In Search of Inoculum
If you tell the truth you don’t have to remember anything
Mark Twain
Twenty-four million is a rounding error in the chaos of capital markets. That is the amount that Akers Biosciences, Oramed, Cystron, Premas Biotech, and HC Wainwright have raised from US capital markets to develop a Covid 19 Vaccine. It is not the amount raised that is of concern; it is that the actors left to their own devices will continue to conjure ever more imaginative stories foisted on an unsuspecting public to profit from the greatest, global crisis in recorded human history.
In the Beginning
In March 2020 Akers Biosciences and Premas Biotech promised the public a smart, fast, cheap Covid 19 Vaccine. Akers Biosciences had lost $190 million in thirty years and was a permanent defendant in the courthouse for claims ranging from securities fraud to a lost leg. For Akers the pandemic was a life preserver. Akers raised $24 million from the public in a series of offerings with false claims, omissions, and just darn right lies.
Akers told the public in SEC filings, news releases, and on its website that it found a vaccine science that it would license from Premas Biotech. The vaccine science was better than others because it was three times more likely to find a vaccine because of Premas unique approach to proteins, its secret sauce. Premas was serious about science but Akers was not interested in serious rather enough of an appearance of seriousness that would pass under the noses of the public and above the eyebrows of the SEC.
Akers did not tell the public that the license would not be with Premas Biotech. Rather Akers would acquire a shell company, Cystron that existed for fourteen days, had one asset, the exclusive license with Premas Biotech for development of a Covid 19 vaccine, and no employees. Cystron licensed the science from Premas and Akers acquired Cystron for cash and shares worth 19.9% of Akers. The shareholders of Cystron were Premas Biotech, the CEO of Oramed Mr Nadav Kidron, and Mr Vasinkevich 75% owner of the underwriter HC Wainwright with a few associates.
The public would give money to Akers to pay the shareholders of Cystron that had no purpose as an intermediary in the transaction between Akers and Premas. As a shareholder in the Licensee, Cystron, Premas would negotiate a license with itself as the Licensor.
The existence of Cystron raised more questions than it answered. What was the need for the shell company Cystron ? Why would Akers not license the science directly from Premas? Who was Mr Kidron and why was he involved? Who was Mr Vasinkevich and why was he involved? How would Premas negotiate a license with itself as both licensor and shareholder of the licensee? Where was the SEC?
Cystron
On 24 March Akers paid Cystron $1 million, 411,403 in common shares, 211,353 of Series D convertible preferred shares valued at $1.233 million, and promised Cystron shareholders a share in future public offerings. Akers recorded a charge of $2.23 million to research and development expenses for the cash plus shares. Premas, a shareholder in Cystron, was now a shareholder in Akers.
On 25 March the Premas CEO and the Akers CEO held a webinar discussing the science of a vaccine without disclosing Cystron, the relationship between Akers and Premas, or the $2.33 million payment from the day before. The investing public was presented with a Licensor (Akers) discussing the potential of the science with the Licensee (Premas) each appearing to be independent with interests in common and also interests that might conflict in a standard Licensor, Licensee relationship. The nine page transcript was posted to the Akers website.
On 8 April Akers sold 766,667 shares of common stock in a public offering at $6 a share raising $4.6 million of which it paid $500,000 to the underwriter HC Wainright also a 40% shareholder in Cystron meaning that in a addition to the underwriting fee Mr Vasinkevich received $400,000 in cash plus roughly $500,000 in Akers shares or $1.4 million in total. Mr Nadav Kidron, the CEO of publicly listed Oramed, received $200,000 in cash plus roughly $250,000 in shares for what is not clear.
Akers stock traded 50,000 shares a day on average before the 8 April 2020 offering. On April 4 the volume was 73,000 shares at a closing price of 1.89. On the next trading day, April 6, 57 million shares traded with a closing price of 4.69, or one hundred times the average volume. In the three days following Akers stock traded as high as $9.00 before volume returned to under one hundred thousand shares a day. Akers now trades at $1.75.
The Refund
On April 16 Akers paid Premas $500,000 for a science milestone under the license between Cystron and Premas that Akers acquired. Premas kept that money but on April 22 Premas returned $299,074 in cash to Akers representing Premas’ portion of the $1,000,000 cash paid to Cystron on 24 March 2020 . Premas did not return the Akers common or Series D convertible preferred shares.
Confusing? Yes. Premas returned the cash portion of the 24 March 2020 Cystron acquisition which called the transaction into legal question, Premas kept the shares from the transaction and kept the science milestone payments made under the license agreement from the transaction that was in law now voidable, void, or just plain illegal. The refund was not disclosed until 15 May 2020 when Akers filed a quarterly report for the March quarter. There was no 8k, no press release, and no thought shareholders should know that the house was resting on a foundation that was missing a few cards.
