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Pump & Dump Report on Raystream, Inc. (OTCBB:                                                  RAYS). RAYS loses one of it...
ContentsIntroduction ........................................................................................................
IntroductionMost investors know the GeoInvesting for its work covering the ChinaHybrid space; both during its glorydays an...
JAMN 1 Year ChartOur first OPR nominee belongs to Raystreams (RAYS)Rays 3 Mo Chart                       www.geoinvesting....
The Raystream story has it all - a too good to be true product, excessive company sponsored paidpromotional campaigns and ...
Going public detailsThe history of RAYS is quite brief.November 4, 2010A “real estate development company”, Interdom (stoc...
On August 22, 2011Interdom completed a 37 for 1 forward split and changes its name to Raystream as it prepares for theinev...
referenced, just to sustain operations. This deadline is approaching fast and has likely accelerated nowthat it has a “rev...
a leader in anything except possibly scams?) or has made a breakthrough discovery. A company       with legitimate breakth...
published a glowing follow-up to his originally skeptical column about Raystream’s technology. Well, wehave only to read t...
You can judge yourself, but in our opinion these considerations are simply unconvincing. How do youexplain the fact that p...
SIDEBAR – All too Familiar StoryHow the big boys with game changing technology do thingsTo this point, we suggest investor...
issuance of 20,000,000 shares of common stock of the Company. The acquisition of Raystream        GmbH makes it a wholly-o...
This is not the first time Ultimate Trade has been involved in a stock promotional campaign.The RAYS-LEXG ConnectionThe or...
The name of Gekko Industries came into the public eye in relation with one of the most successfulpump-and-dump promotions ...
November 10, 2011” but as of now no Paris address is available on the contact page of the RAYS website.In further dissecti...
Amwest Imaging (AMWI ) is a cloud computing company. It has around 500 million shares outstanding,giving it a market cap o...
dealings. The Commission also charged Francisco Abellan (also known as "Frank Abel") of Barcelona,Spain with coordinating ...
also declared insolvent. Tan Siekmann, in this case, bought some of the insolvent assets and founded"Safe-Com GmbH & Co. K...
   Marco Antonio Gomez (Treasurer)These names are now quite familiar to us:       Maria Lucrecia Martinez is President a...
He is Co-founder and CTO of Raystream Inc and he also had a key technical role in Safe-Com as stated inhis bio on Raystrea...
July 12, 2011Roman Rumpf resigned as CEO and become CTO. Brian Petersen was appointed as the new CEO.August 22, 2011Interd...
Mr. Butzer has worked in intellectual property law with such renowned firms as Fitzpatrick,        Cella, Harper & Scinto,...
But... did Unlimited Trade really cancel those 129,500,000 shares? Nobody knows since they were notregistered with the SEC...
   “We will have to raise additional funds in the next twelve months in order to sustain and            expand our operat...
much more superior their so called “proprietary” product is when compared to others. If Raystream was arespectable company...
EXHIBITSwww.geoinvesting.com   27
Exhibit 1 – A Review of how RAYS exhibits characteristics of a Pump and Dump ScamQualifies?   Characteristic              ...
capital).YES   Increased press release flow                             6 press releases in October; 4 in the first       ...
Exhibit 2: All Video players show that the Raystream video used the common H264codec.                              www.geo...
Exhibit 3: Deceptive modification of sections of website.A few days after the test published on github.com, RAYS modified ...
Exhibit 4: The original code (of course commented) is still present on the web page.                                www.ge...
Exhibit 5: Raystream GmbH Company Owners (Handelsregister)                             www.geoinvesting.com            33
Exhibit 6: TOM BGmbH Company Owners (Handelsregister)                            www.geoinvesting.com        34
Exhibit 7: Unlimited Trade Delegate Tan Siekman to represent the company with theGerman Notary.                           ...
Exhibit 8 – Codecs List, License Status (Source: Wikipedia)Codec          Creator/Maintainer First public   Latest stable ...
3ivx           3ivx Technologies    2001         5.0.2 (2007)   Proprietary    MPEG-4 ASP               Pty. Ltd.Nero Digi...
Indeo Video    Intel Corporation,     1992         5.2             Proprietary   Indeo Video               currently offer...
Exhibit 9 – GeoInvesting’s Notable Track RecordCo.     What we found at time       Report Date   Price at   Current Price ...
its cemetery business.                                                         facts presented                            ...
securities is an inherently risky and speculative practice. Trading in securities can result in immediate andsubstantial l...
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Raystream (RAYS) Pump & Dump Report, 12/29/2011

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The Raystream story has it all - a too good to be true product, excessive company sponsored paid promotional campaigns and ties to promoters of other companies that have been pumped before they were dumped. The stock has gone from $1.00 to $2.51 at its high since completing its “corporate restructuring” on October 4, 2011 and has already been exposed by two well-known research sites: The Street Sweeper (Dec. 1) and PumpsandDumps.com (Dec. 5). We also believe that TimothySykes.com views the RAYS story in negative light.
So now it seems that the jig is up for RAYS. Of no surprise, one of the company’s only three named “customers” (not clear whether or not they are paying) has already severed ties with them, as discussed later. It appears that the company’s large campaign to inform investors of a “proprietary” and “revolutionary” technology, claimed to have the ability to compress video like never seen before, has finally backfired on them. Investigations into the morality and intentions of their dealings, present and past, has uncovered disturbing truths and historical events shady enough to make even the most risk-tolerant investors run for the hills.
In a revealing commentary, The Street Sweeper released a column that discussed questionable business practices, delving into RAYS’ botched and weak attempt to fool what they obviously thought were naïve investors, presenting to them a product put together from free and open-source software and calling it their own. PumpsandDumps.com counted twelve stock promoting sites that were engaged in touting RAYS, but something tells us that this number is conservative.
The Street Sweeper’s article also covered a brief look into the intertwined cast of characters charged with molding the RAYS fraud into what it is today and the cast’s evident conflicts of interest in doing so. We decided to go a step further and uncovered eye-opening instances of recurring relationships tied to failed ventures and brazen pumps. (See page 17)
The fact that GeoInvesting was concurrently looking into RAYS speaks volumes to the extent of the “company’s” pump tactics. In fact, on October 21, 2011 we stated on one of our premium blog pages (Open Short Positions) that we were already short RAYS.
In the end, our own network of sleuths reached many of the same conclusions as The Street Sweeper. We decided to collaborate with a third party researcher and expand upon his excellent documentation and commentary which immediately caught our eyes.
From our experience, once the P&D stock’s chart pattern breaks, taking shares below $1.00, the end of the successful pump campaign is inevitable. We don’t know how long the stock will be pumped, but it appears to already be unraveling and we surmise it’s just a matter of time before some lonely investor(s) will be left holding the bag.
