Be warned. We are activists. We are biased.
We do our best to find and present facts, based on extensive primary research and using public sources.
But we will profit if these stocks decline or, when we are long, rise in value.
We do not offer advice on how anyone else should trade a stock. We present our views.
We do our best to find and present facts, based on extensive primary research and using public sources.
But we will profit if these stocks decline or, when we are long, rise in value.
We do not offer advice on how anyone else should trade a stock. We present our views.
Hidden Grand Jury DOJ Investigation
Into Innodata Revealed
- Buried in INOD’s just-released Q3 2024 report is a disclosure that it has been subpoenaed by a grand jury in a DOJ investigation. The subpoena was received August 7, 2024, the day before INOD released Q2 earnings, at which time the investigation was undisclosed.
- We believe that the concerns go beyond the February 15, 2024 Wolfpack report that brought on a class-action suit and an SEC investigation. The involvement of DOJ suggests potentially criminal conduct and validates our September allegations of potential fraud.
- INOD did not disclose this information for more than seven months and made no mention of the investigations on the earnings call last night. Given that sort of conduct, can investors trust INOD? We believe, at best, INOD numbers cannot be relied upon, and, at worst, you can’t rely on anything they say. The first letter from the SEC (Division of Enforcement) was received on March 25, 2024, and a subsequent subpoena from the SEC arrived on September 23, 2024.
- When a company fails to disclose investigations multiple times and puts out numbers that appear good, investors have to question why the information was hidden.
- The SEC is currently focused on curbing “AI washing,” and INOD looks very guilty of this.
Last night after market closing, INOD released its 10Q SEC filing of quarterly financials. The report contained the following commentary (with emphasis added):
Subsequently [to the filing of a securities class action], on March 25, 2024, the Company received a letter from the staff of the Securities and Exchange Commission, Division of Enforcement (the “SEC”), requesting the Company preserve certain documents and data; on August 7, 2024 the Company received a grand jury subpoena from the U.S. Department of Justice (“DOJ”) requesting the Company to produce certain documents; and on September 23, 2024 the Company received a subpoena from the SEC requesting certain information. The Company believes that the SEC and DOJ requests are related to the conduct alleged in the Securities Class Action, and is cooperating with these investigations. The Company is unable to predict when these matters will be resolved or what further action, if any, the SEC or DOJ may take in connection with it.
INOD Q3 2024 10-Q page 16
INOD Q3 2024 10-Q page 16
This issue was NOT noted in INOD’s quarterly press release or on yesterday’s earnings call.
Even this morning, Craig Hallum celebrates INOD’s numbers: “Wow!, Geez, Holy Cow, Holy Smokes and Zowie!” The analyst clearly missed the disclosure buried in the 10Q, Lucky J Capital did not. Regarding these investigations, we say “Wow!, Geez, Holy Cow, Holy Smokes and Zowie!”
Shortly after the February 15, 2024 Wolfpack report, a class-action suit was filed alleging that INOD is engaging in “AI washing.” The SEC back on March 18 disclosed that AI washing may violate securities laws. Bloomberg reported on the SEC’s concern in June. The SEC investigation commenced shortly after the Wolfpack report.
The INOD 10Q reports that the class action alleges “false and misleading statements regarding the Company’s artificial intelligence (“AI”) technology and services”:
Even this morning, Craig Hallum celebrates INOD’s numbers: “Wow!, Geez, Holy Cow, Holy Smokes and Zowie!” The analyst clearly missed the disclosure buried in the 10Q, Lucky J Capital did not. Regarding these investigations, we say “Wow!, Geez, Holy Cow, Holy Smokes and Zowie!”
Shortly after the February 15, 2024 Wolfpack report, a class-action suit was filed alleging that INOD is engaging in “AI washing.” The SEC back on March 18 disclosed that AI washing may violate securities laws. Bloomberg reported on the SEC’s concern in June. The SEC investigation commenced shortly after the Wolfpack report.
The INOD 10Q reports that the class action alleges “false and misleading statements regarding the Company’s artificial intelligence (“AI”) technology and services”:
On February 21, 2024, David D’Agostino filed a putative class action captioned D’Agostino v. Innodata Inc., et al., in the United States District Court for the District of New Jersey against the Company and certain of its current and former officers (the “Securities Class Action”). On October 30, 2024 the presiding judge in the Securities Class Action appointed a lead plaintiff and approved the lead plaintiff’s choice of counsel. The Securities Class Action complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, and it alleges, among other things, that the defendants made false and misleading statements regarding the Company’s artificial intelligence (“AI”) technology and services. The plaintiff seeks unspecified damages, fees, interest, and costs. The Company intends to defend itself vigorously, but the Company cannot predict the outcome of the action at this time and can give no assurance that the asserted claims will not have a material adverse effect on its financial position or results of operations.