Thinking about it the refund was more curious than the shell company, Cystron, and though it is not clear but it could have been the first unsolicited refund by a foreign company of monies raised in the history of US capital markets without a legal notice, court order, subpoena, or the promise of liberty suspended. Something was amiss if not in Denmark then in board rooms across continents.
The Usual Suspects
In 2018 the founder of Akers disagreed with management over accounting practices and resigned. Akers sold medical devices and was by 2018 a permanent defendant in the courthouse where it paid more than its annual revenue in legal fees to defend the suits.
In September 2018 Akers inducted Mr Joshua Silverman as an independent director. Mr Silverman had served in the administration of President Bill Clinton in the Office of the Press Secretary and graduated to the hedge fund business. When appointed Mr Silverman was the proprietor of Iroquois Capital Management. Mr Silverman inherited a medical device company from which the founder had resigned with accumulated losses of $190 million spending more on legal fees alone than the revenue it generated.
Mr Silverman and Akers shareholders Hudson bay Capital and Alpha Capital Anstalt had a colorful history tangent to the ecosystem of what can only be described as a cabal of “pump and dump” capital market operators of funds, promoters, bloggers, and willing corporate cadavers. The “pump” was the “mirror” trading of shares to create the appearance of volume and the “dump” was the sale of securities for companies whose businesses consisted of drone footage of to be created mining sites conveniently tabbed from the internet.
Mr Silverman and Iroquois were involved in at least six companies that were pumped to the benefit of insiders and dumped on an unsuspecting public. In 2016 MGT Capital was issued a subpoena by the SEC microcap securities task force. The fourteen pages subpoena requested much but in particular information in respect of Mr Silverman, Iroquois, Hudson Bay Capital, and Alpha Capital Anstalt, Lichtenstein. These conspirators along with a ferry boat of others were identified by the SEC as the infrastructure of greed that threatened the integrity of capital markets. Mr Silverman in particular had a colorful choice of underwriter, Katalyst, one promoter of which had spent a year in prison while the other had been indicted running numbers for the Lucchese crime family attempting to bribe NYPD cops.
Alpha Capital Anstalt nestled in Vaduz, Lichtenstein with $650 million of unknown capital shepherd through sixty four equity positions in US capital markets including Akers. A quick glance of the 30 equities Anstalt purchased in 2019 reveals “pump” candidates with no trading volume and market capitalizations of less than $10 million, the organ donors for the “dump.” Though Anstalt might have become more circumspect after paying the SEC $1 million for violations related to Mr Barry Honig who ran a microcap securities fraud circus from 2013-2018 along with Mr Philip Frost an 82 year old billionaire who might not have invented Viagra but sold a company to Teva for $700 million and needed something to keep him busy.
Akers was a willing corporate cadaver with the legal claims against it that ranged from Securities Fraud (settled for $2.25 million), Intellectual Property theft (settled for 930,000 plus a permanent injunction), unpaid bills to a telemarketer, wrongful termination of an executive, product liability (loss of a leg, $1 million), and a Chinese outfit with a claim of $1.5 million. The mortar rounds of suits and settlements reached a crescendo in 2019 with a delisting notice from NASDAQ. In December 2019 Akers held a board meeting and decided that cannabis was the future and the public would pay for it.
The China Hustle
Akers chose HC Wainwright as the underwriter for the public offerings. Wainwright was 75% owned by Mr Vasinkevich who enjoyed an event with then Senator Hillary Clinton in 2006 entertained by the comedian David Brenner run by alumni of brokerage Rodman and Renshaw featured in the documentary The China Hustle that exposed the listing of fraudulent Chinese companies on US exchanges without complying with US accounting standards. Akers promised to pay HC Wainwright ten percent of monies raised plus warrants, free options to buy more shares at a favorable price. Ten percent is a lot to pay an intermediary for a public offering but is the going rate for companies drawing up business plans on cocktail napkins to finance New York penthouses.
Retired General Wesley Clark was the Chairman of Rodman and Renshaw who resigned after the China Hustle was released. The Chinese audits of these firms did not comply with US standards and permission was refused for review because the Chinese contended that these accounting inspections would compromise national security, theirs. This detail was of no concern to Rodman and Renshaw that listed Chinese shells on US exchanges with alacrity. Today over 156 Chinese firms are now listed on US exchanges with a market capitalization of more than the GDP of Mexico, $1.2 trillion.
