Root9BTechnologies Inc. (RTNB): -82.47% Downside On Fraud Allegations, Cyber Failure And Bankruptcy. Strong Sell. by The Pump Stopper

root9B Summary

  • root9B Technologies Inc. (OTC:RTNB) is a worthless reverse-merger created by insiders with long history of penny-stock wipeouts, fraud allegations, and disaster while CEO Grano embroiled in “fraudulent concealment”and “breach of fiduciary duty” lawsuit.
  • root9B Technologies Inc.’s claimed “cyber” business is minuscule and imploding, while not a cyber-tech business but largely appears an old employee training program which RTNB resells or other irrelevant, overhyped offerings.
  • Insiders enriching themselves with RTNB through curious related-party transactions, abusive compensation and unloading their failing investments into the public shell at overvalued prices.
  • RTNB insiders have funded their enrichment through astounding 1,000% (so far) dilution while generating -$48 million in losses. Insider-owned preferred shares convert at $2.50, capping RTNB stock at $2.50 .
  • Even assuming RTNB is “real” AND honest management AND fundamentals miraculously turnaround AND using overly-optimistic peer valuations, RTNB has -82.47% downside today. Given precedent of RTNB team, bankruptcy seems inevitable.

I believe Root9 Technologies Inc., is a worthless reverse merger shell led by the “The A-Team” of penny stock wipeouts, questionable board members who have presided over untold shareholder wealth destruction, and a management team with ties to numerous fraud allegations. Starting as far back as the 1980’s, some of these insiders have been involved in numerous securities violations and fraud allegations in what seems a very “interesting” recurring pattern. While RTNB shareholders experience brutal losses, deteriorating fundamentals and egregious dilution this “A-team” of penny stock wipeout masters have gotten amazingly wealthy through questionable related party transactions and foisting their failing private investment onto this public shell, all while collecting unreasonably high cash and stock compensation.

As Root9 has attempted to ramp their promotional “hype machine” with absurd press releases, real cyber security experts have pushed back, debunking their ridiculous claims. Unfortunately unsophisticated retail investors have piled into RTNB on “cyber hype” now. As a result, despite deteriorating fundamentals and RTNB’s claimed miniscule “cyber” business imploding -44%yoy to just $428k of revenue in Q1, RTNB shares have temporarily rallied +400% to the unsustainable valuation of $140m+ for businesses RTNB recently (over)paid just $35m for. Also supporting the view of RTNB’s unsustainable overvaluation, RTNB insiders just filed to sell 10m shares of illiquid RTNB stock. Furthermore, through a convoluted preferred share structure, an additional avalanche of RTNB stock becomes unlocked at $2.50, creating a stock price ceiling with even more insider enrichment for RTNB shareholders.

Even if you somehow believe RTNB is a “real” company led by honest people AND the currently imploding business fundamentals and cash burn miraculously turn around, generously valuing RTNB similar to obviously superior peer companies STILL shows RTNB has -82.47% downside. However, given this “A Team” of wipeout and past fraud allegations, I think it’s clear the much more likely outcome is RTNB fundamentals continue to deteriorate while insiders get rich and the stock will go to $0, just like many other companies this team has been involved in. I believe this likely outcome is likely why insiders are trying to sell 100% of 10m RTNB shares right now.

I recommend extreme caution to anyone considering purchasing this stock or who is currently invested in what I consider likely to become a complete wipeout for shareholders. Below is a summary of my research, although I’m sure if time allowed, investors in RTNB would find much, much more than what I have shared in this report.

RTNB Insiders: The “A-Team” of Penny Stock Wipeouts

In my view, RTNB insiders are clearly the “A-Team” of microcap shareholder wipeouts. To understand who is behind RTNB and what is truly going on with this shell, let’s take a look at the company’s frightening S-1 filing just filed in which insiders are aggressively trying to cash out of nearly ~10,000,000 shares. None of the cash from this offering even goes to the company! It only goes to insiders! If you buy this stock you are basically giving your money directly to these questionable insiders, in my view. Notice the number of shares owned after the offering is nearly 0% in almost every case.

