Suspicious Activity with Suspect Detection Systems’ SDSS Stock

Before disappearing off the financial grid when they filed their 15-12G with the SEC, shares of Suspect Detection Systems Inc.’s (OTC PINK: SDSS) penny stock were on the downward slide. Now, after filing with OTCMarkets their 2009, 2010, 2011 and Q1 2012 results all within the last week, SDSS stock need to be on the radar immediately and added to the list of penny stocks to watch because something is brewing from within.  Suspect Detection Systems, an Israeli company that specializes in the development and application of proprietary technologies for law enforcement and border control, including counter terrorism efforts, immigration control and drug enforcement, and their penny stock, SDSS, are worth having a deeper look to see what can be detected….

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SDSS Stock Chart:

Market Cap: 2.76M
Shares Outstanding: 78.93M
Float: 51.58M

Although cash was reported to be $595,188, the last 10-Q SDSS filed with the SEC was for Q3 2011 which showed a -56% decrease in current assets. The Company reported $174,341 and $259,080 in revenues for the 3 months ended September 30, 2011 and 2010, respectively, which represents a decrease of $84,739 or -32.71%. However, Suspect Detection Systems reported $1,912,620 and $1,596,682 in revenues for the 9 months ended September 30, 2011 and 2010.  The increase in revenues was a result of the recognition of revenues from one large contract in Q1 2011. The revenues recognized from the contract were $1,649,303.

The Company had incurred a net loss of $1,757,961 for the 9 months ended September 30, 2011 and reported an accumulated deficit of $4,543,059.

Prior to filing the 15-12G in March,  Suspect Detection Systems terminated its negotiations with DVTel, Inc. in connection with a non-binding letter of intent which contemplated a merger of a newly-formed, wholly-owned subsidiary of SDSS whereas DVTel surviving the Merger as a wholly-owned subsidiary of Suspect Detection Systems.

The company also filed Schedule 14A which was inviting SDSS shareholders to attend a Special Meeting of Stockholders on February 9, 2012. At the meeting, among other issues, SDSS shareholders were expected to vote on authorizing the amendment of the Company’s Certificate of Incorporation for the purpose of increasing the authorized capital of Suspect Detection Systems from 250 Million shares of common stock, $.0001 par value per share to 2.5 Billion shares of common stock, $.0001 par value per share.

SDSS Finaical Filings on May 21

On Monday, May 21, Suspect Detection Systems filed their Q1 2012 results. The Company incurred a net loss of $379,042 for the 3 months ended March 31, 2012 and, as of March 31, 2012, had an accumulated deficit of $5,327,243. Cash and cash equivalents were reported as $318,570 which is somewhat in-line with prior filings.

No where on the filings does it mention an increase in Outstanding shares or the approval, or denial, of the proposed increase of authorized shares of SDSS common stock which was set to occur on February 9th. Did the special meeting of shareholders get cancelled? Did they no longer need to report the results of the vote since they filed their 15-12G?

From the Schedule 14A:

After taking into consideration our current outstanding equity obligations, in order to have sufficient shares to provide a more favorable capital structure for such purposes as equity financing, stock-based acquisitions and strategic partnerships which may require that additional shares be available for issuance, our Board has determined that it is in the best interest of our stockholders to increase the number of authorized shares of our common stock from 250,000,000 to 2,500,000,000. The additional common stock to be authorized will become part of the existing class of common stock and will have the same par value, the same voting rights, the same rights to dividends and distributions and will be identical in all other respects to the shares of our common stock now authorized.

The Board has approved the amendment to our Certificate of Incorporation for the purpose of increasing the authorized capital from 250,000,000 shares of common stock, par value $.0001 per share to 2,500,000,000 shares of common stock, par value $.0001 per share and authorized and recommends that stockholders of the Company vote FOR approval of the increase in the number of authorized shares of common stock.

Somewhat hard to believe that the vote to increase the authorized capital from 250 Million to 2.5 Billion would not be approved considering that, according to OTCMarkets, there were only 178 Shareholders of Record a/o Mar 30, 2012.

To view the SEC filings of SDSS, click here. To view the current Filings for SDSS, click here.

Bottom Line: SDSS stock must be added to the list of penny stocks to watch simply because reporting all your financial results to current after filing a 15-12G means something is up. What’s up? Dunno, but a sales pitch with terrorism and Israel in it, coupled with prior SEC filings of customer purchases which were in the millions in prior years, and you got yourself a pump. Through Iran into the mix and you got yourself a pump with 2.5 Billion shares at your disposal. Harry Lappa and Mackie Barch ain’t got nothing on Gil Boosidan.

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