By March 2020 the world learned a new term, Covid 19. Akers decided that the pandemic meant money. Akers did not hold a board meeting or file an SEC disclosure about the decision to pursue a Covid 19 Vaccine because clearly its expertise in cannabis and defending securities fraud qualified it for vaccine development, the domain of well-capitalized pharmaceutical companies since Edward Jenner's tryst with James Phipps and cowpox in the 1800s. Akers was neither well-capitalized nor a pharmaceutical company but those details were a trifle in the eye of opportunity.
The Plan
Akers needed to license the science for vaccine development or at least the appearance of vaccine development. And legitimate licensees of vaccine candidates were expensive and pledged to collaborations with serious members of the industry and academia of the global vaccine community. Akers, losing $3 to $10 million a year, could not afford legitimate, and needed a licensee that would be compliant and cheap.
So Akers management reached out to Oramed that had raised $20 million, February 2020, for a Phase III trial in oral insulin. Oramed sourced one of the ingredients for the insulin product from Premas Biotech that had an aspiring DNA sequencing business.
What could go wrong?
Premas had neither a vaccine nor vaccine candidate but was an expert in the sequencing of baker's yeast which offered enough of an appearance of the pursuit of a vaccine candidate to liberate public capital with the blessing of the SEC. A recent study by institutional investors concluded that less than seven percent of institutional fund managers had adequate education in science to understand whether science proposed in a business model could actually work. The regulator, the SEC, just took the word of companies management. Sequencing bakers yeast to a Covid 19 Vaccine made as much sense as anything else.
Akers had to negotiate the license fast because over 1000 vaccine trials were percolating through the legitimate vaccine community. The Akers vaccine tale could not marinate. In general License Agreements take time. The Licensor wants to be paid for its developed thought assured that a well-capitalized Licensee will not disappear into the night with the secret sauce. Encyclopedias have been written about the adversarial negotiation that provides bar associations around the world with billions in legal fees to contest the inevitable post License disputes when the prospect of commercial success springs.
Quicksand
Akers was lucky. Premas agreed to an immediate, exclusive, global license for its science. On 10 March 2020 Cystron LLC was formed, the shell company that bound together Mr Nadav Kidron the CEO of Oramed, HC Wainwright, and Premas Biotech as shareholders.
Cystron was conspicuous by its presence. If Akers was a legitimate Licensee and Premas a legitimate Licensor why would it be necessary to form Cystron, which lived a 14-day existence, to include the CEO of Oramed and HC Wainwright in two-thirds of the consideration created by the IP of Premas? And, why would Premas agree?
The plan was for Cystron to License the science from Premas. Akers would then acquire Cystron for cash plus 19.9% of the shares in Akers.
At the paying end of the rainbow the public would deliver monies to Akers for the acquisition of Cystron. At the receiving end of the rainbow HC Wainwright, Mr Nadav Kidron, CEO of Oramed, and Premas would wait for their gift baskets. The public would not know that Premas Biotech would negotiate with itself as a shareholder of Cystron, the Licensor, and as the Licensee. The real value may not have been the Premas science but any IP associated with Premas negotiating the Licensing Agreement.
Premas divided it share of the public trough by taking money and shares for the sale of its Cystron shares to Akers, taking money under the License Agreement for the achievement of science milestones, agreeing to take money in the future as a share of Akers public offerings, and agreeing to take money from future royalties if a product was developed, approved, and distributed.
The Stealing Lamp is Lit
On 24 March 2020 Akers paid Cystron $1 million and $1.3 million in Akers shares.
On 25 March 2020 the CEO of Akers and the CEO of Premas gave an interview which appeared to the public to be a discussion between Licensee, the CEO of Akers, and Licensor, the CEO of Premas in an arm or at least thumbs length relationship. The discussion concerned a novel approach to vaccine development that would be executed quickly and could capture expedited FDA approval.
There was no mention that the interview participants were shareholders in common venturing to separate the public from monies sharing in the proceeds or that Akers had paid Premas $1 million-plus shares the day before the interview. There was no mention that vaccine development on average required $500 million and 5 to 13 years.
The interview transcript was nine pages long and was posted on Akers website one week before the public offering, the same day that the United States was declared the global center of the epidemic and India went into lockdown.
To be or not to be
The SEC on 7 April gave effect to the Akers request to sell shares to the public. On 8 April Akers sold 766,000 shares at 6.00 a share to the public raising $4.6 million.
This caused great excitement in capital markets. The message boards of communities that share considered thought on the prospects of business models, Seeking Alpha, Stock Twits, dreamed of billion-dollar market capitalization for a three million dollar company. Akers shares traded over 100 million shares in two days, one thousand times its daily average, in a range of $2-$9 a share.
From the offering proceeds Akers paid the HC Wainwright $460,000, Cystron $250,000, and kept the remaining $3.8 million for itself. The $250,000 payment to Cystron was divided between the shareholders of Cystron: HC Wainwright, CEO of Oramed, and Premas. Akers went out of its way to explain its share of the money was not for vaccine development.
