business and has many good ideas, unfortunately, this is not one of them. This is a bad idea that can cost investors a lot of money when it comes tumbling down. While Smith tells his subscribers to get physical delivery of their certificates, the insiders are selling stock and diluting the company by issuing themselves new stock.  Stocklemon strongly suggests that Mr. Smith rethink his position on this stock and understand that when you lie with dogs, you get fleas.

Conclusion

The poor fundamentals of Interpharm are only superceded by the unsavory actions of their management in both Interpharm and other stocks that are controlled by directors.  It will be interesting to see whether or not Yankee Financial was also involved with Interpharm.  Stocklemon believes that the cockroaches will all come out soon and when they do, who will be left holding their certificates?  Cautious investing to all.