We believe that RAYS is worth no more than what it would claim as a shell company or at most about $0.004 to

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Transcript of "Raystream (RAYS) Pump & Dump Report, 12/29/2011"

  1. 1. Pump & Dump Report on Raystream, Inc. (OTCBB: RAYS). RAYS loses one of its alleged three customers, without disclosure. December 29, 2011 Abstract Notable Red FlagsThe Raystream Inc. story has it all. A too In this 40 page report, we discuss many of the red flags that support thegood to be true product, excessive company case for deception and fraud on a grand scale, some of which you maysponsored paid promotional campaigns and already be aware of and others that have certainly flown under the radar.ties to promoters of other companies that havebeen pumped before they were dumped. The Raystream’s Technology is not a Secret (See page 8)stock has gone from $1.00 to $2.51 at its high The company’s claims of a proprietary high definition video compressionsince completing its “corporate restructuring” technology, related to AVC/H.264 video codecs, are flat out misleading. Inon October 4, 2011 and has already been fact, it is and has always been available as free and open-source software onexposed by respected research sites. other sites. Furthermore, RAYS claims “No other company specializes in HD compression technology.” To verify Raystreams claims, we decidedSo now it seems that the jig is up for RAYS. to do a simple web search. As expected, we found several companies thatThe company’s large campaign to inform specialize in HD video compression technology.investors of a “proprietary” and“revolutionary” technology, claimed to have Excessive Promotion (See page 7), REQUIRED READ!!the ability to compress video like never seen Raystream has spent millions of dollars on a self-promotion campaign justbefore, has finally backfired on them. to disseminate details of its story. Over a dozen sites have joined the pumpInvestigations into the morality and intentions train to fuel what we believe is a sensationalistic campaign designed to dupeof their dealings, present and past, has investors who are none-the-wiser about exactly how ubiquitous theuncovered disturbing truths and historical technology really is. In fact, Go Daddy suspended the Smauthority.comevents shady enough to make even the most domain, a pumper for RAYS.risk-tolerant investors run for the hills. The Usual suspects (See page 18) REQUIRED READ!! The people involved with Raystream include a cast of characters that have had a long and lurid history with rogue development stage companies that Valuation eventually failed. The same people are continually tied to one another with each new venture. (Evidence to be sent to SEC Task Force)Until RAYS clearly demonstrates that it cansecure industry giants as customers or books Dilution Imminent (See page 24)meaningful revenues we believe that RAYS is Investors are likely to get slammed with massive dilution due toworth no more than what it would claim as Raystream’s need for capital. RAYS admits it will have to raise fundsa shell company or at most about $0.004 to within the next 3 to 12 months, depending on which SEC filings are$0.01. ($200k to $500k divided by 50M referenced, just to sustain operations.outstanding shares). Furthermore, even ifRAYS has a semblance of legitimacy dilution Loss of customers (See page 17)is a major risk limiting meaningful EPS Exactly who are Raystream’s customers? We contacted one of threeresults. Even if one wants to apply RAYS alleged RAYS customers only to find out that it no longer has aclaimed shareholder equity (which virtually relationship with RAYS? Does this sound like someone who was excitedconsists solely of goodwill) in its October about a technology that would revolutionize the way things are done?2011 10Q, one would derive a price target of$0.19. RAYS has no problem name-dropping when it comes to large players like Netflix and YouTube possibly lining up to use their product, but they fail toFor a company with limited revenues, equity recognize that these and other notable names are already AVC/H.264offerings will likely have to be accomplished licensees, as you will learn.at a major discount to its current market price.GeoInvesting has historically been a financial portal with a long bias keyed on discovering strong growth companies, both Chineseand American. However, our approach to investing is not prohibitive to identifying what we believe to be instances wherecompanies may be practicing deception in various aspects of their businesses. We make our conclusions based on a wealth ofinformation we obtain by examination of both SEC and SAIC filings, as well as from extensive on-the-ground due diligence inChina and now the U.S. Such due diligence resulted in uncovering fraud with PUDA, YUII and SBAY, all of which were haltedshortly after our investigations. To see a snapshot of the outcomes of our DD, please see Exhibit 9. GeoInvesting, LLC | 4440 Township Line Road| Suite 103 | Skippack, PA 19474 | 484.991.8426 GeoInvesting.com
  2. 2. ContentsIntroduction ................................................................................................................................................... 3Our first OPR nominee belongs to Raystreams (RAYS) .............................................................................. 4Going public details ...................................................................................................................................... 6Let the pumping begin .................................................................................................................................. 7 What Happens Next?............................................................................................................................ 7 Claims of a “disruptive technology” .................................................................................................... 8 Too Good to be True? .......................................................................................................................... 8Massive Pump Campaign: So where is the money being spent? ................................................................ 13 The RAYS-LEXG Connection........................................................................................................... 14 Gekko Industries Inc. ......................................................................................................................... 14Persons and places involved in RAYS- No Strangers to Pump and Dump Stories .................................... 18 German Leg ........................................................................................................................................ 18 Castle of Lichtenfels and Tan Siekmann ........................................................................................... 18 Michael Kang and Francis Villena ..................................................................................................... 20 Roman Rumpf .................................................................................................................................... 20 Thomas Friedli ................................................................................................................................... 22 U.S.A. Leg.......................................................................................................................................... 22 Nadia Christian................................................................................................................................... 22 Dane Butzer ........................................................................................................................................ 22Clues of an Off-Shore Scam ("Regulation S”)............................................................................................ 23Dilution is a certainty .................................................................................................................................. 24 TICK TOCK....................................................................................................................................... 25Valuation & Conclusion ............................................................................................................................. 25A Note to Caution ....................................................................................................................................... 26EXHIBITS .................................................................................................................................................. 27 Exhibit 1 – A Review of how RAYS exhibits characteristics of a Pump and Dump Scam ............... 28 Exhibit 2: All Video players show that the Raystream video used the common H264 codec. .......... 30 Exhibit 3: Deceptive modification of sections of website. ................................................................. 31 Exhibit 4: The original code (of course commented) is still present on the web page. ...................... 32 Exhibit 5: Raystream GmbH Company Owners (Handelsregister) ................................................... 33 Exhibit 6: TOM BGmbH Company Owners (Handelsregister) ......................................................... 34 Exhibit 7: Unlimited Trade Delegate Tan Siekman to represent the company with the German Notary. ................................................................................................................................................ 35 Exhibit 8 – Codecs List, License Status ............................................................................................. 36 Exhibit 9 – GeoInvesting’s Notable Track Record ............................................................................ 39 www.geoinvesting.com 2
  3. 3. IntroductionMost investors know the GeoInvesting for its work covering the ChinaHybrid space; both during its glorydays and unfortunately also during its ultimate fall from grace. At times, some observers questioned ourmotives and criticized us for not examining suspicious activity taking place on U.S. shores (Exhibit 8).We have taken this criticism seriously and have slowly begun developing a framework to identify lessthan honest behavior in the U.S. Just as in the ChinaHybrid space we will approach the deception cardusing two categories: 1. Real companies that are not being totally transparent with investors. 2. Companies with barely a semblance of a real operation that play in the OTCBB, Pinksheets and/or RTOs space (OPR) pumping their field of dreams while employing the usual promotion tactics: Pump and Dumps (P&D).JVA was our first U.S. short piece representing the first point above. On July 19, 2011, shortly afterstating we shorted the stock at $22.30, we discussed our opinion on how this real company wasmisrepresenting its earnings power while insiders were selling shortly thereafter. Since then the companyfiled a shelf and raised money with the aid of Roth Capital. The stock currently trades around $8 pershare.Examples of companies representing the second point above are names such as Jammin Java (JAMN) andTakedown Entertainment (TKDN). TKDN’s ride on the ultimate fighting hype ended with a TKO(premium page), while JAMN’s caffeine high eventually ran out. Both of these stocks met the inevitabledoom symbolic of the P&D stories indicative of the all too common crash and burn chart patterns.TKDN 6 Mo Chart www.geoinvesting.com 3
