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Actionable news in GBSN: GREAT BASIN SCIENTIFIC INC,

Is Great Basin Scientific Just Another Pump And Dump?

Summary

We have been short, and have been tracking GBSN as a potential pump and dump candidate since March 30, 2015.

GBSN's IPO underwriter, Dawson James Securities, Inc., raises numerous red flags due to its murky history and involvement in other suspect stocks.

Like all biotechs, there is risk of the stock running on little or no fundamental news, but we believe GBSN will probably head lower from here.

GeoInvesting is currently short Great Basic Scientific (NASDAQ:GBSN), a rapid diagnostic medical test (Nucleic Acid Assay Testing) firm. We first alerted GeoInvesting premium members that we identified red flags associated with GBSN on March 30, 2015.

In our March 30 e-mail to premium members, we stated:

We are taking a closer look at GBSN, as just 3 months after it went public we received a promotional pump e-mail newsletter. The stock was up strong in Friday's session (up 40%). Our initial due diligence is beginning to reveal a number of red flags.

In our April 7, 2015 e-mail to premium members, we stated:

Rapid diagnostic medical test firm Great Basin Scientific went public on October 9, 2014. The IPO was underwritten by Dawson James Securities, Inc, out of Boca Raton, Florida. This immediately gave our team cause for concern due to Dawson's past regulatory infractions and its association with one of its previous brokers, arrested in connection with his participation in a "nationwide Ponzi Scheme." Furthermore, Dawson has had investment banking relationships with other stocks we consider to be pump and dumps, as well as with a high profile Chinese company accused of fraud whose registration was revoked by the SEC. But more importantly, while Yahoo, GOOG and other financial portals indicate that GBSN has only 5 million outstanding shares, a February 2015 secondary offering created convertible preferred stock and warrants that will allow an additional 35 million shares to flood the market.

GBSN reached an intraday trading high of $9.08 during its October 2014 IPO debut, before closing at $5.97. Since its IPO, GBSN shares had been in a steady decline, touching $1.48 on February 10, 2015. A pump campaign initiated by several promotional newsletters last week (Friday, March 28, 2015) has helped push the stock as high as $5.40 as of April 1, 2015.

See our full email alert bulletins here.

Just this week, another skeptic of GBSN posted this article on Seeking Alpha, claiming that "penny stock newsletter pumps don't end well." We agree with the premise of this article and today we'll offer what our due diligence has turned up, some of which corresponds with this report.

Great Basin Scientific went public on October 9, 2014. The company currently only has one product on the market:

"Our C. diff diagnostic test is our first and only assay cleared by the FDA for commercial sale."

The IPO was underwritten by Dawson James Securities, Inc. out of Boca Raton, Florida. This immediately gave our team cause for concern due to Dawson's past regulatory infractions and its association with one of its previous brokers, who was arrested in connection with his participation in a "nationwide Ponzi Scheme." Dawson has had investment banking relationships with other stocks we consider to be pump and dumps as well. They're also connected with a high a profile Chinese company, Fuqi International (OTCPK:FUQI), accused of fraud by the SEC who also revoked their registration. More importantly, while Yahoo, GOOG and other financial portals indicate that GBSN has only 5 million outstanding shares, a February 2015 secondary offering created convertible preferred stock and in-the-money warrants that could allow an additional 39 million shares to flood the market.

After reading company filings, we also learned the company faces competition from at least 11 larger competitors (based on revenue estimates) with revenues ranging from $20 million to $49.8 billion compared to GBSN's 2014 annual revenue of $1.6 million.

GBSN reached an intraday trading high of $9.08 during its October 2014 IPO debut, before closing at $5.97. Since its IPO, GBSN shares have been on a steady decline, touching as low as $1.48 on February 10, 2015. A pump campaign initiated by several promotional newsletters last week (Friday, March 28, 2015) helped push the stock as high as $5.40 on...


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