INOD has spoken frequently of massive contracts from a “Mag 7” tech company that we identified as Meta. On September 23, 2024, we wrote that senior employees at Meta in charge of AI don’t even know of Innodata as a service provider. After extensive interviews with former employees of Innodata and “Mag 7” companies that INOD reputedly serves, we said that we think INOD is massively exaggerating its “commitments.”
INOD received the original request on March 25, 2024 and has disclosed nothing despite two quarters of reports and calls. If a company acts like that, can you trust anything they say?
INOD received the original request on March 25, 2024 and has disclosed nothing despite two quarters of reports and calls. If a company acts like that, can you trust anything they say?
We say “Wow!, Geez, Holy Cow, Holy Smokes
and Zowie!”
Nano Nuclear (NNE)
The Rampant Stock Promotion and Undisclosed Related
Parties Behind the Empty Shell that is NNE
- We believe this back-of-the-napkin nuclear idea is an obvious stock promote. The self-promotional founder, Jay Jiang Yu, and his team of market bro directors have been involved in a half dozen penny stocks that fell between 40-100% post IPO. The founder and nearly all directors lack any experience in the nuclear industry.
- Jay Yu deploys an army of interns and a plethora of affiliated media companies like Financial Buzz Media Networks and Nuclear Insider to promote NNE, which has been called a “shameless grift.” We are stunned by the outrageously blatant stock promotion, which had pushed shares up by about 300% as of October 2 with, we believe, zero substance.
• We conducted onsite checks and learned that NNE shares the same space as an undisclosed related party called LIST. LIST raised almost $12 mln in August for a suspiciously similar plan to NNE’s. We suspect LIST may be financially involved with NNE’s “new headquarters” building in Oak Ridge, Tennessee. - NNE CFO Jaisun Garcha is simultaneously CFO of at least five other companies, four of which look like failures while one is undisclosed related party LIST.
- NNE just spent $1.7 mln on a “headquarters” in Tennessee even though the $33k/mo lease on its office in New York (for fewer than five staff members we observed during a site visit) does not expire until 2031. The purchased building is in the same office park as LIST—which actually has executives in Tennessee and has earmarked about $1 mln for “refurbishing” an unnamed space in the Heritage Center.
- Dilution is coming. After raising $10.4 mln net in May 2024, NNE has offered another roughly $18.6 mln net in shares, and the company says it will need “potentially hundreds of millions of dollars” to develop a product. Lock-up for large inside owners ends in November.
- Service providers are notoriously third-tier. The auditor, WithumSmith+Brown, in February 2024 was fined by the PCAOB for poor audits. The bookrunner, The Benchmark Company, has been sanctioned multiple times by financial authorities. Investors are organizing a lawsuit against NNE for “laughable” regulatory claims.
- Management paid itself roughly $1.5 mln in 2023 despite 0 revenues and even though NNE reported no full-time employees.
- NNE IPO’ed with barely even the concept of a plan. The company went public with zero revenues, zero patents, zero plant and equipment, and zero full-time executives. Since its inception, NNE has spent a grand total of about $4.5 mln on R&D yet has a market capitalization of some $529 mln.
- Advisors remind us of Theranos 2.0: they include General Wesley Clark, the former presidential candidate and frontman for Rodman & Renshaw, which stumped for Chinese frauds, and disgraced ex–New York Governor Andrew Cuomo. These men have neither domain expertise nor, at this point, much political clout.
- NNE has not even received government funding, unlike many of its peers in the SMR and microreactor space. Industry expertise in the company is sorely lacking, and the “independent directors” have no visible experience with either the nuclear industry or listed companies.
- We are enthusiastically in favor of new nuclear technologies, even speculative ones. But our research tells us that NNE is an empty stock promote of the worst type.
*Please see our report for important footnotes. They provide sources for allegations.
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Disclaimer
The reports and other commentary displayed are for information purposes only and should not be relied upon as investment advice. The information provided is not a complete analysis of every material fact regarding any country, region, or market. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of the date of this posting and may change without notice.
Opinions are intended to provide insight on macroeconomic issues and commentary is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy.
Investments involve risk. The value of investments can go down as well as up, and investors may not get back the full amount invested. The information contained in these reports has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion.
The reports and other commentary displayed are for information purposes only and should not be relied upon as investment advice. The information provided is not a complete analysis of every material fact regarding any country, region, or market. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of the date of this posting and may change without notice.
Opinions are intended to provide insight on macroeconomic issues and commentary is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy.
Investments involve risk. The value of investments can go down as well as up, and investors may not get back the full amount invested. The information contained in these reports has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion.