Whose Mama is that: how a Novosibirsk startup was estimated at $35 billion

Startup from Novosibirsk, Neuromama, attracted the attention of the US regulators, when its capitalization exceeded $35 billion, topping the cost of Tesla Motors and Airbnb. How did this story become possible and who are its heroes?
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Who are these people

Company Neuromama appeared at the hearing on 15 August when the Securities and Exchange Commission (SEC) withdrew its shares from trading on suspicion of manipulating entrepreneurs. Achieve capitalization of $ 35 billion Russians failed, most likely due to the repurchase of shares of the same limited range of stakeholders, investors say. However, to make real money on bloated capitalization enterprising Russians could not - have brought their exorbitant appetites and lie about what the company is about to place its shares on the stock exchange NASDAQ.

Startup Neuromama - search engine, based on a "neuroscience". How to assure the representatives of the company, is "the world's first search engine with artificial intelligence, radically different from the traditional Google or" Yandex ". The company emerged in 2011 and first began to be traded on the OTC OTC Markets trading system in April 2012 (SEC data). Initially, the company was registered in Novosibirsk, but later moved to Mexico, to the peninsula of Baja California near the US border. According to the company, of findingof Russia was in for it "politically incorrect."

According to the newspaper "NGS.Novosti" key positions in Neuromama held at different times of the natives Novosibirsk Igor Veselovsky Alexander Vikulov. Last, as stated on his page on LinkedIn, he served as CEO Neuromama with May 2013 and June 2014, and now lives in San Francisco. Vikulov told RBC that left the company more than two years ago. "Shares of the company, I no longer speak, no positions and attitudes do not support," - he wrote in answer to the question of RBC.

Igor Veselovsky still lives in Novosibirsk. The Facebook profile, he said that is engaged in marketing, "coconut water" - coconut juice in the package. Previously, he was involved in the organization of the Novosibirsk Green Light and Mexican AJAX LTD Internacional, as well as doing freelance for the BBC Monitoring (however, in BBC Monitoring RBC said they do not know a person by that name).

RBC interviewed several representatives of IT-companies in Novosibirsk and venture capitalists in Silicon Valley, but all of them Veselovsky name or the name of the previously Neuromamayli known. According to SPARK, Veselovsky registered as SP, and is also the owner of "Ajax import", registered in the category "Wholesale trade through agents (for reward or on a contractual basis)." Furthermore, Veselovsky -. A former co-owner of the company "noosphere" Software development and former manager of "DJ Siberia" Veselovsky himself has not responded to a request to RBC.

In addition, one of the co-founders of a startup is a resident of California, Ukrainian investor Vladislav Zubkis, also uses the name Steven Schwartzbard. According to the press release Neuromama, he served as manager of marketing for the company, and later - the head of the fund Amnistya Children Foundation, who advised the company. Earlier Schwartzbard already had problems with the law: in 2007 he was sentenced to five years in prison in the US for defrauding investors, and complicity in the fraudulent scheme at $ 1.8 million related to the repair of the casino in Las Vegas.

Bubbles and money

US law allows legally registered company that has no assets, pazmeschat shares among investors, with the registration and annual fees do not exceed a few hundred dollars. Search the investors can not only on the stock exchanges, but also on the OTC market.

OTC Markets - OTC equity trading system. As a rule, it traded small companies from different sectors, which are not required to provide accountability and audit. In addition to these companies from the Commission on the US Securities and no minimum requirements for the number of employees, annual revenue, profit or terms of the presence of activity. Parties enter into OTC transactions directly, rather than through the stock exchange, so do not need to reserve funds on the eve of bidding for them. In addition, the OTC market organizer is not liable in the event of default by one of the participants.

"Penny stocks" on the OTC market (penny stocks) are frequently subject to the strategy of "pump and dump» (pump and dump), when speculators wind the value of securities based on a quick profit. For example, the company's shares CannaVest, which has positioned itself as a world leader in investmentsholes in products from hemp, in 2013 rose in price by 680%, and by January 2014 the company's market capitalization exceeded $ 1 billion. The excitement rose on rumors of legalization of soft drugs in the United States, which were used by speculators. By August 2016 the stock price CannaVest Corp. It has fallen to virtually zero. This happens quite often - in July 2014 the company's shares CYNK Technology, registered in Belize, which had no revenues or assets of the previous three years, soared by 15,000% in three weeks, and its market value has exceeded $ 4 billion, however, two. weeks later capitalization CYNK collapsed.

