GetFugu Fiasco - High Humor Continues

GetFugu (OTC: GFGU) is a catastrophe of a company brought to you by the same team which gave us the infamous Gizmondo disaster, involving the Swedish mafia and smashed Ferraris which I repeatedly blogged about a few years ago.   GetFugu is ostensibly a mobile search company of sorts, often using the term Augmented Reality in order to seem even more cool, but it's really a fascinating study of how these types of companies operate, which is just under the radar.

There has been a series of amusing moments since the company emerged - you just can't make this stuff up, and this is just from reading public press releases:

• Company goes public through a reverse merger in March, 2009 - has almost 200M shares, briefly giving it a market cap of $600M at $3.20 a share.   Stock is now $.13/share, a 95% drop.
• Company repeatedly has to amend its press releases the next day, with Blackberry, with Google, and with its own marketing news
• Sept 09 - Spongetech, a maker of high tech sponges (yes, sponges), announces a business development deal with GetFugu as well as a $4M investment into the company - everyone must see the synergy between sponges and mobile search, right?  Unfortunately, 3 weeks later, Spongetech attempts to pull out of the deal, but GetFugu refuses to give back the initial $1.75M already invested, leading to a lawsuit.
• Sept 09 - Vanity Events Holding, a micro-cap public holding company of sorts whose primary business appears to be America's Cleaning Company (again, the obvious synergies), announces a $1M investment into GetFugu.  Unfortunately, 4 weeks later, it too cancels the investment, but avoids a lawsuit, presumably by not already sending over advance payments
• Sept 09 (busy month) - GetFugu announces a big deal with a company called Health Matrix where HM will sell GetFugu's services into the medical fields - comes with a $5M licensing fee to be paid over the next 12months, so we should see that revenue start to show up in the financials (or not...)
• Dec 09 - GetFugu announces lawsuit against "foreign nationals" for trade libel and defamation, attempting to depress the stock price - I believe the Company is capable of doing that on its own
• February 2010 - GetFugu breathlessly announces a big revenue deal with Illusive Media, where Illusive will guarantee the purchasing of at least 8 key words at a price of $500K/month per keyword - Unfortunately, if you go to the home page of Illusive Media today, you'll see a big note essentially saying "We have nothing to do with GetFugu and are investigating how the press release came about" - probably my favorite GF story so far - does the SEC even pay attention?

For those interested in a longer look at the company through public filings, see below:

SEC Filings - a Timeline of an Always Amusing Company

On August 29, 2008, Media Power, Inc, an "augmented reality" company controlled by Carl Freer, purchased 4M shares or 48% of a public shell company called Madero for $264,000.  At that point, Madero's CEO/sole director, Mike Lizarraga, resigned and was replaced by Richard Jenkins as Chairman/CEO, etc and sole director.

On January 30, 2009, Jenkins resigns as Chairman/CEO, etc, and is replaced by Jason Irwin, an accountant.  In addition, 3 new board members are appointed, including Irwin.  On Feb 13, 2009, Madero changes its name to Get Fugu.  March 5, 2009, company dismisses its auditor, replacing it with a new one - not a big deal, but not normally a positive either, especially since the auditor have a Going Concern issue filed in SEC documents.  April 4, 2009 - Irwin resigns as CEO, and is replaced by Bernie Stolar, a respected video game executive and my former boss. 

On April 9, 2009, the company acquires a set of patent applications from a company called the Mara Group - the price was 25M shares (out of 180M after a 12 for 1 split) - the owner of Mara Group?  None other than Carl Freer, who now controls 51M shares after this transaction, although he is at this point neither a Director nor an Officer.   In July, the company is prompted by the SEC to fully disclose that Freer has management control over the company, and the company is forced to defend the patent transaction on a variety of levels.