On 8 April 2020 Akers announced a science milestone achievement by Premas and paid Premas $500,000 bringing the total paid out from the offering to Cystron and Premas of $750,000 plus shares.
Fiction is obliged to stick to possibilities, Truth isn’t.
Mark Twain
A minority shareholder in Premas received a confidential assessment from an independent consultant that opined on the colorful history of Akers and observed that Premas was both Licensor and shareholder in the Licensee without disclosure while raising money from US markets. The advice was to make full disclosure immediately and consider options in the event Akers was to declare bankruptcy.
The report was delivered on 20 April and forwarded to the Board of Premas which convened on 21 April. On 22 April Premas returned $290,000 of the proceeds from the Cystron acquisition (24 March 2020). On 30 April Premas returned $83,000 of the monies received from the 7 April offering though Premas kept the $500,000 payment for the science milestone.
The net effect of the fancy math was that Premas received roughly $500,000 in cash instead of the $1.4 million it was owed plus shares in Akers. In the process Premas may have made US Capital market history with the first-ever voluntary refund by a foreign recipient of monies from a public offering.
The financial distinction between the acquisition of Cystron by Akers and achievement of Science Milestones by Premas is theoretical. In practice Akers raised monies from the US public markets to pay for both so a refund of one and acceptance of the other by Premas brings to mind the relationship between the deer and the headlights, or, what is behind the headlights, with Premas cast as the deer.
Historically actors have been ordered to return monies after lengthy civil and criminal investigations. The immediate refunds by Premas raised more questions than the conscience it answered: in light of the refunds, what was the validity of the License agreement and the acquisition of Cystron ? If Premas had returned the money then what had Akers purchased? Did it own Cystron and the License ? In fancy legal terms were the contracts executed, executory, void, or, pray tell, illegal? Should Akers fight or flee?
Akers chose flight. On 14 May 2020 Akers sold 1.36 million shares at 3.53 a share, a 40% discount from the 7 April offering, raising $4.8 million. Companies in pursuit of vaccine candidates had witnessed share prices untethered to gravity and were able to raise money at multiples of original offering prices while Akers sold shares into a black hole paying HC Wainwright $500,000 for the privilege of the down round.
Mark Felt said Follow the Money
Tales about money and who gets it are best understood by boring ledger accounting that bring to life inspired conspiracies while revealing cover-ups that go to excruciating lengths. The gritty of Akers’s story began with its 15 May 2020 SEC quarterly filing for the period ending 31 March 2020 the highlight of which was Premas returning money to Akers along with details on shareholders of Cystron.
These shareholders were now insiders of Akers and wanted to sell their Akers shares to the public. Akers had little choice but to identify the sellers and seek permission from the SEC for the sale of the shares.
Shares
Michael Vasinkevich, HC Wainright 409,299
Mr Nadav Kidron CEO Oramed 207,564
Mr Kunndu, CEO Premas Biotech 207,564
Noam Rubinstein 103,913
Charles Worthman 3,298
Craig Schwabe 16,223
Akers mentioned that one million warrants had been exercised at $4.00 share raising $4 million between the period 6 April to 20 April, 2020 though neither the exercise nor identity of the warrant holders was disclosed at the time despite the warrants being for over 25% of Akerss shares outstanding.
In eight weeks from March to May Akers raised $13.1 million or three years of operating losses and used none of it for vaccine development.
The Fancy Math
Of the $13.1 million Akers kept $11 million specifically not for vaccine development. HC Wainwright received $1.4 million-plus shares in Akers for being HC Wainwright. The CEO of Oramed received 207,000 shares plus cash of $400,000 for what is not clear. The reason for the offerings and the new business plan, Premas, received $400,000 in cash, 207,000 shares, and $500,000 for science milestone payment, of which it refunded the $400,000.
Impunity
According to SEC filings Akers shareholders stretch from Florida to Lichtenstein and include Mr Sander Gerber of Hudson Bay Capital, Intracoastal Capital, Iroquois, Alpha Capital Anstalt, and thirty-four other funds ranging from fronts to the legitimate mutual fund community.
That Akers is permitted to foist ever more imaginative tales in American public markets is a testament to the impunity granted by SEC permission.
As a coming attraction when the trough runs dry It is not difficult to imagine Akers timing a bankruptcy petition or attendant skullduggery to a capital schedule that confers secured, preferred status to select shareholders and leaves the rest contemplating credulity.
Akers belated admission that vaccine development takes time and that they have done precisely nothing to begin the process because they simply do not have the money, the expertise, or a product worthy of an application to regulators should be enough to warrant a passing glance.
If you tell the truth you don’t have to remember anything
Mark Twain
Twenty-four million is a rounding error in the chaos of capital markets. That is the amount that Akers Biosciences, Oramed, Cystron, Premas Biotech, and HC Wainwright have raised from US capital markets to develop a Covid 19 Vaccine. It is not the amount raised that is of concern; it is that the actors left to their own devices will continue to conjure ever more imaginative stories foisted on an unsuspecting public to profit from the greatest, global crisis in recorded human history.
In the Beginning
In March 2020 Akers Biosciences and Premas Biotech promised the public a smart, fast, cheap Covid 19 Vaccine. Akers Biosciences had lost $190 million in thirty years and was a permanent defendant in the courthouse for claims ranging from securities fraud to a lost leg. For Akers the pandemic was a life preserver. Akers raised $24 million from the public in a series of offerings with false claims, omissions, and just darn right lies.
Akers told the public in SEC filings, news releases, and on its website that it found a vaccine science that it would license from Premas Biotech. The vaccine science was better than others because it was three times more likely to find a vaccine because of Premas unique approach to proteins, its secret sauce. Premas was serious about science but Akers was not interested in serious rather enough of an appearance of seriousness that would pass under the noses of the public and above the eyebrows of the SEC.
Akers did not tell the public that the license would not be with Premas Biotech. Rather Akers would acquire a shell company, Cystron that existed for fourteen days, had one asset, the exclusive license with Premas Biotech for development of a Covid 19 vaccine, and no employees. Cystron licensed the science from Premas and Akers acquired Cystron for cash and shares worth 19.9% of Akers. The shareholders of Cystron were Premas Biotech, the CEO of Oramed Mr Nadav Kidron, and Mr Vasinkevich 75% owner of the underwriter HC Wainwright with a few associates.
The public would give money to Akers to pay the shareholders of Cystron that had no purpose as an intermediary in the transaction between Akers and Premas. As a shareholder in the Licensee, Cystron, Premas would negotiate a license with itself as the Licensor.
The existence of Cystron raised more questions than it answered. What was the need for the shell company Cystron ? Why would Akers not license the science directly from Premas? Who was Mr Kidron and why was he involved? Who was Mr Vasinkevich and why was he involved? How would Premas negotiate a license with itself as both licensor and shareholder of the licensee? Where was the SEC?
Cystron
On 24 March Akers paid Cystron $1 million, 411,403 in common shares, 211,353 of Series D convertible preferred shares valued at $1.233 million, and promised Cystron shareholders a share in future public offerings. Akers recorded a charge of $2.23 million to research and development expenses for the cash plus shares. Premas, a shareholder in Cystron, was now a shareholder in Akers.
On 25 March the Premas CEO and the Akers CEO held a webinar discussing the science of a vaccine without disclosing Cystron, the relationship between Akers and Premas, or the $2.33 million payment from the day before. The investing public was presented with a Licensor (Akers) discussing the potential of the science with the Licensee (Premas) each appearing to be independent with interests in common and also interests that might conflict in a standard Licensor, Licensee relationship. The nine page transcript was posted to the Akers website.
On 8 April Akers sold 766,667 shares of common stock in a public offering at $6 a share raising $4.6 million of which it paid $500,000 to the underwriter HC Wainright also a 40% shareholder in Cystron meaning that in a addition to the underwriting fee Mr Vasinkevich received $400,000 in cash plus roughly $500,000 in Akers shares or $1.4 million in total. Mr Nadav Kidron, the CEO of publicly listed Oramed, received $200,000 in cash plus roughly $250,000 in shares for what is not clear.
Akers stock traded 50,000 shares a day on average before the 8 April 2020 offering. On April 4 the volume was 73,000 shares at a closing price of 1.89. On the next trading day, April 6, 57 million shares traded with a closing price of 4.69, or one hundred times the average volume. In the three days following Akers stock traded as high as $9.00 before volume returned to under one hundred thousand shares a day. Akers now trades at $1.75.
The Refund
On April 16 Akers paid Premas $500,000 for a science milestone under the license between Cystron and Premas that Akers acquired. Premas kept that money but on April 22 Premas returned $299,074 in cash to Akers representing Premas’ portion of the $1,000,000 cash paid to Cystron on 24 March 2020 . Premas did not return the Akers common or Series D convertible preferred shares.
Confusing? Yes. Premas returned the cash portion of the 24 March 2020 Cystron acquisition which called the transaction into legal question, Premas kept the shares from the transaction and kept the science milestone payments made under the license agreement from the transaction that was in law now voidable, void, or just plain illegal. The refund was not disclosed until 15 May 2020 when Akers filed a quarterly report for the March quarter. There was no 8k, no press release, and no thought shareholders should know that the house was resting on a foundation that was missing a few cards.
Thinking about it the refund was more curious than the shell company, Cystron, and though it is not clear but it could have been the first unsolicited refund by a foreign company of monies raised in the history of US capital markets without a legal notice, court order, subpoena, or the promise of liberty suspended. Something was amiss if not in Denmark then in board rooms across continents.
The Usual Suspects
In 2018 the founder of Akers disagreed with management over accounting practices and resigned. Akers sold medical devices and was by 2018 a permanent defendant in the courthouse where it paid more than its annual revenue in legal fees to defend the suits.
In September 2018 Akers inducted Mr Joshua Silverman as an independent director. Mr Silverman had served in the administration of President Bill Clinton in the Office of the Press Secretary and graduated to the hedge fund business. When appointed Mr Silverman was the proprietor of Iroquois Capital Management. Mr Silverman inherited a medical device company from which the founder had resigned with accumulated losses of $190 million spending more on legal fees alone than the revenue it generated.
Mr Silverman and Akers shareholders Hudson bay Capital and Alpha Capital Anstalt had a colorful history tangent to the ecosystem of what can only be described as a cabal of “pump and dump” capital market operators of funds, promoters, bloggers, and willing corporate cadavers. The “pump” was the “mirror” trading of shares to create the appearance of volume and the “dump” was the sale of securities for companies whose businesses consisted of drone footage of to be created mining sites conveniently tabbed from the internet.
Mr Silverman and Iroquois were involved in at least six companies that were pumped to the benefit of insiders and dumped on an unsuspecting public. In 2016 MGT Capital was issued a subpoena by the SEC microcap securities task force. The fourteen pages subpoena requested much but in particular information in respect of Mr Silverman, Iroquois, Hudson Bay Capital, and Alpha Capital Anstalt, Lichtenstein. These conspirators along with a ferry boat of others were identified by the SEC as the infrastructure of greed that threatened the integrity of capital markets. Mr Silverman in particular had a colorful choice of underwriter, Katalyst, one promoter of which had spent a year in prison while the other had been indicted running numbers for the Lucchese crime family attempting to bribe NYPD cops.
Alpha Capital Anstalt nestled in Vaduz, Lichtenstein with $650 million of unknown capital shepherd through sixty four equity positions in US capital markets including Akers. A quick glance of the 30 equities Anstalt purchased in 2019 reveals “pump” candidates with no trading volume and market capitalizations of less than $10 million, the organ donors for the “dump.” Though Anstalt might have become more circumspect after paying the SEC $1 million for violations related to Mr Barry Honig who ran a microcap securities fraud circus from 2013-2018 along with Mr Philip Frost an 82 year old billionaire who might not have invented Viagra but sold a company to Teva for $700 million and needed something to keep him busy.
Akers was a willing corporate cadaver with the legal claims against it that ranged from Securities Fraud (settled for $2.25 million), Intellectual Property theft (settled for 930,000 plus a permanent injunction), unpaid bills to a telemarketer, wrongful termination of an executive, product liability (loss of a leg, $1 million), and a Chinese outfit with a claim of $1.5 million. The mortar rounds of suits and settlements reached a crescendo in 2019 with a delisting notice from NASDAQ. In December 2019 Akers held a board meeting and decided that cannabis was the future and the public would pay for it.
The China Hustle
Akers chose HC Wainwright as the underwriter for the public offerings. Wainwright was 75% owned by Mr Vasinkevich who enjoyed an event with then Senator Hillary Clinton in 2006 entertained by the comedian David Brenner run by alumni of brokerage Rodman and Renshaw featured in the documentary The China Hustle that exposed the listing of fraudulent Chinese companies on US exchanges without complying with US accounting standards. Akers promised to pay HC Wainwright ten percent of monies raised plus warrants, free options to buy more shares at a favorable price. Ten percent is a lot to pay an intermediary for a public offering but is the going rate for companies drawing up business plans on cocktail napkins to finance New York penthouses.
Retired General Wesley Clark was the Chairman of Rodman and Renshaw who resigned after the China Hustle was released. The Chinese audits of these firms did not comply with US standards and permission was refused for review because the Chinese contended that these accounting inspections would compromise national security, theirs. This detail was of no concern to Rodman and Renshaw that listed Chinese shells on US exchanges with alacrity. Today over 156 Chinese firms are now listed on US exchanges with a market capitalization of more than the GDP of Mexico, $1.2 trillion.
By March 2020 the world learned a new term, Covid 19. Akers decided that the pandemic meant money. Akers did not hold a board meeting or file an SEC disclosure about the decision to pursue a Covid 19 Vaccine because clearly its expertise in cannabis and defending securities fraud qualified it for vaccine development, the domain of well-capitalized pharmaceutical companies since Edward Jenner's tryst with James Phipps and cowpox in the 1800s. Akers was neither well-capitalized nor a pharmaceutical company but those details were a trifle in the eye of opportunity.
The Plan
Akers needed to license the science for vaccine development or at least the appearance of vaccine development. And legitimate licensees of vaccine candidates were expensive and pledged to collaborations with serious members of the industry and academia of the global vaccine community. Akers, losing $3 to $10 million a year, could not afford legitimate, and needed a licensee that would be compliant and cheap.
So Akers management reached out to Oramed that had raised $20 million, February 2020, for a Phase III trial in oral insulin. Oramed sourced one of the ingredients for the insulin product from Premas Biotech that had an aspiring DNA sequencing business.
What could go wrong?
Premas had neither a vaccine nor vaccine candidate but was an expert in the sequencing of baker's yeast which offered enough of an appearance of the pursuit of a vaccine candidate to liberate public capital with the blessing of the SEC. A recent study by institutional investors concluded that less than seven percent of institutional fund managers had adequate education in science to understand whether science proposed in a business model could actually work. The regulator, the SEC, just took the word of companies management. Sequencing bakers yeast to a Covid 19 Vaccine made as much sense as anything else.
Akers had to negotiate the license fast because over 1000 vaccine trials were percolating through the legitimate vaccine community. The Akers vaccine tale could not marinate. In general License Agreements take time. The Licensor wants to be paid for its developed thought assured that a well-capitalized Licensee will not disappear into the night with the secret sauce. Encyclopedias have been written about the adversarial negotiation that provides bar associations around the world with billions in legal fees to contest the inevitable post License disputes when the prospect of commercial success springs.
Quicksand
Akers was lucky. Premas agreed to an immediate, exclusive, global license for its science. On 10 March 2020 Cystron LLC was formed, the shell company that bound together Mr Nadav Kidron the CEO of Oramed, HC Wainwright, and Premas Biotech as shareholders.
Cystron was conspicuous by its presence. If Akers was a legitimate Licensee and Premas a legitimate Licensor why would it be necessary to form Cystron, which lived a 14-day existence, to include the CEO of Oramed and HC Wainwright in two-thirds of the consideration created by the IP of Premas? And, why would Premas agree?
The plan was for Cystron to License the science from Premas. Akers would then acquire Cystron for cash plus 19.9% of the shares in Akers.
At the paying end of the rainbow the public would deliver monies to Akers for the acquisition of Cystron. At the receiving end of the rainbow HC Wainwright, Mr Nadav Kidron, CEO of Oramed, and Premas would wait for their gift baskets. The public would not know that Premas Biotech would negotiate with itself as a shareholder of Cystron, the Licensor, and as the Licensee. The real value may not have been the Premas science but any IP associated with Premas negotiating the Licensing Agreement.
Premas divided it share of the public trough by taking money and shares for the sale of its Cystron shares to Akers, taking money under the License Agreement for the achievement of science milestones, agreeing to take money in the future as a share of Akers public offerings, and agreeing to take money from future royalties if a product was developed, approved, and distributed.
The Stealing Lamp is Lit
On 24 March 2020 Akers paid Cystron $1 million and $1.3 million in Akers shares.
On 25 March 2020 the CEO of Akers and the CEO of Premas gave an interview which appeared to the public to be a discussion between Licensee, the CEO of Akers, and Licensor, the CEO of Premas in an arm or at least thumbs length relationship. The discussion concerned a novel approach to vaccine development that would be executed quickly and could capture expedited FDA approval.
There was no mention that the interview participants were shareholders in common venturing to separate the public from monies sharing in the proceeds or that Akers had paid Premas $1 million-plus shares the day before the interview. There was no mention that vaccine development on average required $500 million and 5 to 13 years.
The interview transcript was nine pages long and was posted on Akers website one week before the public offering, the same day that the United States was declared the global center of the epidemic and India went into lockdown.
To be or not to be
The SEC on 7 April gave effect to the Akers request to sell shares to the public. On 8 April Akers sold 766,000 shares at 6.00 a share to the public raising $4.6 million.
This caused great excitement in capital markets. The message boards of communities that share considered thought on the prospects of business models, Seeking Alpha, Stock Twits, dreamed of billion-dollar market capitalization for a three million dollar company. Akers shares traded over 100 million shares in two days, one thousand times its daily average, in a range of $2-$9 a share.
From the offering proceeds Akers paid the HC Wainwright $460,000, Cystron $250,000, and kept the remaining $3.8 million for itself. The $250,000 payment to Cystron was divided between the shareholders of Cystron: HC Wainwright, CEO of Oramed, and Premas. Akers went out of its way to explain its share of the money was not for vaccine development.