Why is the company so much

US Securities Commission temporarily suspended trading in shares Neuromama, LTD (NERO) on the OTC market before 26 August. As stated in the SEC statement, this measure caused among other things by doubts in the authenticity of the information on the persons who control the company's operations, as well as "false statements to shareholders and / or potential investors that the company has applied for listing on the stock exchange NASDAQ, and potentially manipulative transactions with shares in the company. " Warn Commissionsludge brokers, shareholders and potential buyers that they must carefully consider all the statements, which are issued and will issue Neuromama.

As explained by the American financier and founder David Merkel at Aleph Investments Asset Management, Neuromama increased the value of their shares by trading shares between the limited range of stakeholders. In March 2011, the company was registered with the original name of Trance Global Entertainment Group Corp. with a capital of $ 3.5 thousand. (35 million shares at a price of $ 0.001 per share). In 2012, she held an IPO on the OTC market, where 720 thousand shares were purchased already at $ 0.03 per share. (Total transaction amount - $ 21.6 thousand.).

In 2013 the founders changed the name to Neuromama, crushed shares in the ratio of 750: 1, so that the price per share soared 750 times. Now the company has been more than 3 billion shares. Such a large-scale emission of the company's representatives explained their "grand plans".

In the fall of 2013 he made Neuromama site and allegedly acquired a number of assets associated with entertainment, -. A virtual library with a variety of TV shows, movies, etc. These assets are acquiredin exchange for the issue of 4,866,180 ordinary shares at a price of $ 20.55 (September 3, 2013) totaling $ 100 million. The seller of assets is unknown, and it is unclear whether they are at least some value. In the course of the transaction the owner of Major annulled 80% of its shares (the transaction was cash-strapped). Now the number of shares amounted to more than 630 million.

From time to time the stock traded at NERO really exchange small amounts of no more than several tens of thousands of dollars. But by August 2016 the stock price has risen to $ 56.25, and the company's market capitalization exceeded $ 35 billion. Are these stocks to buy at least someone from outside investors? Optional - at such a low liquidity of the company's capitalization could finagle several players close to the company.

Neuromama Company has not filed any financial report on its activities, from time to time the release of confining reference 8-K, - a form of current accounts, which public companies are required to submit to the SEC, to inform shareholders about major events. How to explain this Neuromama in a statement she was late reporting due to the fact that "Ameriini- tially the auditors' refused to conduct an audit of the company located in Russia. Startup promises to provide all the financial reports and a half or two months.

According to David Merkel, the real value of the company goes to zero. "This is still suffering from a lack of money to start initial stage of development without any income after five years of existence. Market capitalization - is an illusion, if there is nothing that can generate cash flow, "- notes the analyst. According to him, the company's price should fall to zero as soon as trading resumes.

Why is all this necessary

Why founders Neuromama this bubble was inflating need? "The first calculation is very simple - the signal will be seen by human or machine intelligence and someone will take a random decision to purchase, and the founders will sell a small stake at a higher price and make money on it," - said RBC's leading investment analyst of "Finam" Leonid Delitsyn . It might well work in the stock market, but over the counter transaction commit large investors, and "vryad whether someone will be missed on the emotions stake in a little-known company, just because it grows in the price, "explains the expert.

According to one of the sources of RBC, the beneficiary could be a third party - for example, the Russian bank or fund owns shares of that company, which sought for its own account to increase capitalization. However, this assessment of the company's value had to stay at a high level for a long time. "If they kept the capitalization of the company at $ 90 million for a couple of years, it could work. But this scandalous increase - it's too much, and this one will not allow ", - said Delitsyn.

It is possible that the founders Neuromama simply carried away by blowing capitalization as gambling. If the company's assessment did not exceed several tens or even hundreds of millions of dollars, these manipulations may remain.