  4. 4. JAMN 1 Year ChartOur first OPR nominee belongs to Raystreams (RAYS)Rays 3 Mo Chart www.geoinvesting.com 4
  5. 5. The Raystream story has it all - a too good to be true product, excessive company sponsored paidpromotional campaigns and ties to promoters of other companies that have been pumped before they weredumped. The stock has gone from $1.00 to $2.51 at its high since completing its “corporaterestructuring” on October 4, 2011 and has already been exposed by two well-known research sites: TheStreet Sweeper (Dec. 1) and PumpsandDumps.com (Dec. 5). We also believe that TimothySykes.comviews the RAYS story in negative light.So now it seems that the jig is up for RAYS. Of no surprise, one of the company’s only three named“customers” (not clear whether or not they are paying) has already severed ties with them, as discussedlater. It appears that the company’s large campaign to inform investors of a “proprietary” and“revolutionary” technology, claimed to have the ability to compress video like never seen before, hasfinally backfired on them. Investigations into the morality and intentions of their dealings, present andpast, has uncovered disturbing truths and historical events shady enough to make even the most risk-tolerant investors run for the hills.In a revealing commentary, The Street Sweeper released a column that discussed questionable businesspractices, delving into RAYS’ botched and weak attempt to fool what they obviously thought were naïveinvestors, presenting to them a product put together from free and open-source software and calling ittheir own. PumpsandDumps.com counted twelve stock promoting sites that were engaged in toutingRAYS, but something tells us that this number is conservative.The Street Sweeper’s article also covered a brief look into the intertwined cast of characters charged withmolding the RAYS fraud into what it is today and the cast’s evident conflicts of interest in doing so. Wedecided to go a step further and uncovered eye-opening instances of recurring relationships tied tofailed ventures and brazen pumps. (See page 17)The fact that GeoInvesting was concurrently looking into RAYS speaks volumes to the extent of the“company’s” pump tactics. In fact, on October 21, 2011 we stated on one of our premium blog pages(Open Short Positions) that we were already short RAYS.In the end, our own network of sleuths reached many of the same conclusions as The Street Sweeper. Wedecided to collaborate with a third party researcher and expand upon his excellent documentation andcommentary which immediately caught our eyes.From our experience, once the P&D stock’s chart pattern breaks, taking shares below $1.00, the end ofthe successful pump campaign is inevitable. We don’t know how long the stock will be pumped, but itappears to already be unraveling and we surmise it’s just a matter of time before some lonely investor(s)will be left holding the bag.We believe that RAYS is worth no more than what it would claim as a shell company or at mostabout $0.004 to $0.01. ($200k to $500k divided by 50M outstanding shares). Even when applying RAYSclaimed shareholder equity (which virtually consists solely of goodwill) as shown its October 2011 10Q,a price target of just $0.19 can be derived.What follows is our assessment on RAYS, an effort to supplement the research of prior authors, withadditional information. www.geoinvesting.com 5
  6. 6. Going public detailsThe history of RAYS is quite brief.November 4, 2010A “real estate development company”, Interdom (stock symbol prior to RAYS: ITRD), with no revenueswent public through an S-1 filing. Interdom Corp was incorporated by Igor Rumiantsev in Nevada onDecember 8, 2009 with an authorized share count of 75,000,000. Interdom never progresses with itsstrategy but still has an asset as a public vehicle.June 14, 2011A change in the control of Interdom occurred when Igor Rumiantsev sold all of his 3,500,000 commonshares (83.8% of the Company’s outstanding and issued common stock) for $200,000 in a private sharepurchase transaction to Unlimited Trade Inc.The Raystream Connection is BornOn the same day (and SEC filing) Igor Rumiantsev resigned and Interdom appointed Roman Rumpf asits new President, CEO, Principal Executive Officer, Treasurer, CFO, Principal Accounting Officer,Secretary, Treasurer and as Director.The 8K filing offers the following biographical information about Roman Rumpf: Currently, Mr. Rump is the general manager of Raystream GmbH, a private technology company, a position he has held since March 2011. From April 2010 to February 2011, Mr. Rump worked as a technical consultant at Elogic GmbH, a private electronic FX Trading company. From March 2008 to March 2010, Mr. Rumpf worked as Head of Development for Burg Lichtenfels GmbH & Co. KG, a private IT-Security company. From June 2006 to February 2008 Mr. Rumpf was Project and Product Manager at Qnective Inc. a private Social Networking company. Note: GmbH is the German equivalent of LLC.Well examine this information later. For now, just remember the bold items in the excerpt above and notethat this is the first time (June 14, 2011) that the name “Raystream” was referenced.On July 12, 2011The company appointed Brian Petersen to executive positions.On July 18, 2011As its new controlling shareholder, Unlimited Trade lent the company $2 million via a convertible loan,due in July 2013, (we will revisit this item). (Related party loan) (see July 21 8k) www.geoinvesting.com 6
  7. 7. On August 22, 2011Interdom completed a 37 for 1 forward split and changes its name to Raystream as it prepares for theinevitable acquisition of Mr. Rumpf’s affiliated company, Raystream GmbH.On September 19, 2011Raystream Inc. acquired Raystream GmbH in a ZERO cash transaction using 20 million shares asconsideration.Also on September 19, 2011 after only two months of possession of its loan and with essentially notrading market for RAYS shares, Unlimited Trade (largest and newest shareholder) opted to convert itsloan into 5 million (unregistered) shares of common stock at $0.40 (equal to $2 million or the amount oftheir original loan), well below the current going market price of RAYS.Let the pumping beginOn October 4, 2011 RAYS issued its first press release.After trading a combined volume of 5 thousand shares in recent trading sessions prior to this release,volume exploded to 5.2 million shares on October 10, 2011 and never looked back.Shortly thereafter, the company sponsored a $3.25 million promotion campaign.This story smells of a classic shell game. Take control of a public shell and develop a “sexy” businessplan. Next, enter into a related party convertible loan where potential shares will cover the cost of the“riskless” loan that you essentially control. Next, instead of having to spend cash which the company doesnot have, the company purchases non-patented “ground breaking technology” from (Raystream GmbH)using stock, where the R&D capital has allegedly been spent. Finally, create enough trading volume tosell your unregistered shares. At the stocks high the company’s convertible loan shares were valued at$12.5 million. This easily covers the cost if the $3.25 million promotional campaign. Better yet, the 20million shares that were so graciously given to Raystream GmbH were worth $50.2 million. Not a badday for a company with essentially no revenues.What Happens Next?Ultimately, we surmise that the stock will plummet:  as investors realize that RAYS may not be what it purports itself to be.  as investors realize that even if some legitimacy exists, the company will have to tap the equity markets.  if the company just goes dark after selling its convertible shares and the promotional capital dries up.As you will read later in the report and what has not yet been discussed by other authors, RAYS admits itwill have to raise funds within the next 3 to 12 months, depending on which SEC filings are www.geoinvesting.com 7
  8. 8. referenced, just to sustain operations. This deadline is approaching fast and has likely accelerated nowthat it has a “revolutionary”, unpatented product to market. At best, substantial dilution, an investor’sworst enemy, is around corner and should continue well into the future. Investors who purchase RAYSshares now could soon be blindsided with an equity offering and a sharp hit to the share price.These are some of the Red Flags encompassing the RAYS story, often shared by other P&D’s:  Sexy story,  Possible exaggeration of “proprietary’ product function or technology,  Insignificant customers relations  Promotional activities  Usual Suspects of fraudulent accomplices  DilutionClaims of a “disruptive technology”Rays is a small development stage software company founded on March 21, 2011 which allegedly ownsa “proprietary” ground breaking online video compression technology. According to their website this“technology drastically decreases bandwidth costs by reducing the file size of HD videos up to 90percent, with an average of approximately 70 percent, and with no loss in clarity or quality -- so they canbe streamed online without buffering or stopping.”According to a recent article by Streetsweeper.com: RAYS of Sunshine ... or Clouds of Doom? “They appear to be selling open-source software – available at no charge – to anyone who wishes to use it. That software, known as “x264,” can be downloaded here for free” which is given away as shareware.While we are by no means video technology compression experts, it was easy enough to substantiateStreet Sweeper’s claims that the x264 encoder (one of the many implementations of the proprietary H.264format) used to compress video is “free and open-source software” (defined) licensed as GNU GPL. Justfollow this link you can clearly see that the technology can be characterized as such.Even more startling is there is a list of companies that have already registered as licensees to useAVC/H.264 – some of which are the same companies named in the P&D material that claims theywill be lining up to become RAYS customers! Among them are Netflix and Google. RAYS needs tooffer more clarity on this issue.Too Good to be True?As the pumpsanddumps.com states: “Beware if the company claims to be an industry leader (do you really think a penny stock can be www.geoinvesting.com 8
