Algae Dynamics: Anatomy of a Questionable Canadian IPO in US Markets

Since 2013, NoHedge has assisted investors to navigate U.S. Traded

Canadian company space (OTCBB) that has proven to be full of companies
actively engaged in deceiving investors. As investors read our expos on
Algae Dynamics (formerly Carbon Converted Technologies) today they need
to realize that our due diligence process employed similar tools, such as
background checks, court records, transcripts, and SEDAR and EDGAR filing
analysis that led to the halt and trading of numerous frauds. Today's report
on Algae Dynamics combines these approaches and allows us to make our
strongest impact of fraud to date: limit public investor losses before it can
trade. The choice investors are left to make is very simple: Do I buy Algae
Dynamics and wait for the rhetoric that its management and its fee collectors
will spout or do I sell out prior to what we believe is the inevitable
bankruptcy, trusting in our due diligence and track record? The choice is
yours and yours alone to make. We have made ours.
Algae Dynamics is controlled by Richard Rusiniak and Paul Ramsay, former
Cymat Technologies (TSX: CYM) founders, management and directors.
Sandra Elsley, an Officer of Algae Dynamics and a marriage and family
therapist, heads financing and investor communications. All three have
colorful histories further discussed in this expos.
ALGAE DYNAMICS RED FLAGS

Algae Dynamics is controlled by former founders and management of

Cymat Technologies (TSX: CYM), who ran the company into the ground
for over $13,000,000 ($13 million) in accumulated losses by 2002.
Over 4 years, they decreased annual sales of less than $300,000 per
year to $0 in 2002 when Mr Ramsay and Mr Rusiniak were retired from
the company.
In the final year of employment at Cymat, these two Algae Dynamics
Directors lost $7 million in just one year before they were retired.
86% of Algae Dynamics is owned by insiders who paid a total of $100
for all of their shares.
No independent technology review.
Only management is paid no staff.
Capital raised and grants exceeding $2M most of which is accounted
for as expenses as of March 2014 (per S1 filings).
There are no employees or operations in the United States.
Money is not spent on technology.
Nominal equipment : $27,000 (as per 2014 S1)

There are no operations, their focus is on shares sales and future

share price.
Offering documents in 2013 state future value at $250 million;
however, the registration S1 statement proves no revenue, assets or
profit.
Primarily funded by a small group of unsophisticated Ontario-based
investors.
No registration, offering, prospectus or exemptions filed with the
Ontario Securities Commission.
The company has pushed for accelerated registration despite serious
operating concerns and material omissions.
No Canadian listing sought.
Future securities litigation likely from regulators and Ontario investors
relating to the Companys prior private financing offerings.
No independent engineering reports from a major recognized
engineering firm.
Classic pump-and-dump statements from their investor
relations/financier.
Reverse split prior to S1, masking numerous prior raises at different
prices.
Algae Dynamics goes to a new low in boiler-room share sales: Hire a
family therapist to manipulate unsophisticated investors into parting
with retirement funds with the promise of high returns. Details of this
is covered later in this report.

S1 REGISTRATION STATEMENT
https://www.sec.gov/cgi-bin/browse-edgar?company=algae+dynamics+corp
HYPERLINK "https://www.sec.gov/cgi-bin/browse-edgar?
company=algae+dynamics+corp&owner=exclude&action=getcompany"
& HYPERLINK "https://www.sec.gov/cgi-bin/browse-edgar?
company=algae+dynamics+corp&owner=exclude&action=getcompa
ny"owner=exclude HYPERLINK "https://www.sec.gov/cgibin/browse-edgar?
company=algae+dynamics+corp&owner=exclude&action=getcompa
ny"& HYPERLINK "https://www.sec.gov/cgi-bin/browse-edgar?
company=algae+dynamics+corp&owner=exclude&action=getcompa
ny"action=getcompany
The Securities and Exchange Commission is tasked to protect future
investors, with limited resources, by determining whether a

prospective company is real or not. In this case, Algae Dynamics filed

a registration statement with the SEC under private cover pressing to
accelerate the going public process without public view. Eventually in
the fall of 2014, Algae Dynamics filed its public S1 statement which
requires full disclosure of operations and audited financials. The
audited financial statements share a new light on the multi-million
dollar company with some audited numbers:

86% of the company is owned by insiders and they too are already
seeking to sell shares.
Insiders paid $100 total for 8.6 million shares.
Executives were compensated in excess of $120,000 in 2014.
The remaining shares for registration were purchased by a small group
of unsophisticated Ontario investors.
No revenue now or in the foreseeable future.
Low/no cash (shows $63,000 in the bank as of March 2014).
Shareholder agreement terminated with Waterloo University
researchers (the technology and bacteria source).
No money to sustain operations or build a plant.
No operations people, employees, plant staff on payroll.
Massive yearly losses.
In 2014, $3,000 spent in Research and Development hardly
substantial R&D into new technology
The S1 includes an employment agreement for Sandra Elsley, a family
therapist in Niagara Falls, Ontario, who was paid to raise capital for the
company and handle investor communications.
No operational plant.
No production.
No Form 4s or Form 3s from insiders.

