Originally published on Forbes.com.
Almost all the coverage you will find about Sunshine Capital Inc is press releases by Sunshine Capital Inc. Sunshine trades over the counter and is currently priced at $6.00 per share making it, in the view of my stick in the mud investor adviser, a “penny stock” too volatile for his firm to get involved with. A recent press release from Sunshine obliges me to clarify a piece I did that discussed the company. The title of the press release give its essence “Sunshine Capital Inc. Announces That The Company’s Use of ‘DIBCOIN’ Was Described as ‘Genius’ in a Forbes.com Article”. It goes on:
“It’s an honor to be mentioned in a financial news icon like Forbes.com,” stated Adam Petty, President and CEO. “The real genius of our business plan is Sunshine Capital, unlike the majority of public companies who use their stock as ‘currency,’ ours is structured in such a way that DIBCOIN will be used as a currency and that our shareholders’ ownership will never be diluted.”
Some Clarification
There are two problems with that statement. One is that there is an implication that in my piece with the hardly laudatory title of Florida Man Goes From Multilevel Marketing To Cryptocurrency – What Could Possibly Go Wrong? I am somehow endorsing Sunshine Capital Inc and Dibcoin.I am not endorsing Sunshine Capital Inc and Dibcoin. I don’t want to knock them. I figure I have a pretty smart readership and that you can form your own conclusion.
Also what Adam Petty states as the genius of Sunshine’s business plan is not what I see as the genius of Sunshine’s business plan. Mr. Petty emphasizes that Sunshine’s shareholders will not have their ownership diluted when it acquires new companies. I suppose that is a good thing, but it is not what I see as genius. What I see as genius is something that as far as an investor is concerned is not a good thing. The genius of Adam Petty, Honson Luma and Ernie Land is to take three things that by themselves have negligible credibility – a penny stock, a new cryptocurrency, and multi-level marketing to create a credible seeming narrative.
To Be Fair
A couple of things in the “to be fair” column before I continue. Honson Luma, the VP of Sunshine and originator of Dibcoin told me that Rx Smart Coffee is just one of Sunshine’s acquisitions and that they are not staking their credibility on Ernie Land’s endorsement. Further, I have no reason to doubt the sincerity and integrity of Adam Petty, Honson Luma and Ernie Land. I never did manage to speak to Mr. Petty. I had a nice conversation with Mr. Luma.
Ernie Land and I have spoken and been in correspondence for several years. Mostly it has been about the trials and tribulations of young earth creationist Kent Hovind, who served a long term in federal prison and who was spared an additional long term by sharp legal work for which Ernie gets a lot of credit. I believe that Ernie is about as sincere as a person with a sales related career can be. On the other hand, Ernie seems to sincerely believe many things that I find preposterous. And visa versa. Kent Hovind’s innocence narrative , evolutionary biology, the age of the earth and a variety of conspiracy theories are among the things that Ernie and I agree to disagree on while maintaining a cordial relationship. Sunshine Capital and Dibcoin will now join that list.
The Sunshine Story
So let’s start with the Sunshine narrative, which does not include multi-level marketing. It has two components Sunshine Capital Inc, a publicly traded company and Dibcoin, a cryptocurrency now traded on the Livecoin exchange.
Sunshine Capital’s unaudited financial statements are underwhelming. When I look at the financial statements of public companies, the numbers are usually rounded to the nearest million. Sunshine’s statements include pennies. In the first three quarters of 2016, there was less than $20,000 of revenue and no revenue at all in the fourth quarter. The largest expense item in the thirty odd thousand of expenses is $5,500 paid to Livecoin for Dibcoin expenses. For assets there are two bank accounts. The account at Harris Bank has $29.00 and the one at Bank of America has $2,543.99. That’s it for assets. There are were over 68 million shares outstanding on 12/31/16. However in a restructuring in February, most of those share were cancelled leaving 16.997,000. Still the implied market capitalization of $100 million at $6 per share seems a bit high for a company with no assets and no revenue to speak of.
The Dibcoin Story
Then there is Dibcoin. Dibcoin’s credibility is based on its listing on the LiveCoin exchange. I asked the people at LiveCoin how hard it is to get a coin listed. The response was:
The rules for new coins are quite simple, you can read it following this link: https://www.livecoin.net/en/coin-listingSo we would say that the listing procedure and requirements aren’t difficult.
Regardless, Dibcoin is trading on LiveCoin. According to CryptoCurrency Market Capitalizations, as I write this a Dibcoin goes for $1.10. Here is the rub though, the total volume traded in the last 24 hours is $241. And there are 5 billion dibcoins.
When You Put Them Together
This is where the genius, or perhaps ingenious narrative, comes into play. If I say that Sunshine Capital does not seem to amount to very much, the response is – “But it has 4 billion dibcoins. And dibcoins trade on the LiveCoin Exchange at $1.10 each”. If I say dibcoins don’t seem to have very much in the way of transactions supporting their $1.10 valuation, the answer is – “But there is a publicly traded company that will be using its dibcoins to acquire other companies making Dibcoin unique and revolutionary”
That’s the cake baked by Adam Petty and Honson Luma. The icing on the cake is Ernie Land out there spreading the word with his multi-level marketing passion. There is soon to be an affiliate program with nine levels. We’ll see how that goes.
When you really boil it down you have two things that objectively have negligible value with a linking narrative that creates purported billions in value out of thin air. The only way I can think of to improve this is to use the new expedited Form 1023-EZ to get 501(c)(3) status for the Future of Money Foundation (I just made that up for illustrative purposes) . Then you could have FMF give its innovator of the century award to Sunshine emphasizing that FMF has been approved by the IRS. I’m really surprised they hadn’t thought of that. Maybe next time they order Rx Smart Coffee , they should go with the Beautiful Mind blend that enhances mental agility instead of Gentleman’s Blend. Male vigor can be a great thing, but my experience is that it does not support clear thinking.
How I Got On This
I declared the Kent Hovind story or L’affaire Kent Hovind done as far as my forbes.com coverage was concerned in August 2015 when his co-defendant Paul Hansen received a below guideline sentence for contempt of court. I have kept up with the story on my alternate tax blog, which has lower standards and no rational editorial supervision at all. That has kept me in touch with Ernie Land, Kent’s consigliere, as Kent rebooted his ministry with speaking, a youtube channel and the prospects of a bigger better Dinosaur Adventureland in Lenox, Alabama.
I would never have imagined that my Kent Hovind coverage would cross over with my coverage of virtual currencies, but Ernie Land and Dibcoin have made it happen. I found the combination irresistible. Ernie’s response to my skepticism is that people were skeptical about Bitcoin and look how that has done. As it happens it I remain skeptical of Bitcoin, but have to admit that its attractiveness to techno nerds of a libertarian bent will give it staying power. I’m not buying any bitcoins, but I’m also not trying to figure out how to short them. If Dibcoin catches on, as it may, with young earth creationists, it might really take off. You be the judge.
Update
You won’t be able to buy Sunshine Capital on the OTC for at least a couple of weeks. This release just came out from the SEC.
The Commission temporarily suspended trading in the securities of SCNP because of questions regarding the accuracy of assertions by SCNP in press releases to investors concerning, among other things, the liquidity and value of the company’s assets, namely DIBCOINS, a cryptocurrency.
I spoke with Valerie Sczepanik, Assistant Regional Director of the SEC New York Regional Office. She told me that the SEC cannot comment beyond what is contained in the release.