I have highlighted some key, extremely “questionable” individuals for you to understand below and will draw your attention to these people and organizations throughout the report. You may want to print this page out to follow along so you can understand what is truly going on at RTNB.

Selling Stock Holder (2) Shares of Common Stock Owned Before the Offering Shares of Common Stock UnderlyingWarrants Owned Before the Offering Total Number of Shares of Common Stock and Shares UnderlyingWarrants to be Offered (1) Shares of Common Stock and/or Common Stock Underlying Warrants to be Beneficially OwnedAfter theOffering Percentage ofCommon StockBeneficially Owned Afterthe Offering
Joseph C. Grano and Robert H. Silver, Trustees of The Grano Children’s Trust dtd. December 13, 2012(3)(14) 2,681,613 2,681,613 0%
Jim Orphanides (3) 1,289,600 1,255,000 34,600 0%
Brian King (3) 620,466 620,466 0%
Centurion Holdings(3) 500,000 500,000 0%
Anthony Sbledorio (3) 300,000 300,000 0%
Lindsay McLean (3) 200,000 200,000 0%
George Pataki (3) 122,000 122,000 0%
Joseph C Grano(3) 50,000 50,000 0%
Sam Jurist(3) 49,880 49,880 0%
Timothy Howell(3) 43,000 43,000 0%
Heather Payson (3) 30,100 30,100 0%
Karen Tilli(3) 30,100 12,000 30,100 12,000 0%
Colin Milner(3) 21,500 21,500 0%
Mark Pando (3) 17,200 17,200 0%
Peter Clarke (3) 0%
Melissa Robbins(3) 8,600 8,600 0%
Michael Arnstein (3) 8,600 8,600 0%
Michael Amicucci(3) 8,600 8,600 0%
Ankur Vishwakarma(3) 8,600 8,600 0%
Carla Short(3) 8,600 8,600 0%
Christina Van Tassell (3) 50,000 50,000 0%
Concetta Kristan (3) 50,000 50,000 0%
Eric Hipkins(4) 1,708,948 1,698,215 10,733 0%
Michael Morris(4) 394,889 382,497 12,392 0%
Eric Fleming (4) 50,000 50,000 0%
James McCarter(4) 51,754 50,054 1,700 0%
Erika Hipkins(4) 10,179 10,179 0%
Greg Morris(5) 4,900 50,000 50,000 4,900 0%

49

Pat Kolenik(5)(11) 185,545 540,000 200,000 525,545 0%
Cary Sucoff(5)(12) 90,000 706,440 200,000 596,440 0%
Isaac Blech(5)(13) 784,231 450,000 450,000 784,231 1.1%
Steve Yarbrough (5) 50,000 50,000 0%
Kevin Carnahan (6) 100,000 100,000 0%
Proactive Capital Resources Group LLC(7)(15) 50,000 50,000 0%
Solit, Tessler & Co LLC(8)(16) 200,000 200,000 0%
Harvey Pitt (9) 250,000 250,000 0%
Alliance Advisors LLC(10)(17) 75,000 75,000 0%
TOTAL 9,378,905 2,483,440 9,879,804 1,982,541 0%

Let’s start by reviewing the highly questionable cast of characters at Root9 Technologies, Inc. one-by-one with all my research, estimates and views cited and linked for the public good. I personally guarantee you will be amazed at what you read!

Joseph J. Grano Jr – RTNB’s CEO and Chairman of the Board of Directors

Grano has an extensive history with both penny stock value destruction and questionable related party transactions with RTNB, among many, many other issues. As I will outline below, these transactions are so self-enriching to Grano that I think it is obvious what RTNB truly is.

To date, Grano seems to have sold two private companies

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