TROUBLING EXECUTIVE BIOGRAPHIES

The S1 statement contains glowing biographies for the executive team but
fails to disclose material information:
Paul Ramsay, CEO and Chairman and Richard Rusiniak, Director
Management claims in their S1 that Paul Ramsay is Co-founder and former
CEO and VP Business Development of Cymat Corp, (TSX: CYM) with a market
valuation over $150 million upon his resignation in 2002 and Mr Rusiniaks is
similar.

Fact Check: Cymat Technologies 1998-2002 Annual Reports prove the

executives ran the company into the ground and the company lost over $13
million, no sales, and significant year-after-year losses:

Year (source: annual Net Profit

reports)
1998
$490,000 loss
1999
$1,400,000 loss
2000
2001
$2.9 million loss
2002
$7 million loss
2003

YTD accumulated
losses
(omitted from AS)
(omitted from AS)
$3.13 million loss
$6 million loss
$13 million loss

Sales
$78,000
$265,000
$264,000
$0 (Ramsay leaves
here)

$2.3 million loss

(Algae Dynamic
Execs no longer
employed)

The year 2000 financial statement could not be located for this expos;
however, 1998,1999,2001,2002,2003-2005 were available to fill in the gaps
you get the idea: huge losses. The inflated share value came from the
Internet bubble. The stock became a penny share with massive losses shortly
thereafter. Yearly losses were cut significantly when Algae Dynamics
management retired. The Cymat 2002 Annual Report states:
Paul B. Ramsay* A director since June 1998, Mr. Ramsay was a co-founder
of the company and retired as Vice President of Cymat in March 2002.
Richard J. Rusiniak* Mr. Rusiniak has served Cymat as a director since June
1998, and was a co-founder of the company. He retired as Vice President in
March 2002.
Sandra Elsley, VP Communications
Sandra Elsley S1 Biography: Over 25 years of experience in human relations
and the organizational development field as a communications and
relationship expert, working in government, corporate and private sectors.
Extensive experience developing, marketing and managing peak performance programs to enhance individual and company dynamics in
Canada and internationally. Was involved in the start up of an Ontario based
company, was instrumental in raising funds and working as VP Corporate
Communications/Investor Relations - share price went from $0.50 to $7.70.
Has privately owned and managed a successful psychotherapy and consulting
practice since 1991.

Fact Check: SEDAR and EDGAR do not reveal Ms Elsley working for any
public company that had a share price that went from $0.50 to $7.70. There
is one public filing from a non-public company that states Ms Elsleys
employment with the company was terminated with cause. There are also
numerous judgments and court orders against
In SPAM emails to new potential investors, Ms Elsley claimed the Mr Ramsey
and Mr Rusiniak were "smart business men who made $50,000,000 Million
about ten years ago and retired" and she goes onto say they "Spent alot of
money, got bored, and decided to find the next best product to market." Ms
Elsley failed to disclose to investors material information like the two men
enjoyed high compensation, share sales to unsuspecting investors, while
driving Cymat to a $13,000,000 loss, never achieving a profit, and little to no
revenue in less than 5 years.
Ms Elsley will be further discussed in the capital raising detail of this expos.
SEC S1 CORRESPONDENCE
The Securities and Exchange Commission has now published comments from
SEC staff and answers from Algae Dynamic company executives. Highlights
of the communications include:

Get company public now, without quality disclosures.

The S1 amendments are rife with material omissions and errors.

The SEC required a material 424B3 filing immediately after the

automatic Effect statement to ensure the company cannot go public
or trade at this time.

The SECs request and Algaes management refusal to upload the

material shareholders agreement with Waterloo University researchers.

Numerous deficiencies in the S1.

Brute-force immediate responses from the Company to the SEC

comment letters and a demand for an accelerated effect statement
without normal review.