  9. 9. a leader in anything except possibly scams?) or has made a breakthrough discovery. A company with legitimate breakthrough technology is unlikely to be promoting itself on the penny stock market and will most likely have funding available to it within a variety of partnerships with major companies. These same companies will not likely be interested in dealing with a penny stock company. Also, question the likelihood of a fairly new company being the leader in anything other than schemes.”Let’s see what RAYS declares to be…From the Company Profile on Yahoo!Finance: Raystream Inc. provides proprietary video compression technology to businesses and consumers worldwide. Its technology reduces the file size of high definition (HD) videos with no loss in clarity or quality. The company enables HD video over Internet connections through its online video platform. Its automated content management system enables users to manage uploading, editing, conversion format, and queue management, as well as storage, analytics, and client side utilities. The company offers commercial conversion for large-scale content owners, content distribution networks, advertising groups, and telecommunications companies; personal conversion for smaller video content developers, individuals, and person users; and live- streaming for large and small businesses, news organizations, sporting clubs, and individuals.From the “About Raystream” in a recent press release: Raystream Inc. is bringing its proprietary video compression technology to businesses and consumers worldwide. This technology drastically decreases bandwidth costs by reducing the file size of HD videos up to 90 percent, with an average of approximately 70 percent, and with no loss in clarity or quality -- so they can be streamed online without buffering or stopping. Raystream’s technology puts high definition video in the reach of nearly every Internet user on the globe.In their October 2011 10Q, RAYS makes what we thought looked like an absurd statement coming from acompany with no financial backing from industry giants or venture capital firms “Raystream is the first company to offer HD compression technology”…“No other company today specializes in HD compression technology.”Wow! It seems they have discovered one of the most disruptive video technologies of the century,with the potential to revolutionize the entire web!To verify RAYS claims, we decided to perform our own simple web search. As expected, just byconducting simple web searches, we found several companies that specialize in HD video compressiontechnology. You can do the same.Interestingly enough, in a recent development on Reel SEO’s website, freelance writer Christopher Rock www.geoinvesting.com 9
  10. 10. published a glowing follow-up to his originally skeptical column about Raystream’s technology. Well, wehave only to read the second sentence of his first paragraph to maintain a skeptical eye on the results thatMr. Rock publishes further down in his column: “I sent them a 271MB video file and asked them to do that voodoo that they do to it and send it back.”This is where we again say that Raystream’s secret sauce is no secret. Of course they can show that anexisting technology works, but what they fail to do is show, by technical example, how they haveadded any value to x264. Anyone familiar with x264 can pretty much see this, as described in LucianGregory’s blog post, Raystream (RAYS): Trying to Market Essentially Free Techology?, that came outafter Reel Seo’s column. An excerpt that we whole-heartedly agree with follows: “In any case, the measurements here appear to show that Raystreams technology does not offer a compelling solution for video compression over the freely-available x264 encoder. The test of this was easy to put together and shows that Raystreams claim that "before Raystream," compressions such as the ones Raystream achieves were not possible, is patently false. Virtually the same compression ratios are achievable using a free product.”So why hasn’t Raystream protected its only asset with patents? On the company’s website, the answers tothis frequently asked question sheds light on this issue: Q: Does Raystream have a patent or patent pending on its technology? A: Raystream did not apply for a patent for its HD video compression technology due to a number of factors, most specifically as a measure to protect its proprietary nature and maintain it as a trade secret claim. Other factors include: o Applying for patent protection of our various technologies requires disclosure and full description of how the technology works. If accepted, the patent details would be published, opening our technology to possible replication by competitors without patent infringement even if minor modifications were made. o Securing a patent for software takes a long time, is expensive, requires government action and approval, and involves a significant amount of uncertainty. o Trade secret protection is quicker and less expensive, aligns with our strategy, and is more certain. o Patent protection offers only civil (monetary) remedies. Trade secret protection offers federal criminal remedies. o For these reasons, we have made the strategic decision to use trade secret protection instead of patent protection. www.geoinvesting.com 10
  11. 11. You can judge yourself, but in our opinion these considerations are simply unconvincing. How do youexplain the fact that practically all the other major proprietary codecs are patented (Exhibit 8)?Another important reason to patent video codec is that their underlying algorithms are easy victims of"reverse engineering". The hackers Jerome Rota and Max Morice (Link 1, Link 2) needed only a week toreverse engineer Microsoft’s MPEG-4 Version 3 video codec!On November 8, more evidence was provided supporting the argument that RAYS technology may not bewhat they claim it to be. A simple test was published here, reproducible by anyone with a minimal LinuxOS expertise. The author was able to reach the same rate of compression claimed by Raystream - even 3MB less – with the freely available tool mencoder and the H.264/AVC codec. By the way, one only needsto download the RAYS showcase video to see that it was also compressed with this codec. Opening thefile “ray_480p.mp4” with a video player and looking for its properties will show you that the RAYSproprietary codec is in reality a common H264 (Exhibit 2)A few days after that test was published, RAYS modified the see-for-yourself-page, removing thesection on the left (“Watch original version - 686 MB”) and on the right (“Watch standard compression214 MB - 214 MB”). The only video that remained was that one with the text “Watch Raystream version -28 MB”. One of our investigators tried to reconstruct the page’s previous appearance, shown in theExhibit 3. At any rate, the old code was not removed (just commented) and its still visible in the page“source view” (Exhibit 4).By now, it should be obvious that this story is too good to be true. Investors need to ask themselves aquestion that is often asked by ChinaHybrid skeptics such as Muddy Waters and Citron. Why would acompany with such a game changing technology choose to go public via a transaction with a shell withoutassets? The answer - we believe it is unlikely that the company has some game changing technologyand in the slim chance it does it will have to spend millions of dollars just cultivate it, dilutingshareholder value along the way.We find it impossible to believe that the firm that claims to possess unique technology could not raisesubstantial capital as a private firm, culminating in partnership arrangements with reputable industrygiants or in an impressive IPO debut when it could maximize its return on its investment. They insteadchose to come to the market with a public shell company (where their reputation would surely betarnished) that has limited funds to enhance or market the alleged Raystream “product.” This is a veryimportant point to understand. That would have been like YouTube choosing to go public via an RTOtransaction as opposed to combining forces with Google. If you have revolutionary technology thegiants will find you, and you will want to partner with a firm that can back you. You will not want to gopublic and then embark on massive dilution activities to fund your business plan, nor will yourshareholders prefer this scenario. RAYS already has 50 million outstanding shares and to date has barelyraised any capital. www.geoinvesting.com 11
  12. 12. SIDEBAR – All too Familiar StoryHow the big boys with game changing technology do thingsTo this point, we suggest investors read the story of DiVx Inc., a company in the same business RAYSclaims to be that after several initial rounds of investment and funding by some venture capitalists wentpublic with an IPO price of $16.The company started with an initial investment as they began their journey to NASDAQ, with an initialinvestment of $5 Million in 2000, growing to $35 million in invested capital by 2005.They solidified their position in the market place in 2006 by having their software downloaded withover 180 million downloads and over 50 million DivX Certified devices shipped. Their partnersincluded Samsung, Sony, Toshiba and Philips, working in multiple devices such as DVD Players, Blu-ray Players, Televisions, Game Consoles, Mobile Phones, Media, Streamers, Multimedia StorageDevices, Portable Media Players and In-car Players.They went public in September 2006 with annual revenues tracking at about $60 million. The registrationstatement covered 9,100,000 shares of common stock at $16.00 per share, raising proceeds for theCompany, before expenses, of approximately $111 million. They closed at $18.70 per share, giving theSan Diego-based company a market value of $625 million.According to an excerpt from the DIVX 8-K filed Oct 30, 2006, third quarter consolidated revenueswere $15.4 million, an increase of 83 percent from the third quarter of 2005. Non-GAAP Net income inthe third quarter of 2006 was $3.6 million, or $0.12 per diluted share, compared to net income of$821,000, or $0.02 per diluted share, in the third quarter of 2005. Revenue for the nine-month periodended September 30, 2006 was $42.7 million or 90 percent more than the comparable 2005 period.Non-GAAP net income for the nine months ended September 30, 2006 was $9.15 million, or $0.33 perdiluted share, as compared to net income of $373,000, or $0.01 per diluted share, for the nine monthsended September 30, 2005.They were acquired four years after the IPO in September of 2010 for $323 million by Sonic(SNIC), developer of digital media software (its flagship brand is Roxio). The price amounted to $9.25 ashare. At the time DivX employed 371 workers worldwide.Sonic in-turn was then purchased three months later in January 2011 by Rovi Corp. for $725 million.So what did Raystream GmbH sell its ground breaking technology for? Well they certainly did notrequire any cash or follow the route that a respected firm like Divx took.From the SEC Filing dated 09/23/2011: On September 19, 2011, Raystream Inc. (the “Company”) entered into an agreement whereby it acquired 100% of the issued and outstanding shares of Raystream GmbH in exchange for the www.geoinvesting.com 12
