Fitell (FTEL): No Pump In This Gym Equipment Reseller
Introduction
Even by the standards of international stock promotions foisted on the U.S. markets, Fitell (FTEL) surprised us. In our research we discovered Fitell’s largest shareholder has undisclosed ties to a vast web of stock promotions and scams that we were able to identify. We found recent evidence of WeChat and WhatsApp stock promotion groups promoting FTEL—the same groups that promoted BAIYU Holdings (BYU) before it dropped 78% over the last two days. We also found undisclosed ties between FTEL’s enablers and BYU, and think the same rig is being run. We believe FTEL is substantially overvalued and will soon join the legions of Chinese pump and dumps that decline substantially, seemingly out of nowhere. Fitell has a $300m market cap supported by $5m of TTM revenue from dropshipping excercise equipment from China. Its offices in Taren Point, Australia recently housed the offices of Med Spa Vacations, a now-delisted pump and dump that shares many of the characteristics of FTEL. FTEL’s 57% shareholder has extensive and undisclosed ties to a now-delisted Australian stock promotion called Healthzone (ASX: HZL) that ended with two directors in jail after they facilitated a fake company loan to purchase company shares, instead diverting the proceeds to a home improvement project. We think the same playbook is happening at FTEL. We found a $2m loan FTEL made to an entity that had been dissolved for four year. FTEL’s auditor is a tiny Tampa-based outfit with a 100% deficiency rate that has other clients reporting that it has notified them it is no longer doing audits.
Disclosure: Funds managed by Bleecker Street Capital are short Fitell (FTEL). Please see the full disclosure at the end of this report.
FTEL’s director and 57% shareholder was involved in another public company in Australia that ended in prison sentences for two directors.
FTEL’s largest shareholder is a mysterious Chinese-Australian businesswomen with little to no online presence. Her name is Jieting Zhao. According to FTEL’s SEC filings, Ms. Zhao was the Managing Director of Ansa Group Limited from 2006 to 2017, after which she began to serve as the executive director for Gym Direct, the DBA of Fitell’s Australian drop shipping operation. Despite her limited paper trail, were able to track her down and begin to unravel the tangled web of promoters and enablers behind FTEL. The Australian Trademark Registry indicates that Ms. Zhao owns the intellectual property associated with a logo used in “Beverages containing added vitamins (for medical purposes); Effervescent vitamin tablets; Food supplements for animals (vitamins).”
This is the same logo used by vitamin brand Aurida, a wholly owned subsidiary of Healthzone, which now delisted after the scandal that sent two directors to jail over fraudulent loans to directors. One of those directors was a man named Ge Wu. He was the Chairman of Healthzone and was convicted of “conspiring to commit market manipulation offences.” We believe that Fitell and Healthzone are operated by the same people, and will have the same outcome.
FTEL never disclosed this, but Guy Adrian Robertson, a director at FTEL, was also a director at Healthzone.
The ties between Fitell and Healthzone don’t end there. Recall Ms. Zhao’s only listed experience was as Managing Director of Ansa Group. Zhao appears to have a longer history of business with Mr. Wu than just Healthzone. Mr. Wu was revealed to be a secret investor in a bankrupt gym deal.
FTEL’s CEO involvement with Ge Wu and a gym acquisition that went bankrupt.
Ms. Zhao’s Ansa Group was involved in the buyout of a series of Hong Kong-based gyms called California Fitness. California Fitness ended in bankruptcy, and during the proceedings it came out that a large shareholder (Mr. Wu) was involved in the company. This turned out to just be the tip of the iceberg. By pulling on the Ansa Group thread, we were able to uncover a tangled web of fraud: pump and dumps, loans to companies that don’t exist, and market manipulation and criminal charges.
Mr. Wu’s involvement in California Fitness was not made public until its bankruptcy in 2016, a controversial filing that included non-payment of vendors and many claims of consumer fraud for overcharging, not honoring gym plan cancellations. Basically everything you would expect from a bankrupt gym chain.
An South China Morning Post story broke news of Mr. Wu’s involvement:
“Wong also revealed the shareholding structure for the first time: the remaining 15% was owned by a mainland investor, also a former director, identified as Wu Ge via Nova Investments Asia. His ownership was previously unknown because the company was registered in an offshore tax haven.”
FTEL loaned “Ansa Group Ltd.” $2m in 2020. Ansa Group Ltd. was disolved in 2016 per Hong Kong corporate records.
If you will recall, the Healthzone scam was that a director of the company took a $1m loan from Healthzone ostensibly to buy shares in the company, and then he used $900k of that to renovate his home.
We discovered a potentially similar loan that FTEL made in 2020. FTEL loaned “Ansa Group Ltd.” $2 million. Business records obtained from Hong Kong reveal that Ansa Group Ltd. was dissolved in 2016. Calling it chicanery would imply there was some art to it—this appears to be straightforward fraud.
