I shorted IMGG a number of weeks back and turned a profit when it dropped after a big promotion.  The company might have some real tech, but their financial moves would lead me to believe that this is a lot of hype. Hype to sell shares in an offering (at a HUGE discount) and finance the company for another number of years.  Not sure how this isn’t illegal.  Call yourself a development stage company and all bets are off. Revenue, cash on hand, and other traditional metrics don’t matter.

When I wrote about IMGG a week and a half ago (IMGG cured something, NO!), I shorted some shares and made a few dollars from $0.67 down to $0.52.  In late September, the company issued press about their application that would be sent to the FDA on 9/30/2009.  It struck me as odd that they were referencing an event to prop their stock by naming a date that more detail would come out (9/30/2009) and believe it or not, it worked.  No one wanted to miss out. It was a brilliant move after their big promotion. It propped the stock for an entire week.

Shortly after this event (which, could honestly be a big one) they did an offering of shares at…. drum roll please….. $0.025.  That is right, when the shares were at around $0.70 they sold more than 100 million shares at $0.025!

On October 6, 2009, Imaging3, Inc. (the “Company”) completed a series of private placements of its common stock pursuant to which the Company sold a total of 107,059,027 shares of its common stock at a purchase price of $0.025 per share raising total capital of $2,676,475.68. The private placements were made pursuant to Rue 506 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended.

IMGG quietly raised $2.7 million SELLING 107 MILLION SHARES AT 0.025 PER SHARE, A 95% DISCOUNT TO THEIR MARKET PRICE!

This is all very odd. Sketchy as Timothy Sykes would say.

I am currently short a few shares of IMGG and down on the position.  I shorted again after covering my initial trade and digging a little deeper into what appears to be an operation that promotes to pay.  Owners/insiders promote the shares and sell shares to cover their own salaries and expenses.   They are not doing things illegally.  However, they are creating artificial demand that is questionable.

The real kicker with stock is the unknown of how many shares are outstanding.  No one truly knows.  The SEC might just look into this one to find out.

IMGG

By the looks of a 3 year chart on IMGG, you would think that they cured a disease or struck oil.  Not the case.

Imaging 3 (imgg) Stock Chart

IMGG is a stock that has had a very rapid run as of late.  The company offers 3d imaging technology, but the stock is acting like a typical pump and dump.  When reviewing a pump and dump, you need to read any press with a grain of salt.  One of the easiest things for a company, whose stock is being hyped or promoted, to say is that they are a development stage company.  When that is said… hands are off.  That would explain the lack of revenue and the lack of revenue in the bank.

Deeper digging will give you the facts.  The following is from Tim Sykes (TimAlerts.com) on 9/24/2009

Imaging3, Inc. (IMGG) is another pump & dump, promoted by the same scoundrels as behind GVBP…10 cents to 70 cents/share so far, many people ask, why not just buy these? Because I’m not good at it, I don’t sleep well when I do and these things can fall out of bed quicker than I can send an alert so it’s not worth the risk….much easier to short when they show signs of cracking…sometimes short even down to 0 like GVBP…this one will be nice, but I hope it gets above $1 first to give it more downside.

IMGG did not crack $1.  Not even close.  It reached $0.70.  I shorted at $0.67 and took a small gain covering at $0.52.  The downtrend is continuing and the event that they were hyping on 9/30/09 appears to have been a non-event.

The biggest tells here are with the promoter behind the stock and snapshot of the company.   Read any news on this company with this thought.  ”Enough to string you along believing it could be real”.

When trading in this arena, you have to be a cynic.