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Stock surge sparks nasty comments

  • Updated

A Charleston company has seen a steep climb in its stock price over the past few weeks, setting off a nasty war of words between management and certain investors who are betting on the shares to fall.

Revolutions Medical Corp. is a research-and-development business that is seeking to sell its products and generate revenue for the first time in its history.

In recent weeks, the tiny, publicly traded company has released a flurry of public statements about potentially promising business prospects.

The announcements have included a five-year deal to start manufacturing a safety syringe Revolutions Medical has been developing. On Friday, the company suggested that it is about to be awarded a contract to sell the devices to a program run by the U.S. Department of Defense.

Previously it discussed the progress of a software technology for doctors who diagnose magnetic resonance imaging scans.

Over the past few weeks, Revolutions Medical's stock, which does not trade on a major exchange, climbed from 27 cents on Aug. 20 to a 52-week peak of $1.74 on Monday, according to

In the meantime, some of the no-holds-barred chatter about the company posted on at least two online investment websites has turned ugly.

The stock retreated Tuesday, falling 20 percent to close at $1.15, but volume was up sharply. More than 2.7 million shares changed hands, in excess of 10 times the average for the past 30 days.

Ron Wheet, chief executive officer and majority shareholder of Revolutions Medical, said the company is under attack from "shorts" -- investors who profit when a stock falls in value.

"They have been saying all kinds of crazy stuff," he said Tuesday.

Short traders borrow and sell shares that they believe are overvalued and poised to fall. The strategy is to repurchase the stock later at a cheaper price, pocket the difference and return the shares to the owner.

Wheet said shorts have been bad-mouthing the business to drive down the price so they can cover their bets without a loss. Some of the online comments have been defamatory and potentially criminal, he said. He is considering legal action.

Tim Sykes, a former hedge fund manager who shorts penny stocks and writes about them on one of his websites,, is among the critics who have bashed Revolutions Medical.

Reached Tuesday, he said he made several thousand dollars shorting the stock this week, and that he remains "skeptical" about the company.

Wheet said the jump in the share price most likely stemmed from the recent surge of news releases Revolutions Medical has issued since mid-August.

Before that, he said, the firm was raising money and was restricted from making public announcements under a four-month "quiet period" mandated by the Securities and Exchange Commission, which regulates public companies.

On's message board, questions have been raised about the military contract. In its statement Friday, the company announced that it was to receive a "contract with the United States Department of Defense HIV/AIDS Prevention Program" for multiple countries, but offered no other details.

It did not say that it had been officially awarded a contract.

Karl Van Orden, science director for the San Diego-based Naval Heath Research Center, which oversees the HIV/AIDS program, said he was not aware of any deal with Revolutions Medical. He said he had received other calls about the company statement.

"To the best of my knowledge, no contract has been awarded," Van Orden said Tuesday.

Wheet said he could not discuss the prospective Defense Department deal in any detail. But given the sharp jump in the stock price, he said, the company felt it was necessary to disclose to its 4,000 individual investors and to the SEC as much information as it could that a contract was in the offing, he said.

"We made a decision to err on the side of caution. ... We were worried that word had leaked out or something," Wheet said.

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