On 8 April 2020 Akers announced a science milestone achievement by Premas and paid Premas $500,000 bringing the total paid out from the offering to Cystron and Premas of $750,000 plus shares.
Fiction is obliged to stick to possibilities, Truth isn’t.
Mark Twain
A minority shareholder in Premas received a confidential assessment from an independent consultant that opined on the colorful history of Akers and observed that Premas was both Licensor and shareholder in the Licensee without disclosure while raising money from US markets. The advice was to make full disclosure immediately and consider options in the event Akers was to declare bankruptcy.
The report was delivered on 20 April and forwarded to the Board of Premas which convened on 21 April. On 22 April Premas returned $290,000 of the proceeds from the Cystron acquisition (24 March 2020). On 30 April Premas returned $83,000 of the monies received from the 7 April offering though Premas kept the $500,000 payment for the science milestone.
The net effect of the fancy math was that Premas received roughly $500,000 in cash instead of the $1.4 million it was owed plus shares in Akers. In the process Premas may have made US Capital market history with the first-ever voluntary refund by a foreign recipient of monies from a public offering.
The financial distinction between the acquisition of Cystron by Akers and achievement of Science Milestones by Premas is theoretical. In practice Akers raised monies from the US public markets to pay for both so a refund of one and acceptance of the other by Premas brings to mind the relationship between the deer and the headlights, or, what is behind the headlights, with Premas cast as the deer.
Historically actors have been ordered to return monies after lengthy civil and criminal investigations. The immediate refunds by Premas raised more questions than the conscience it answered: in light of the refunds, what was the validity of the License agreement and the acquisition of Cystron ? If Premas had returned the money then what had Akers purchased? Did it own Cystron and the License ? In fancy legal terms were the contracts executed, executory, void, or, pray tell, illegal? Should Akers fight or flee?
Akers chose flight. On 14 May 2020 Akers sold 1.36 million shares at 3.53 a share, a 40% discount from the 7 April offering, raising $4.8 million. Companies in pursuit of vaccine candidates had witnessed share prices untethered to gravity and were able to raise money at multiples of original offering prices while Akers sold shares into a black hole paying HC Wainwright $500,000 for the privilege of the down round.
Mark Felt said Follow the Money
Tales about money and who gets it are best understood by boring ledger accounting that bring to life inspired conspiracies while revealing cover-ups that go to excruciating lengths. The gritty of Akers’s story began with its 15 May 2020 SEC quarterly filing for the period ending 31 March 2020 the highlight of which was Premas returning money to Akers along with details on shareholders of Cystron.
These shareholders were now insiders of Akers and wanted to sell their Akers shares to the public. Akers had little choice but to identify the sellers and seek permission from the SEC for the sale of the shares.
Shares
Michael Vasinkevich, HC Wainright 409,299
Mr Nadav Kidron CEO Oramed 207,564
Mr Kunndu, CEO Premas Biotech 207,564
Noam Rubinstein 103,913
Charles Worthman 3,298
Craig Schwabe 16,223
Akers mentioned that one million warrants had been exercised at $4.00 share raising $4 million between the period 6 April to 20 April, 2020 though neither the exercise nor identity of the warrant holders was disclosed at the time despite the warrants being for over 25% of Akerss shares outstanding.
In eight weeks from March to May Akers raised $13.1 million or three years of operating losses and used none of it for vaccine development.
The Fancy Math
Of the $13.1 million Akers kept $11 million specifically not for vaccine development. HC Wainwright received $1.4 million-plus shares in Akers for being HC Wainwright. The CEO of Oramed received 207,000 shares plus cash of $400,000 for what is not clear. The reason for the offerings and the new business plan, Premas, received $400,000 in cash, 207,000 shares, and $500,000 for science milestone payment, of which it refunded the $400,000.
Impunity
According to SEC filings Akers shareholders stretch from Florida to Lichtenstein and include Mr Sander Gerber of Hudson Bay Capital, Intracoastal Capital, Iroquois, Alpha Capital Anstalt, and thirty-four other funds ranging from fronts to the legitimate mutual fund community.
That Akers is permitted to foist ever more imaginative tales in American public markets is a testament to the impunity granted by SEC permission.
As a coming attraction when the trough runs dry It is not difficult to imagine Akers timing a bankruptcy petition or attendant skullduggery to a capital schedule that confers secured, preferred status to select shareholders and leaves the rest contemplating credulity.
Akers belated admission that vaccine development takes time and that they have done precisely nothing to begin the process because they simply do not have the money, the expertise, or a product worthy of an application to regulators should be enough to warrant a passing glance.
In the words of someone much smarter, wiser, and experienced, “never walk behind a horse or in front of a cop.”
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