FTEL shares an investor - Flying Height Consulting Services - with scam BAIYU Holdings (BYU) that just fell 80% in two days.
This January FTEL raised $3.6 million from a Chinese investor called Flying Height Consulting Services. Flying Height Consulting services was also a 10% shareholder of scam BYU that just collapsed 80% in two days.
All of FTEL’s auditors other clients are saying it is no longer doing PCAOB audits. A PCAOB review of the firm found 100% of 2023 audits were deficient.
It seems FTEL’s audit firm is no longer doing audits. Accell Audit & Compliance out of Tampa was not a name we were familiar with, but a PCAOB inspection found that 100% of its 2023 audits were deficient in some way. It seems they might not still be in business, as recent filings by other Accell clients such as Business Warrior Corp. and Kingfish Holding Company state that Accell has notified them that they are no longer conducting PCAOB audits. FTEL has been silent on the subject.
FTEL shares a corporate address with another delisted stock promotion from Australia called Med Spa Vacations. The connections don’t end there.
FTEL’s Australian operations are listed in SEC filings as 23-25 Mangrove Lane in Taren Point. That is the same address used by Med Spa Vacations (MDVP), another Australian pump and dump that ended up delisted.
Conclusion
FTEL is an obvious stock promotion being run by the same people that have been in the business of separating shareholders from their money in numerous cases. We think FTEL is next.
Bleecker Street Research LLC Terms and Conditions
By downloading from or viewing material on this website you agree to the following Terms of Service. Use of Bleecker Street Research LLC’s research is at your own risk. In no event should Bleecker Street Research LLC or any Bleecker Street Research LLC Related Person (as defined hereunder) be liable for any direct or indirect trading losses caused by any information on this site. You further agree to do your own research and due diligence, consult your own financial, legal, and tax advisors before making any investment decision with respect to transacting in any securities of an issuer covered herein (a “Covered Issuer”).
As of the publication date of Bleecker Street Research LLC’S report, Bleecker Street Research LLC Related Persons (along with or through its members, partners, affiliates, employees, and/or Bleecker Street Research LLCs), clients, and investors, and/or their clients and investors have a short position in the securities of a Covered Issuer (and options, swaps, and other derivatives related to these securities), and therefore will realize significant gains in the event that the prices of a Covered Issuer’s securities decline. Bleecker Street Research LLC and Bleecker Street Research LLC Related Persons are likely to continue to transact in Covered Issuers’ securities for an indefinite period after an initial report on a Covered Issuer, and such position(s) may be long, short, or neutral at any time hereafter regardless of their initial position(s) and views as stated in the Bleecker Street Research LLC’S research. One or more Bleecker Street Research LLC Related Persons have provided Bleecker Street Research LLC with publicly available information that Bleecker Street Research LLC has included in this report, following Bleecker Street Research LLC’S independent due diligence.
Research is not investment advice nor a recommendation or solicitation to buy securities. To the best of Bleecker Street Research LLC’s ability and belief, all information contained herein is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable, and who are not insiders or connected persons of the securities of a Covered Issuer or who may otherwise owe any fiduciary duty or duty of confidentiality to the Covered Issuer. However, such information is presented “as is,” without warranty of any kind – whether express or implied. Bleecker Street Research LLC makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Research may contain forward-looking statements, estimates, projections, and opinions with respect to among other things, certain accounting, legal, and regulatory issues the issuer faces and the potential impact of those issues on its future business, financial condition, and results of operations, as well as more generally, the issuer’s anticipated operating performance, access to capital markets, market conditions, assets, and liabilities. Such statements, estimates, projections, and opinions may prove to be substantially inaccurate and are inherently subject to significant risks and uncertainties beyond Bleecker Street Research LLC’s control. All expressions of opinion are subject to change without notice, and Bleecker Street Research LLC does not undertake to update or supplement this report or any of the information contained herein. You agree that the information on this website is copyrighted, and you, therefore, agree not to distribute this information (whether the downloaded file, copies/images/reproductions, or the link to these files) in any manner other than by providing the following link: Bleecker Street Research LLC bleeckerstreetresearch.com The failure of Bleecker Street Research LLC to exercise or enforce any right or provision of these Terms of Service shall not constitute a waiver of this right or provision. If any provision of these Terms of Service is found by a court of competent jurisdiction to be invalid, the parties nevertheless agree that the court should endeavor to give effect to the parties intentions as reflected in the provision and rule that the other provisions of these Terms of Service remain in full force and effect, in particular as to this governing law and jurisdiction provision. You agree that regardless of any statute or law to the contrary, any claim or cause of action arising out of or related to the use of this website or the material herein must be filed within one (1) year after such claim or cause of action arose or be forever barred.
Bleecker Street Research LLC Related Person is defined as: Bleecker Street Research LLC and its affiliates and related parties, including, but not limited to, any principals, officers, directors, employees, members, clients, investors, Bleecker Street Research LLCs, and agents.