In August, 2009, the company is late filing its 10Q report, making it the 3rd consecutive time it has missed its filing deadline with the SEC - probably not a good sign.  Company is also forced to significantly restate its Q1 filings to accurately reflect its share count and how it paid some vendors with shares, which were undervalued by an amazing 99%.  Company then dismisses its accounting firm for 2nd time in 8 months - going badly...Of course it then turns out that the accounting firm (MSPC) actually had its license revoked by the Public Company Accounting Oversight Board, which meant that the SEC then informed GetFugu that it had to re-look at all its related financial statements - company retains a 3rd auditing firm - just keeps getting better

Q2 10K finally comes out.   By this point, the company has appointed Carl Freer as "Chief Futurist" and granted him 10M preferred shares with 20x the voting power of common shares (hard to imagine why that was necessary, but it's not the most independent board in history) - he is still not a Director or Officer even though the company admits he controls the company.

Company terminates the 2 different investment deals referenced in September, having "found out" that the 2 companies (Spongetech and Vanity) were actually fronts for the same company (RM Enterprises) and that RM was short selling stock and is being accused of forgery and identity theft - but company will retain the first $1.75M for the time being...

Then in November, 2009, a big and always amusing 8K is released.   First the company grants an amazing 20M common shares to various consulting firms for helping it in some way (the polite term is market promotion, I believe).  GetFugu settles its lawsuit with Spongetech and even comes to a deal with RM Enterprises, giving it 5M shares, but keeping its $1.75M.  Lots of directors are appointed to the Board of Directors, including finally, Carl Freer as President/Director, along with the disclosure of his probation for passing bad checks and the bankruptcy of his last company, Gizmondo.  Company has lots of executive changes, moves to Los Angeles from SF, passes an insider trading policy, etc.  Company is then late filing its 10Q, which is at least consistent with past practices.

Q3 10Q is filed in late November, but lo and behold, there is not yet any revenue from Health Matrix (may come later) - actually there is no revenue at all...The company also creates a subsidiary, GetFugu Research, which it then uses to buy a "company" from its CTO in return for 10M shares - it is unclear what the company actually does since the CTO was already an employee of Get Fugu from April 2008 forward, according to his own Linked In profile, but I'm not sure it really matters at this point anyway.

More to come this quarter - will they switch accounting firms, will they actually record any revenue from previously announced deals, will they Correct and Replace press releases, etc. - the gift that keeps on giving = Get Fugu

Comments

[Dino]

Unreal......Yes... is the SEC watching this?
And to think that I even got sucked into investing in this.
I smell jailtime coming for these folks.

[Uncle Hi!]

I made $500 on this scam..first one takes a spngEbath, the they getfugged!

[Hank]

I guess the word "truth" has NO bearing in your world....does it?

Must be nice to ignore the facts (like MSPC has its license revoked - pssst...its another firm with similar name that had its license pulled). And the company replaced the auditors with Marcum (one of the largest and most respected firms in the world)..

Facts....inconvenient as they are, are necessary..

[See the Big Picture]

I guess I am still working to understand your article...

Are you trying to say Getfugu is dysfunctional because they upgraded management, auditors, improved their product by acquiring technology and backed out of a financial transaction with a company who was the subject of a SEC investigation (Spongetech)?

Its called "good management" where I come from....I thought the point was to grow companies. This one will change another million times in the next year.

They call that GROWTH

[Amused]

HAHAHAHAHAHAHA.....thanks for this article. Was extremely amusing..

Can you write another??

By the way, I just downloaded the Getfugu app from the Blackberry App World..worked GREAT. I held it up to your webpage and it brought up the Wiki entry for "idiot"...

Keep up the GOOD work!!

[Sean Ryan]

To both Hank and Big Picture, all I'm doing is reading SEC documents posted by the company and press releases done by the company. Given the 95% drop in stock price, always late financials, and restated financials, investors can make their own decisions.

[Karma Police]

Let's talk "facts" and get to the bottom of what you term "idiocy," smart people.