  13. 13. issuance of 20,000,000 shares of common stock of the Company. The acquisition of Raystream GmbH makes it a wholly-owned subsidiary of the Company.They paid Raystream GmbH with 20,000,000 common shares. How much was it in U.S. Dollars? Theanswer to this question isnt so easy because at that time the stock was not actively traded in the market.Anyways, considering that about a month before (August 22, 2011) Interdom Corp (ITRD) affected a37:1 forward split and that all the shares issued in the past had a value of $0.03/share, its reasonable toestimate a value of $0.0008. That means, that Roman Rumpf, the 29 year old founder of RaystreamGmbH and inventor of this breakthrough technology gave it away for $16,000 in stock, and no cash!Where/Who are RAYS Customers?If you had a revolutionary product wouldn’t major companies like Netflix, Youtube, Hulu and the like bechomping at the bits to access your products? The RAYS promotional campaign wastes no time tossingthese names around as potential RAYS customers. So who are RAYS customers? Well surprise, these bigboys are not customers of RAYS. What is interesting is that if you visit the site that hosts the free andopen-source software that RAYS applies to its product you will notice that all the big names haveregistered to this site and are keenly aware of AVC/H.264. These include Google (who owns YouTube),Netflix and YouTube. Apparently this technology is not a secret.So far, Raystream has only named three customers, one of which is here in America called EdgeFactoryOmniMedia. We called and spoke with a representative and discovered they had already severed tieswith Raystream and will no longer do business with them.The second is Laterna Magica located in Germany. We called and left several messages, stating that wewanted to find out more about RAYS video compression technology and how effectively it was workingfor them. We were clear in conveying that we were considering RAYS as a potential investment andthought that speaking with a client like Laterna, named by RAYS on their website, was a good start. Wedid not receive a call back. Our last attempt was successful in getting in touch with the CEO, who wouldnot comment regarding their relationship with Raystream.Finally, RAYS just recently announced the Christian Broadcasting Network as a “customer” who will beusing the technology on a trial basis for 60 days. We take this to mean free of charge. Are all of their“customers” on a trial basis? Is this why there is no revenue stream?Massive Pump Campaign: So where is the money being spent?So far we have confirmed that RAYS largest shareholder, Ultimate Trade, has spent at least a grandtotal of $3.25 million on a promotional campaign to disseminate the RAYS story. RAYS managementshould be advised to put that money to better use by spending capital to develop its market and customerrelationships. We find this unbelievable. RAYS is not even hiding the fact that it is essentially as wesee it, pumping its own stock. Per its 2011 second quarter 10Q the company has spent no capital onR&D and only $6,774 to market its revolutionary product. We plan to send information on this andmore to the SEC Special Task Force. www.geoinvesting.com 13
  14. 14. This is not the first time Ultimate Trade has been involved in a stock promotional campaign.The RAYS-LEXG ConnectionThe original change of control filing mentioned earlier in our report says nothing else about UnlimitedTrade Inc, but we will learn though some subsequent filings (on September 23, 2011) that it is anoffshore entity.Before the September 23 filing, an iHub user posted the addresses associated with the domain unlimited-trade.com: Unlimited Trade Inc. Frankfurt Office Bockenheimer Landstraße 17/19, 60325 Frankfurt/Main, Deutschland/Germany P: 0049 69 710 455 Panamá Office Edificio Century Tower, Piso 4, Oficina 401-2141, Panamá, República de Panamá. info@unlimited-trade.comWe also learned that Unlimited Trade Inc. is a sort of German-Panamanian entity. To be more precise,there is no entry about Unlimited Trade in the German Company Register, and the address above is avirtual office – not the first one that we will reference in this story.Looking at the Panamanian Company Register, we have more luck in finding some interestinginformation.The company was created on October 5, 2010 and the following persons are its officers (or more likelystraw persons):• Marcos Antonio Gomez Sanchez (President)• Francela Ivonne Findlay Silva (Treasurer)• Orlando Zamet Reyes Saldaña (Secretary)Thanks to a very useful site (http://ohuiginn.net/panama) we can do a search with these names andquickly discover that there is another Panamanian company with two of the same officers:Gekko Industries Inc.• Manuel Mauricio Monge Acuña (President)• Orlando Zamet Reyes Saldaña (Treasurer)• Francela Ivonne Findlay Silva (Secretary) www.geoinvesting.com 14
  15. 15. The name of Gekko Industries came into the public eye in relation with one of the most successfulpump-and-dump promotions of the year: Lithium Exploration Group Inc. (LEXG) (A story discoveredby The Street Sweeper when LEXG traded at $4.02, and now trades for less than $0.70).But this is not the only link between RAYS and LEXG. In looking at the Html code of any Raystreamweb page, there was a small piece of commented code that referred to LEXG!<!--<div class="fright stockquote">OTCBB: LEXG <span class="greenText">1.00 + 0.00</span><ahref="#None" class="header_butt">STOCK QUOTE</a></div>-->This appears to be clear the evidence that RAYS webmaster used the same Html Template that was usedfor the LEXG site. It was removed on November 28, 2011 after the connection became public on aforum but its still visible in this video.Strange coincidence, isnt it? But this isnt the last one. RAYS and LEXG are heavily pumped by manypaid stock promoting newsletters and on many message boards like those one of Yahoo and iHub. Startingon October 12, 2011, RAYS was promoted by more than 19 paid newsletters and in the first week ofNovember was among “The Most Promoted Penny Stocks This Week” according to stockpromoters.com.By far, the most well paid RAYS campaign was one orchestrated by The Stock Market Authority(smauthority.com, now a dead link). In their Disclaimer they say that they have indirectly “received andmanaged a total production budget of $3,250,000” to provide public awareness for RAYS. According tothe disclaimer, the campaign was financed by Unlimited Trade. Recall that Ultimate trade is thecontrolling shareholder of RAYS. During its short life, Smauthority promoted only one other stock,LEXG. The LEXG campaign was also expensive, with a total production budget of $3,296,800 and wasfinanced by Gekko Industries. We believe that its not beyond the realm of reason that whoever controlsGekko Industries, Unlimited Trade, RAYS and LEXG are also tied to Smauthority.com.On November 22, 2011, Go Daddy suspended the domain Smauthority.com for SPAM-AND-ABUSE.As if the newsletter promotion hasn’t been massive enough (More info on this - Link 1, Link 2, Link 3),the company has just embarked on a prolific IR campaign. On October 6, 2011 they "announced it hasretained Halliburton Investor Relations (“HIR”), a Dallas-based, full-service investor relationsfirm". Since that alert until the end of November 2011, they released 8 announcements on Business Wirewith a lot of not-so-detailed claims or announcements.For example, in a recent release (“Compression of Full High Definition 3D Videos”) they use the “sexy”term “cloud-based architecture”. This is exactly the same term used by a substantial fraud we bustedearlier this year, the Chinese RTO Subaye (PINK:SBAY).In another recent press release, they were pleased “to announce our office in Paris, France, opened on www.geoinvesting.com 15
  16. 16. November 10, 2011” but as of now no Paris address is available on the contact page of the RAYS website.In further dissecting the contact page, we noticed that the office in Germany is the medieval Cast ofLichtenfels (as well see later, this cast dishes out a lot of surprises!) while the address in Orlando is a DaVinci Virtual Office. Another Da Vinci Virtual Office is the address reported on every SEC filing butomitted on the web site: 219 Redfield Parkway #204, Reno, Nevada (Address of principal executiveoffices). Regarding the office in Texas, it is only 1.8 miles from another company that we will encounterlater (it belongs to Raystreams CEO Brian Petersen): Petersen - Hines, LLC, located in 15305 DallasParkway, Suite 300, Addison, Texas... another Virtual Office! But this time from Regus.SIDEBAR - The Classic "Pump and Dump" SchemeIts common to see messages posted on the Internet or sent by e-mail that urge readers to buy a stockquickly or to sell before the price goes down. Often promoters of the stock will claim to have "inside"information about an impending development or to use an "infallible" combination of economic and stockmarket data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gainby selling their shares after the stock price is pumped up by the buying frenzy they create. Once they selltheir shares and stop hyping the stock, the price typically falls, and investors lose their money.On the following pages below are a few companies with the most recent pump and dump scheme.Lithium Exploration Group (LEXG) went from 12 cents to almost $4 a share in just under a month andat one point had a market cap of almost $200 million.LEXG 1 Year Chart www.geoinvesting.com 16
  17. 17. Amwest Imaging (AMWI ) is a cloud computing company. It has around 500 million shares outstanding,giving it a market cap of around $100 million.AMWI 2 Mo ChartLooking at both of these most recent examples will give you a feel to how pump and dumps work.The SEC is investigating these type of companies but it’s usually too little too late for the investor. Hereare some recent actions by the SEC.SEC Charges N.Y.-Based Penny Stock Promoter with FraudWashington, D.C., Jan. 14, 2011 — The Securities and Exchange Commission today charged an upstateNew York-based penny stock promoter and his affiliated website with fraud for failing to disclose that hewas paid by certain issuers to promote their stock while simultaneously liquidating millions of his ownshares for profits of at least $2.95 million.The SEC alleges that Christopher Wheeler of Victor, N.Y., received compensation at various times in2007 and 2008 to promote several thinly-traded penny stocks on his website, OTCStockExchange.com.Wheelers website claimed to "have compiled a long list of successful stock picks" and to afford investorsthe opportunity to "make a fortune."SEC Freezes Funds in Trans-Atlantic "Pump and Dump" Scheme, August 15, 2008 —The Securities andExchange Commission announced today that it obtained an emergency court order freezing the profitsfrom an alleged $13 million international fraud involving a Seattle-area microcap company and aBarcelona stock promoter. The Commission charged Bremerton, Wash.-based GHL Technologies, Inc.,and its CEO Gene Hew-Len with issuing a series of false press releases touting the companys business www.geoinvesting.com 17