OFFERING DOCUMENTS AND PRIOR FINANCING RAISES

(Figure 1 financials used in prior financing rounds in 2013)

Fact Checking Highlights of Offering Materials vs. Audited Financials in S1

False Claim

Offering Document

Revenue 2014
Gross Profit 2014
Plant Equipment 2014
Net earnings YTD
EBITDA (page 8 of
document)

$5.5 million
$3.6 million
$2.6 million
$2.5 million profit
$247 million value

Actual audit from S1

statement
$0 nothing
$0 nothing
$27,000 + 1 computer
In excess of $722,000 lost
$0 profit x 15 = $0 value

SEED MONEY IN S1 IPO

Most troubling in this company is the lack of investment bank underwriting or
financing. Offering documents and materials found on the internet paint a
troubling pump-and-dump story. A family therapist, Sandra Elsley, is an
officer of Algae Dynamics titled as VP Corporate Communications. In an
unusual role for a family therapist, Ms Elsleys job is to find money for Algae
Dynamics and handle investor communications. Pacer court records and
other public court filings detail numerous prior and current litigations over
the past ten years involving Ms Elsley detailing a history of fraud and
misrepresentations. A quick search of the names listed in the S1 reveal
related numerous litigations, including a transcript from a Nevada lawsuit

naming Sandra Elsley as an interested party.

In Pacer, case cv-01463 document 14-1 filed 11/25/13, contains a transcript
of of one of many of Ms Elsleys depositions. In the first 50 paragraphs, Ms
Elsley reluctantly admits, after first denying, that the largest private
placement investor in Algae Dynamics is a mental-health therapy client of Ms
Elsleys and that Ms Elsley borrowed significant money from her. Ms Elsley
refused to disclose the amount she borrowed; however, she did indicate that
she had not repaid the loan. This raises a serious concern of nominee
shareholders whereby Directors and Officers of Algae Dynamics would
benefit directly from an S1 investor selling into the market if the company
became public. These monies could be disguised as loans to the insiders as
they are in most OTCBB scams.
There are numerous SPAM emails by Ms Elsley seeking investors in Algae
Dynamics, contrary to securities law. Prospective investors were promised
the company would be public in 6 months, have a substantial share price,
and that Ms Elsley had a lot of news to announce to pump the share price.
MATERIAL NEWS NOT REPORTED IN 8K FILINGS
Press Releases by Algae Dynamics are NOT filed with the Securities and
Exchange Commission.
Algae Dynamics issued a press release dated November 25, 2014 that the
SEC declared their S1 Effective after hours on Friday November 21,2014
however they failed to disclose they had to file a material 424B3 filing the
following trading day, Monday November 24, 2014, thereby nullifying the
Effect Statement. The press release included contact information to receive a
prospectus for investment to seek MORE investors.
The S1 on page 12 states: Each time we file a post-effective amendment to
our registration statement with the SEC, it must first become effective prior
to the offer or sale of shares of our Common Stock by the selling
shareholders.
424B3: A form of prospectus that reflects facts or events that constitute a
substantive change from or addition to the information set forth in the last
form of prospectus filed with the SEC.
NO CURRENT 10Q or INSIDER FILINGS
Algae Dynamics has not filed quarterly financial statements since its year-end
of March 2014.
None of the Directors, Officers or insiders of the company have filed
mandatory Form 3 and Form 4s with the Securities and Exchange

Commission reporting the shares they own and how much they paid for
them.
LIKELY RECISSION OF INVESTMENT BY ONTARIO INVESTORS
The Ontario Securities Commission overseas investment and market
regulation much like the Securities and Exchange Commission in the United
States does. Ontarios RIGHTS OF ACTION FOR DAMAGES OR RESCISSION
mean shareholders who purchased shares in Ontario can demand a refund or
file an action against the company and individual who sold them the shares
illegally or by misrepresenting facts. Due to time limitations, we expect the
Ontario S1 investors will soon commence actions against Algae Dynamics or
the Officer who handled their share purchase to recover their money. The
Ontario Securities Commission can be very helpful in this regard.
Boiler-room emails from IR blindly seeking fresh investors and press releases
publicly seeking investors will likely draw the intervention of the Ontario
Securities Commission.
SECURITIES AND EXCHANGE COMMISSION STATUS
At this time, the SEC is not permitting Algae Dynamics to trade on the OTCBB
market. Future litigation and likely rescission of investment by Ontario
investors will pepper Algae Dynamics filings for years to come.
In the unlikely event the company does go public, the only shares registered
for sale are the S1 investors the company did NOT file a shelf registration
to sell its own registered shares in the future. If Algae Dynamics trades, the
only shares available on the market would be the S1 investors looking to exit
as quickly as possible. Presently, the Company is not publicly traded. It has
not sought registration for any of its treasury shares for future financing.
Algae Dynamics is following the same pattern of business management as
Cymat Technologies and we would not be surprised if the SEC chooses to
deny its registration as a public company. Algae Dynamics does not even
deserve to trade on the Pink Sheets in our view.
Disclosure: I will short Algae Dynamics if it becomes public. I wrote this
article myself, and it expresses my own opinions. I am not receiving
compensation for it. I have no business relationship with any company whose
stock is mentioned in this article.