Carl Freer's Behavior: http://www.wired.com/wired/archive/14.10/gizmondo.html?pg=3&topic=gizmondo&topic_set=

Rico Filing Against Freer and GetFugu:
http://viewer.zoho.com/docs/oxaah

GetFugu comes to investment agreement with SpongeTech, accepting major funding:
http://www.faqs.org/sec-filings/091106/SPONGETECH-DELIVERY-SYSTEMS-INC_8-K/v165164_ex99-1.htm

GetFugu miserable working conditions and unpaid wages:
http://www.jobvent.com/getfugu-job-reviews-C16749?searchType=company&searchText=getfugu

These guys are running wild with sub-par technology, and like bulls in a china shop, are playing corporate games with no integrity.

If you're on payroll with GF, then your blind defense is understood, but not justified, and if you're the one sinking your cash in, then just remember that you owe it to yourself to do your due diligence, and YOU are the idiot if you don't do the research.

Ryan is dead-on in his assessment, and could probably rock several more articles with just public information that is easily found.

[Karma Police]

Oh, and by the way, when a company reports major losses and NO profits for months on end and the stock drops SIGNIFICANTLY and consistently, then that usually means that a company isn't being very well managed. Check the "facts" on that.

[Ex-fu]

google 'mikeal ljungman' and use google translate to read about carl's ex-partner. M.J. might go to jail for fraud

[renaissance costume]

hmmm... sad.. this is just no true..

[Karma Police]

What is sad, renaissance costume, is that you will bother to post that something isn't true when the facts are completely laid-out, and you won't bother to support your argument with any kind of real evidence. The real sad thing is that people will hide under the shell of a corporation and think that it makes them legitimate businessmen.

[Ex-fu]

renaissance costume: It is true. M.J. is on trail for fraud:
http://www.dr.dk/Nyheder/Penge/2010/03/08/143752.htm
use google translate to read.

renaissance costume: Are you Carl? or someone paid by Carl?

[Paulie]

There is no longer a link to download this for BB. I find their website vague. Also read about the company in JobVent and sounds really shady.

[The guy]

GetFugu will fold soon and start up as a different company [again], might be in China. They've already done this in London, New York, and Atlanta. As of March, 2010, employees are more than a month behind pay and EVERY contractor that ever worked there is STILL owed money. I can't believe that they continue to operate and scam.

[e murer]

Just another penny stock scam,
just like the other thousands
of penny stock scams that occur, that the SEC,for decades, has just simply
and conviently looked the other way, and fails to regulate over the counter stocks, I bought it at 10cents
a share, today 3-19-10,its 4cents a share, granted I was a fool to believe all the those trumped up press
releases, the whole getfugu
executive mgmt. team, should
be prosecuted for fraud, and
sent to prison--forever!

[The guy]

The news on these scammers is becoming public and official:

http://www.cphpost.dk/news/international/89-international/48605-fbi-enters-stein-bagger-case.html

you MUST see this article

[The guy]

The Article mentioned above at the Copenhagen post was taken down, someone at GetFugu or the FBI shut it down. I PDF'd a copy and posted it here for viewing:

http://hidemyass.com/upload/files/MmGf7

It's an official article showing the scam, money and FBI involved with Carl Freer / GetFugu

[Fed Up]

REALLY NICE GUYS. Apparently, the majority of people who have ever worked for them found it to be a miserable experience. How a company can continue operating while leaving others hanging out to dry is beyond me:

http://www.jobvent.com/getfugu-job-reviews-C16749

[Fugu]

Federal Court Throws Out Frivolous RICO Claims Against Getfugu

http://www.live-pr.com/en/federal-court-throws-out-frivolous-rico-r1048549775.htm

[Fed Up 2]

Having read through the court order, turns out there was no basis for charges to ever have been filed.

http://www.getfugu.com/rico_dismissal/getfugu_order.pdf

So if so much that is on this page was created in effort to smear Freer and GetFugu, can't all of it be considered fraudulant as well?