The Pump Isn't Dry Yet For These Small Cap Stocks: BLUF, DPHS & IWEB

Small cap stocks BluForest Inc (OTCMKTS: BLUF), Dephasium Corp (OTCMKTS: DPHS) and IceWEB, Inc (OTCBB: IWEB) have been getting some attention for at least a few weeks now thanks to paid for promotional activity. Of course, there is nothing wrong with properly disclosed stock promotions, but one of these stocks also has a former shareholder who has filed a civil action against it alleging there is an illegal "pump and dump" scheme going on. So what's the whole story and more importantly, what will happen with these small cap stocks when the well from promoters eventually goes dry? Here is a closer look and a quick reality check:

BluForest Inc (OTCMKTS: BLUF) Has a Former Shareholder Crying Foul

Small cap BluForest is an early stage carbon offsets marketing and renewable energy company executing a strategy to become a leading marketer of carbon offsets in the voluntary markets under the UN principle of Reducing Emissions from Deforestation and forest Degradation (REDD+). On Friday, BluForest rose 15.58% to $1.78 for a market cap of $184.18 million plus BLUF is down 70.3% over the past year and up 612% over the past five years according to Google Finance.

What's the Catch with BluForest Inc? According to various disclosures, transactions of $15k and $50k have or will occur with one promoter expecting to receive an additional $75k in cash for a total of $150k cash paid by IRELAND OFFSHORE SECURITIES SA, a non affiliated third party, while another promoter expects to receive $200,000 from a third party non affiliate for two months of coverage. This probably means we will keep hearing about BluForest for awhile. Last Monday, a former shareholder of BluForest filed a civil action for "Fraud, Negligent Misrepresentation, Deceit, violation of California Corporations Code Section 25400, and violations of the California Business and Professions Codes 17200 (Unfair Business Practices) and 17500 (False Advertising)" against the company and several of its past and present officers. Basically, he is claiming they are all part of an illegal pump and dump scheme. A quick look at BluForest Inc's financials is not exactly reassuring as its reported no revenues; net losses of $24,565k (most recent reported quarter), $957k, $731k and $812k for the past four quarters; and no cash to cover $3,227k in current liabilities as of the end of March. Nevertheless, BluForest does claim to own a huge track of Ecuadorian jungle, but its not like the company can log or mine it for profits.

Dephasium Corp (OTCMKTS: DPHS) Has Warned About Short Sellers

Small cap Dephasium Corp recently acquired the US Ancilia trademark and patent from Dephasium, Ltd. and with its intended commercialization of that product, intends to become the leader in the field of people protection against electromagnetic waves emitted by mobile phones. On Friday, Dephasium Corp closed at $0.035 for a market cap of $3.32 million plus DPHS is down 92.2% over the past year and up 250% since February 2011 according to Google Finance.

What's the Catch with Dephasium Corp? According to various disclosures, transactions of $2k, $2.5k, $3k, $4k, $7.5k, $12.5k and $15k have or will occur to mention Dephasium Corp in various investment newsletters. Dephasium Corp has been getting plenty of off and on attention for a couple of months now, but what's been pretty strange is the company issuing a press release to announce that an unidentified third party, without the DPHS's approval, has listed its shares on the Boerse Berlin Stock Exchange. The press release warned that this could be the first salvo in a "significant naked shorting attack directed at the Company" given that the Berlin exchange is one of few stock exchanges in the world that allows listing and trading of a company's stock without the consent or authorization of the company being listed in order to facilitate short-selling. A quick look at Dephasium Corp's financials reveals no revenues; net losses of $10k (most recent reported quarter), $17k and $11k plus net income of $388k; and $51k to cover $9k in current liabilities at the end of March. In other words, Dephasium Corp isn't making money but someone else is trying to make some from it.

IceWEB, Inc. (OTCBB: IWEB) Seems to Be Making Progress

Small cap IceWEB is a provider of Unified Data Storage appliances for cloud and virtual environments, as well as the highly secure, scalable IceBOXTM BYOD (Bring Your Own Device) Private Digital Cloud Solution. On Friday, IceWEB fell 8.57% to $0.0320 for a market cap of $9.01 million plus IWEB is down 54.3% over the past year and down 81.7% over the past five years according to Google Finance.

What's the Catch with IceWEB, Inc? According to various disclosures, transactions of $2k, $3k, $5.5k and $15k have or will occur to mention IceWEB in various investment newsletters. The last time I mentioned IceWEB, it had announced that two additional K-12 school systems had ordered new IceBOX BYOD implementations and I mentioned that back in Mid-July, the company announced it had secured an order from an (unnamed) Ivy League University for up to 5,000 users. Since then, IceWEB has announced an order from the University of Southern California for up to 5,000 users plus it has announced a Distribution & Reseller Partnership Agreement with Halodata International for Southeast Asian Nations (ASEAN). A quick look at IceWEB's financials reveals revenues of $455k (most recent reported quarter), $313k, $94k and $655k for the past four quarters along with net losses of $2,124k and $791k, net income of $38k and a net loss of $4,000k. At the end of last March, IceWEB had $59k in cash and $595k in receivables to cover $3,393k in current liabilities. While the top line does not look too bad, investors might still want to wait and see what impact the recent announcements have on financials before jumping in and wait for all the promotions to end.