  18. 18. dealings. The Commission also charged Francisco Abellan (also known as "Frank Abel") of Barcelona,Spain with coordinating the scheme, sending glossy promotional mailers to over 2 million U.S. recipientsand unloading over $13 million in GHL stock on unsuspecting investors. "The Street Stock Report," afull-color glossy mailer sent to millions of U.S. addresses urging investors to purchase GHL stock quicklyto see huge trading profits. Around the same time, Hew-Len issued nine press releases over a nine-weekperiod hyping the company. Among other things, according to the SEC, the press releases made falseclaims about contracts with large customers, fraudulently touting millions of dollars in potential revenues.Following this concerted promotion campaign, GHLs stock price doubled and trading volume spikednearly 1500%. Abellan and his entities sold their GHL stock holdings for profits in excess of $13 million.The stock, which reached a high of nearly $9 per share at the height of the scheme, now trades at under apenny.SEC Charges Seven in Global Warming Pump-and-Dump SchemeWashington, D.C., Feb. 18, 2011 — The Securities and Exchange Commission today charged a group ofseven individuals who perpetrated a fraudulent pump-and-dump scheme in the stock of a sham companythat purported to provide products and services to fight global warming. CTTD.PKSEC Charges Company CEOs and Penny Stock Promoters in Kickback SchemesWashington, D.C., June 30, 2011 — The Securities and Exchange Commission today filed securitiesfraud charges against several CEOs, their companies, and two penny stock promoters alleging they usedkickbacks, a bribe and blast e-mails to manipulate trading in microcap stocks.Persons and places involved in RAYS- No Strangers to Pump andDump StoriesGerman LegThe Raystreams site is hosted in Germany, it was registered by Roman Rumpf, that provided the Texasoffice address as its Registrant Address. The Admin and Tech Addresses are the same: Ringstrasse 13,Berndorf, Hessen. This address doesnt not jive with any address in SEC filings, but as we will learn later,its the private address of Roman Rumpf.The address for the Raystreams German Branch is Burg Lichtenfels, 35104 Lichtenfels. “Burg” is theGerman word for “Castle” and in fact the Caste of Lichtenfels is a real medieval castle.Castle of Lichtenfels and Tan SiekmannThe Castle of Lichtenfels was built in 1189 and is located in the German State of Hesse, whose largestcity is Frankfurt am Main (remember that Unlimited Trade has/had a Virtual Office in Frankfurt).Since the late 1980s this Castle has belonged to the German entrepreneur Tan Siekmann and his parents.Tan Siekmann is well-known in Germany because his company, Biodata AG, also based in the castle,was one the most famous bankrupt companies when Germanys Dot-Com bubble exploded. AfterBiodata AG’s first insolvency in 2001(There is even a movie about it), the CEO and major holder TanSiekmann founded "Biodata Systems GmbH". Three years later (2004) "Biodata Systems GmbH" was www.geoinvesting.com 18
  19. 19. also declared insolvent. Tan Siekmann, in this case, bought some of the insolvent assets and founded"Safe-Com GmbH & Co. KG", and like the others was domiciled in the castle. Information on Safe-Com is scarce, but its website, Safe-Com.com, is no longer active, although some archived/crawled partsof the site are still available to view. It is also known that Roman Rumpf had a key technical role in Safe-Com.In another instance, as reported in a four year old article published by the German business magazine"brandeins", the company Demuth & Dietl (a mobile telephony service provider) accused Tan Siekmannof being responsible for its own bankruptcy. Even more interesting, the same article states that in 2007Safe-Com bought 65% of BodyTel Scientific Inc. (BDYT). BodyTel was a development stage companyin a "sexy" sector (telemedical monitoring). After having touched $3 in 2008 it declined to 2 cents only afew months later!BDYT 5 Year ChartThere is still more…When Tan Siekmann was one the Major Holder at BodyTel (BDYT), the company signed an investmentagreement with Michael Kang and Francis Villena , who acted as agents for Bridge Capital LLC (June11 , 2008)In the Panama Companies Register there is a firm registered on June 6, 2008 called Bridge Capital Inc.(yes, we know the first was a LLC and this one is an INC.). Who were two of the three Bridge CapitalInc.s managing directors? (Note that they all resigned):  Maria Lucrecia Martinez (President) www.geoinvesting.com 19
  20. 20.  Marco Antonio Gomez (Treasurer)These names are now quite familiar to us:  Maria Lucrecia Martinez is President at Foresight Media Inc.  Marco Antonio Gomez is President at Unlimited Trade Inc. , and RAYS’ largest shareholder (the name there is longer: Marcos Antonio Gomez Sanchez)To supplement the information we already have on Unlimited Trade Inc, Foresight Media Inc. (FM)enters the mix within the P&D campaign…The Stock Market Autority (SMA) disclaimer for RAYS states: [...]Raystream, (RAYS), the company featured in this issue, appears as paid advertising, paid byUnlimited Trade to provide public awareness for RAYS.[...] [...]SMA and Foresight Media (FM) have used outside research and writers using public information tocreate the advertisement coming from SMA about RAYS.[...] [...]FM has received and managed a total production budget of $3,250,000[...]…confirming that Unlimited Trade paid itself in a certain manner to promote RAYS.A medieval Castle, the same young entrepreneur, four collapsed businesses (one of which looks to be aU.S. pump and dump story), and conflicts of interest...an impressive record, making RAYS quite a goodcandidate for an SEC investigation.Michael Kang and Francis VillenaTogether, these individuals were behind BRIDGE CAPITAL.But who is Francis Villena, aka Francisco Abellan Villena, aka Francisco Abellan, aka Frank Abel?He lives in Barcellona, inherited an important printing company from his father, but above all its an “oldfriend of the SEC’s”, which on August 15, 2008 froze his assets, accusing him having earned over $13million in a Trans-Atlantic "Pump and Dump" Scheme related to shares of GHL Technologies, Inc(Link 1 and Link 2)Regarding Michael Kang, there was a Nevada corporation founded early this year called eLogic NorthAmerica FX. On its contact-page, eLogic GmbH makes reference to "eLogic North America", whichsuggests that they’re the same company. The Nevada Corporation’s president is Michael Kang, makinghim the fourth person in our crew of usual suspects to be tied to this company.Roman RumpfRoman Rumpf was born on July 29, 1983 in Twistetal-Berndorf, a very small town in the German Stateof Hesse and he is currently domiciled in Ringstrasse 13, Berndorf, Hessen, one of the addressesregistered for the raystream.com domain. www.geoinvesting.com 20
  21. 21. He is Co-founder and CTO of Raystream Inc and he also had a key technical role in Safe-Com as stated inhis bio on Raystreams site.The June 24, 2011 8K states: "From June 2006 to February 2008 Mr. Rumpf was Project and Product Manager at Qnective Inc. a private Social Networking company."There are some discrepancies between this statement and other information available on the Qnective website and in the SEC filings.As the company itself declares in its home page, Qnective was founded in 2007 (April 2, 2007 is the firstdate where the company name appears – its former name was Sotech Inc.). It is quite odd that it appearsthat Mr. Rumpf was Project and Product Manager at Qnective 10 months before the company was evenfounded.The second and most important discrepancy is that this time (“From June 2006 to February 2008”),Qnective WASNT private! Before going private in 2011, the company was listed on the OTC BB underthe symbol QNTV. On May 5, 2011 the price of the stock was $1.00. The last price before going privateon January 28, 2011 was $0.20. Tan Siekmann was a Beneficial Owner (10% or more) and the CTO ofQnective Inc.Let’s take a closer look at Raystrem GmbH, the German firm created on March 21, 2011, its first CEObeing Roman Rumpf (See Registrar for German Companies). Although the company was formed onthat day, it was only communicated to the German Company Register on May 2, 2011. The sole owner ofRaystream GmbH was the Panamanian Unlimited Trade Inc (Exhibit 5). Here is the timeline of eventsleading up to the acquisition of Raystream GmbH by Raystream Inc.August 16, 2011Roman Rumpf resigned as CEO and Thomas Friedli (Frankenberg, 1977-05-12) came on board tosubstitute him.June 14, 2011The same Roman Rumpf became the new CEO and only officer of Interdom Corp when UnlimitedTrade Inc bought it.June 16, 2011Unlimited Trade Inc (Exhibit 6) sold its shares in Raystrem GmbH to the German holding “TOMBeteiligungsgesellschaft GmbH” (“TOM”). On June 24, 2011, Thomas Friedli took the place of TanSiekmann as the CEO of this holding is (Lichtenfels, 1966-10-29).Until June 7, 2001 Tan Siekmann was the only owner of TOM before selling a part of his shares toThomas Friedli and Roman Rumpf (note that TOM had also a role in the Biodata saga). www.geoinvesting.com 21
  22. 22. July 12, 2011Roman Rumpf resigned as CEO and become CTO. Brian Petersen was appointed as the new CEO.August 22, 2011Interdom changed its name to Raystream Inc and did a 37:1 forward-split.September 19, 2011Raystream Inc. acquired 100% of Raystream GmbH.The Panamanian Unlimited Trade Inc purchased the German Raystrem GmbH through the AmericanRaystream Inc. on September after having sold it in June of the same year. Unlimited Trade waspresented in front of the German Notary by Tan Siekmann (Exhibit 7). Here you will find more than oneclue of non -disclosed related party transactions.The list of the Company Owners for Raystream GmbH and TOM Beteiligungsgesellschaft mbH ispresented in the Exhibit 5 and 6.Thomas FriedliReferenced above for having been part of certain share transaction, Thomas Friedli is known as themanager of the German branch of RAYS.He is also Founding Partner and Chief Operations Officer of eLogic GmbH. The CEO of eLogic (alsolocated in the Castle of Lichtenfels) is Tan Siekmann.U.S.A. LegThe American staff of RAYS is practically the same as those who work for Petersen-Hines LLC. WhenBrian Petersen was appointed as CEO at RAYS, the same SEC filing covering this appointment stated thathe “has grown Petersen - Hines, LLC to a $35 million dollar company within six years”, even making itdebt free. Is it feasible that they can devote enough time and resources to this development-stage RAYSventure? We are in the process of trying to determine if Petersen-Hines is aware of the past dealings ofthose associated with RAYS.Nadia Christian, Vice President of Marketing at RAYSMs. Christian should be the busiest person in the staff. Not only is she presumably workingsimultaneously at Raystream Inc and Petersen-Hines LLC, but she runs also businesses of her own as aCognitive Fitness Therapist. See also, this link.Dane Butzer, Business Development ManagerWe only had to view the html code of Raystream’s site to find a special surprise, another key staffmember that was seemingly hidden from view: www.geoinvesting.com 22
  23. 23. Mr. Butzer has worked in intellectual property law with such renowned firms as Fitzpatrick, Cella, Harper & Scinto, and The Swernofsky Law Group. He also maintained a highly successful solo practice. Mr. Butzer has witnessed many start-up ventures and ongoing businesses both fail and succeed over the course of his career, resulting in a deep understanding of the fundamentals of applying technology and business processes in the real world.In performing a web search on his name, he seems to be a reputable U.S. patent application attorney.Its our opinion that the heads of the RAYS operation are based in Germany, but they made sure to appointa recognizable U.S. management team to possibly give a façade of legitimacy to the company.Clues of an Off-Shore Scam ("Regulation S”)On April 30, 2011Interdom had 4,175,000 outstanding shares:  3,500,000 owned by Igor Rumiantsev and purchased for $.0010/share on April 14, 2010.  675,000 issued at $.03/shareOn June 14, 2011, Igor Rumiantsev privately sold all his 3,500,000 shares to Panamanian UnlimitedTrade Inc for $200,000 ($.0571/share) making it the new major holder:  3,500,000 owned by Unlimited Trade and purchased for $.0571/shareOn August 22, 2011 Interdom changed its name to Raystream and did a 37:1 forward split. After the splitRaystream now had 154,475,000 outstanding shares:  129,500,000 owned by Unlimited Trade and purchased for $.0015/share  24,975,000 purchased by someone for $.0008/shareOn September 19, 2011 three important events happened:  Raystream Inc bought 100% of the German Firm Raystream GmbH for 20,000,000 shares  Unlimited Trade converted its $2,000,000 financing into 5,000,000 common shares at $.40/share).  Unlimited Trade cancelled 129,500,000 shares and now owns 5,000,000 sharesAll the transactions occurred on September 19 pertain to off-shore entities (based in Germany andPanama) therefore these shares were exempt from registration (Regulation S). That led to the followingsituation:  20,000,000 owned by Raystream GmbH (paid price unknown).  5,000,000 owned by Unlimited Trade and paid $0.40/share  24,975,000 owned by others and having an initial price of $0.0008/share  for a total of 49,975,000 outstanding shares.Considered that to qualify for a Regulation S exemption, the shares may not be sold back into the UnitedStates for one year the effective count of shares available for free trading is currently only a little less thanone half (of course they do not risk to loss the control of the company). www.geoinvesting.com 23
  24. 24. But... did Unlimited Trade really cancel those 129,500,000 shares? Nobody knows since they were notregistered with the SEC.Now the risk is that they will resell “Reg. S” or claimed-to-be-canceled stock to U.S. investors, dilutingthe float, pocketing high profits for themselves and causing the price to collapse.Unlimited Trade already owned both Raystream Inc (USA) and Raystream GmbH (Germany), but all ofthose transactions occurred between the same these related party entities. What exactly could be therationale behind these moves?Dilution is a certaintyLet’s assume for one moment RAYS has a piece of legitimacy. Since Raystream is a development stagecompany generating no revenues we need to assume that it will have to raise substantial capital toimplement its goals. RAYS agrees (from various filings):  “The Company has incurred losses since inception resulting in an accumulated deficit of $189,286 as of July 31, 2011 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. Although the Company obtained debt financing in July (See Note 4), the ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary additional financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.”  “We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.”  “We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities.”  “Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements.” www.geoinvesting.com 24
  25. 25.  “We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock.”What does all this mean? These comments imply that RAYS only has enough cash to sustain it operationsfor the next 3 to 12 months, depending on which SEC filings are referenced, just to sustainoperations.TICK TOCKWell, this deadline is approaching fast and has likely accelerated now that it has a revolutionary,unpatented product to market. This means that substantial dilution, an investor’s worst enemy, is aroundcorner and should continue well into the future. Investors who purchase RAYS shares now could beblindsided with equity offerings and a sharp hit to the share price. Worst yet, if the company is unable toraise capital the story could end badly in 3 months.Valuation & ConclusionUntil RAYS clearly demonstrates that it can secure industry giants as customers or book meaningfulrevenues we believe that RAYS is worth no more than what it would claim as a shell company or atmost about $0.004 to $0.01. ($200k to $500k divided by 50M outstanding shares). Even when applyingRAYS claimed shareholder equity (which virtually consists solely of goodwill) as shown its October2011 10Q, a price target of just $0.19 can be derived.Furthermore, even if RAYS has a semblance of legitimacy, dilution is a major risk further limiting EPSperformance. To put this into perspective, Divx raised a total of $146 million (pre IPO and IPO) todevelop their business. If RAYS needs to raise a similar amount of capital, shareholders will be slammedwith massive dilution. For a company with limited revenues, equity offerings will likely have to beaccomplished at a major discount to its current market price. Even in the unlikely case that RAYS had aproduct that people could sink their teeth into (in other words an honest company with a promisingproduct), you would still only end up with a company with a horrible equity market presence, not onlydue to the manner in which it went public, but also by having gone public prematurely.Although the company talks a big talk, Raystream cannot boast solid customers to initiate to a meaningfulrevenue stream. In fact, we were unable to get much out a former customer of Raystream, whoconsequently terminated its need for whatever technology the company offered, effectively reducing thenumber of paying customers RAYS has to just one, to the best of our knowledge and until provenotherwise. The mention of large industry players such as YouTube and Google is a tactic promoters areusing to draw investors into a web of deception. Would respected companies like these seriously want todeal with executives whose pasts are as shady as Raystream’s story?Raystream is hardly letting the product speak for itself. The company instead chooses to promote thestock through hype and related party funds and what amounts to a weak attempt to demonstrate how www.geoinvesting.com 25
  26. 26. much more superior their so called “proprietary” product is when compared to others. If Raystream was arespectable company, it wouldn’t use pump outfits and stock promoters to throw industry buzz wordsaround and spread innuendo of an eventual acquisition by an industry giant. The company would insteadgo much further into actually proving the product.One of the most compelling facets of the RAYS story that has convinced us that there is no way to trustanything that comes out of the company’s camp is the cast of characters involved, a crew that can bereferred to as the Usual Suspects due to their involvement with other failed ventures/promotions. If yourhead was not spinning by the time you finished reading about the business relationships of RAYSpersonnel, then you need to read it again. Let it sink in, and then decide if this is a genuinely honestbusiness venture hell bent on over-achieving in a market that already appears saturated with the sametechnology RAYS claims to have developed.A Note to CautionIf you are trying to short RAYS, you should be aware that it is still being pumped hard by manynewsletters. It is a stock with a small float and a high risk of POSSIBLE BUY-INS. That means yourbroker could be forced to liquidate your positions if he cannot find shares to borrow, and that couldhappen before the company price collapses.Disclosure: Short RAYS www.geoinvesting.com 26
  27. 27. EXHIBITSwww.geoinvesting.com 27
  28. 28. Exhibit 1 – A Review of how RAYS exhibits characteristics of a Pump and Dump ScamQualifies? Characteristic CommentsYES Recently completed RTOs On June 14, 2011, Unlimited Trade Inc. acquired 83.8% of the Reno, Nev.-based shell company Interdom Corp.YES Company name, symbol or core business change On August 22, 2011, Interdom Corp. changed its name to Raystream Inc. Interdom was a Real Estate company. Raystream declares to be an IT company.YES Stock Promoting (Emails, Newsletters, Yahoo MB, Since October 12 promoted by 19 paid IHUB) newsletter. In the first week of November was among “The Most Promoted Penny Stocks This Week” according to http://stockpromoters.com. Marketing campaigns orchestrated by companies like The Stock Market Authority (smauthority.com). Their Disclaimer stated that they have indirectly “received and managed a total production budget of $3,250,000” to providing public awareness for (RAYS). According the disclaimer, the campaign was financed by RAYS largest shareholder, Unlimited Trade, (on an unrelated note Go Daddy suspended the domain Smauthority.com for SPAM-AND- ABUSE). Massive bull comments on iHUB.YES Recent 52-week High (generally within 3 months) $2.50 on Nov. 2nd and Nov. 7th respectively a week and a trading day before the first big dump.YES Flat charts that just broke out During October the volume was low and the price almost constant. During the subsequent price increase the volume advanced also smoothlyYES Volume Spike After trading a combined volume of 5 thousand shares in recent trading sessions prior to this release, volume exploded to 5.2 million on October 10, 2011 and never looked back.NO Over 50 million (preferably over 100 million) shares Shares Outstanding: 49.97M, outstanding. Float:46.47M; . (but will need to raise www.geoinvesting.com 28
  29. 29. capital).YES Increased press release flow 6 press releases in October; 4 in the first half of November.YES Public announcement that they have just embarked on an On October 6, 2011 they "announced it IR campaign has retained Halliburton Investor Relations (“HIR”), a Dallas-based, full- service investor relations firm, to assist the Company with its investor relations (“IR”) program."NO Unimpressive websites or ones that say coming soon Mainly promotional content but it looks professionally done. Experienced bug when attempting to trial their product.YES Stocks with "sexy" stories or names. From the companys profile: “Raystream Inc. brings its proprietary video compression technology to businesses and consumers worldwide. This technology drastically decreases bandwidth costs by reducing the file size of HD videos up to 90 percent.”YES No revenues—Development stage companies. Also Interdom Corp never had revenues.YES Exaggerations of relationships and too good to be true They announced contracts but do revenue and contract announcements. provide any financial information, nor are these relationships with industry giants such as Google and NetflixYES The usual suspects of individuals/management teams Castle of Lichtenfels (Tan Siekmann), known for being part of past pump and dumps. Biodata AG, Demuth & Dietl, Safe-Com GmbH & Co. KG, Roman Rumpf , BodyTel Scientific Inc. (BDYT), Qnective (QNTV) www.geoinvesting.com 29
  30. 30. Exhibit 2: All Video players show that the Raystream video used the common H264codec. www.geoinvesting.com 30
  31. 31. Exhibit 3: Deceptive modification of sections of website.A few days after the test published on github.com, RAYS modified the see-yourself-pageremoving the sections on the two sides that we tried to reconstruct in the picture above. Theoriginal code (of course commented) is still present on the web page (see next exhibit). www.geoinvesting.com 31
  32. 32. Exhibit 4: The original code (of course commented) is still present on the web page. www.geoinvesting.com 32
  33. 33. Exhibit 5: Raystream GmbH Company Owners (Handelsregister) www.geoinvesting.com 33
  34. 34. Exhibit 6: TOM BGmbH Company Owners (Handelsregister) www.geoinvesting.com 34
  35. 35. Exhibit 7: Unlimited Trade Delegate Tan Siekman to represent the company with theGerman Notary. www.geoinvesting.com 35
  36. 36. Exhibit 8 – Codecs List, License Status (Source: Wikipedia)Codec Creator/Maintainer First public Latest stable License Patented release date version compression formatslibtheora Xiph.org 9/25/2002 1.1.1 (2009) BSD-style[4] Patented, but(Theora) freely licensed[*]dirac- BBC Research 9/17/2008 1.0.2 (2009) MPL 1.1, GNU noneresearch Department GPL 2, GNU(Dirac) LGPL 2.1Schrödinger David Schleef 2/22/2008 1.0.9 (2010) MPL 1.1, GNU none(Dirac) GPL 2, GNU LGPL 2, MIT Licensex264 x264 team 2003 r2019 (2011) GNU GPL MPEG-4 AVC/H.264Xvid Xvid team 2001 1.3.2 (2011) GNU GPL MPEG-4 ASPFFmpeg FFmpeg team 2000 0.8.5 (2011) GNU LGPL MPEG-1,(libavcodec) MPEG-2, MPEG-4 ASP, H.261, H.263, VC-3, WMV7, WMV8, MJPEG, MPEG-4v3, DV etc.FFavs FFavs team 2009 0.0.3[ GNU LGPL MPEG-1,(libavcodec) MPEG-2, MPEG-4 ASP etc.Blackbird Forbidden 2006-01 2 Proprietary Blackbird Technologies plcDivX DivX, Inc. 2001 DivX Plus Proprietary MPEG-4 ASP, (2010) H.264DivX a hack of 1998 3.20 Proprietary Microsofts Microsofts MPEG- alpha(2000) MPEG-4v3 4v3 codec (not MPEG-4 compliant) www.geoinvesting.com 36
  37. 37. 3ivx 3ivx Technologies 2001 5.0.2 (2007) Proprietary MPEG-4 ASP Pty. Ltd.Nero Digital Nero AG 2003 Unknown Proprietary MPEG-4 ASP, H.264ProRes 422 / Apple Inc. 2007 Proprietary UnknownProRes 4444Sorenson Sorenson Media 1998 Proprietary SorensonVideo VideoSorenson Sorenson Media 2002 Proprietary SorensonSpark SparkVP3 On2 Technologies 2000 BSD-style[4] Patented, but freely licensed[*]VP4 On2 Technologies 2001 Proprietary VP4VP5 On2 Technologies 2002 Proprietary VP5VP6 On2 Technologies 2003 Proprietary VP6VP7 On2 Technologies 2005 Proprietary VP7VP8 On2 Technologies 2008 BSD-style Patented, but (now owned by freely Google) licensedDNxHD Avid Technology 2008 Proprietary VC-3Cinema Craft Custom Technology 2000 1.00.01.09 Proprietary MPEG-1,Encoder SP2 Corporation (2009) MPEG-2TMPGEnc Pegasys Inc. 2001 2.525.64.184 Proprietary MPEG-1,Free Version (2008) MPEG-2Windows Microsoft 1999 9 (2003) Proprietary WMV, VC-1,Media (WMV3 in (in earlyEncoder FourCC) versions MPEG-4 Part 2 and not MPEG-4 compliant MPEG-4v3, MPEG-4v2)Cinepak Created by 1991 1.10.0.26 Proprietary Unknown SuperMac, Inc., (1999) Currently maintained by Compression Technologies, Inc. www.geoinvesting.com 37
  38. 38. Indeo Video Intel Corporation, 1992 5.2 Proprietary Indeo Video currently offered by Ligos CorporationTrueMotion S The Duck 1995 Proprietary TrueMotion S CorporationRealVideo RealNetworks 1997 RealVideo Proprietary H.263, 10[20] RealVideoACT-L3 Streambox 2/21/2003 3.4 (2009) Proprietary UnknownHuffyuv Ben Rudiak-Gould 2000 2.1.1 (2003) GNU GPL 2 noneLagarith Ben Greenwood 10/4/2004 1.3.26 (2011- GNU GPL 2 none 09-25)MainConcept MainConcept 1993 8.8.0 (2011) Proprietary MPEG-1, GmbH MPEG-2, H.264/AVC, H.263, VC-3, MPEG-4 Part 2, DV, MJPEG etc.Elecard Elecard 2008 G4 (2010) Proprietary MPEG-1, MPEG-2, MPEG-4, AVC www.geoinvesting.com 38
  39. 39. Exhibit 9 – GeoInvesting’s Notable Track RecordCo. What we found at time Report Date Price at Current Price What happened of investigation time of after report report publication?PUDA  It appeared that U.S. Apr 8, 2011 $8.78 $0.25  Sharp decline in shareholders only had stock price 45.9% of Shanxi Coal  Company cash flows; a far cry quickly admitted from the 90% interest wrong doing in PUDA’s mining  Stock was halted operations as on April 11, portrayed in the 2011 at a price company’s filings. of $6.00  Strikingly complex ownership interest transaction histories w/r/t Shanxi Coal and Shanxi Puda Mining.YUII  YUII never acquired Jun 3, 2011 $5.05 $0.79  Sharp decline in 13 farms from stock price Dajiang Enterprise  Company Group Co., Ltd. quickly admitted  The company may wrong doing have misappropriated  Stock was halted $12.1 million, on June 17, misleading investors 2011 at a price about the use of this of $1.21 money for the  Delisted Dajiang farms  Resumption of acquisition. trading occurred on July 18, 2011 below halt price.CGPI  The Cemetery Mar 3, 2011 $3.00 $0.17  Sharp decline in Business Service stock price. License of Guiyaun  Weak attempts Cemetery had been by company to revoked/suspended. rebut allegations  Guiyaun Cemetery  Company Company was not eventually permitted to continue conceded to the www.geoinvesting.com 39
  40. 40. its cemetery business. facts presented by GeoInvesting  CFO Resigned on April 22, 2011SBAY  Evidence supporting Mar 24, 2011 $3.62 $0.03  Sharp decline in our view that stock price shareholder had no  Stock was halted claim to SBAY’s on April 7, 2011 potential revenue. at a price of  We could not locate $2.15 the more than 1500  Auditor employees SBAY Resigned claimed to have.  Resumption of trading occurred on June 24, 2011 below halt price.  DelistedWarning and disclaimer:By accessing and using the GeoInvesting website, you agree to be bound by the following Terms ofService:GeoInvesting is a publisher. Nothing published by GeoInvesting on the website shall be deemed to be arecommendation as to the advisability on inadvisability of any particular transaction in securities. Youshall not republish or redistribute in any medium any information either made available on or through theGeoInvesting website without our express written authorization. You acknowledge that GeoInvesting isnot registered as an exchange, broker-dealer or investment advisor under any federal or state securitieslaws, and that GeoInvesting has not provided you with any investment advice or personalizedinformation. Any information on the website relating to securities has been provided for informationpurposes only and is not to be treated as investment advice. Any information on the website relating tosecurities is impersonal, and as such, is not tailored or directed to you or any other individual. In no eventshall GeoInvesting be responsible or liable for the accuracy or suitability of any information transmittedor made available on its website, and shall not be liable for any investment decisions or trading activity byyou arising from such information. Nothing in the website should be construed to be an offer or sale ofany security.You should consult your financial advisor before making any investment decision or engaging in anysecurities transaction because investing in any securities mentioned in the website may or may not besuitable to you or for your particular circumstances. You acknowledge that you are aware that investing in www.geoinvesting.com 40
  41. 41. securities is an inherently risky and speculative practice. Trading in securities can result in immediate andsubstantial losses of invested capital.GeoInvesting, its affiliates, employees, and the third party information providers providing content to thewebsite may, and in many instances do, hold positions in securities mentioned in the website. Moreover,GeoInvesting, its affiliates, officers, employees, and the third party information providers may, and inmany instances do, otherwise effect purchase or sale transactions in securities, including those mentionedin the website. These facts should be taken into consideration by you in connection with your decision toinvest in securities.GeoInvesting, its affiliates, officers, employees and third party information providers make no warranties,express or implied, as to the accuracy, adequacy or completeness of any of the information contained inthe website. All such materials are provided to you on an "as is" basis, without any warranties as to theaccuracy thereof or fitness for a particular purpose or use nor with respect to the results which may beobtained from the use of such materials. GeoInvesting, its affiliates, officers, employees and third partyinformation providers shall have no responsibility or liability for any errors or omissions contained in theinformation made available on the website nor shall they be liable for any damages, whether direct orindirect, special or consequential even if they have been advised of the possibility of such damages. In noevent shall the liability of GeoInvesting, any of its affiliates, officers, employees or third partyinformation providers pursuant to any cause of action, whether in contract, tort, or otherwise exceed thefee, if any, paid by you for access to such materials in the month in which such cause of action is allegedto have arisen. In no event shall GeoInvesting, any of its affiliates, officers, employees or third partyinformation providers be liable or in any way responsible for information or opinions posted in themessage board portion of the website by individuals who are not affiliated with GeoInvesting.Furthermore, GeoInvesting shall have no responsibility or liability for delays or failures due tocircumstances beyond its control.NOT FOR REDISTRIBUTION www.geoinvesting.com 41

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