Gotham City Research’s Formal Response to Gowex & Jenaro Garcia Martin’s Public Confession


Let’s Gowex: La Charada Pescanova (a Pescanovan Charade)

Gotham City Research initiates coverage on Let’s Gowex SA, with a price target of € 0.00/share (100% downside)


  • Gowex shares are worth €0.00 per share.
  • Over 90% of Gowex’s reported revenues do not exist. We estimate GOW’s actual revenues to be <€10 million.
  • The shares will be suspended, just as Pescanova’s shares were suspended.


  • Gowex’s actual Wireless revenues are at most 10% of what GOW reports in its financial statements.
  • GOW’s Hotspot network it owns or manages is ~5K in size. CEO told us 100K+ & JBCapitalMarkets estimates 35K.
  • GOW’s audit fee is €40,000, which makes sense if Gowex’s actual revenues are only 5%-10% of reported revenue.
  • 90% of Telecom revenue originated from undisclosed related parties, tied to GOW CFO & an early investor. We have evidence Gowex’s largest customer was really itself.
  • Gowex Telecom (i.e. Iber-x) website has not been updated in years. It appears to be no longer in business.
  • Gowex told some investors that New York City was paying them €7.5 million. GOW told us €2 million. The real number is <€200,000, according to New York City.
  • Gowex does not publicly disclose basic metrics, such as hotspot count or wireless revenue segment details.
  • The head of investor relations is the CEO’s wife. She signed off on GOW’s annual reports.
  • The June 5th MallPlaza press release (in English) makes demonstrably false claims. The same press release in the native Spanish omits the false claims.
  • GOW lied to the European Union’s Transparency Register, claiming it spent over €50 mm in political contributions.
  • CEO Jenaro Garcia was a Director of Advanced Refractive Technologies, a penny stock fraud whose shares were revoked by the US Securities and Exchange Commission.
  • GOW’s private market valuation is only €0.14 per share, based on Arqiva’s acquisition valuation.



Quindell PLC: A Country Club Built On Quicksand

Gotham City Research initiates coverage on Quindell PLC, with a price target of 3p/share (92% downside)


  • 42%-80% of Quindell’s profits are suspect, as we are unable to reconcile the whole with the sum of the parts.
  • Quindell was little more than a country club until 2008/2009, yet QPP somehow began reporting Microsoft/Google-esque profit margins in 2010/2011.
  • 26%-43% of Quindell’s 2009 and 2010 revenues came from, a subsidiary owned by CEO Robert Terry.
  • 41% of Quindell’s 2011 revenues came from an undisclosed related party (controlled by a QPP executive).
  • 10+ acquisitions lack economic substance. Several of the acquired companies are little more than paper companies.
  • QPP’s largest telematics customer is itself (via subsidiaries Himex & Ingenie), accounting for 61% of 2013 revenue.
  • 99% & 80% of Himex’s 2012 and 2013 balance sheets are seriously deficient (Himex is QPP’s largest acquisition).
  • Former executives allege Himex/Navseeker lied to them about its financial state and that in effect they were operating a Ponzi-style scheme.
  • 2011-2013 accounts receivable are between 86%-231% of revenue, while deferred revenue only 1%-2% of revenue.
  • Nearly all of CEO Terry’s £11 mm personal investment into Quiindell was used to build Quindell the country club.
  • No free cash flow and negative operating cash flow.
  • Quindell fails to explain how its personal injury business complies with Lord Jackson’s reforms & referral fee ban.
  • The Chairman of the Transport Select Committee, Louise Ellman recently initiated a probe to determine whether ABSs are used to side-step the Jackson reforms.
  • 3 auditors in 3 years, since 2011.
  • Quindell’s shares are worth no more than 3p/share.
  • QPP shares would qualify for a de-listing if the shares were trading in US markets.
  • When asked, Quindell refuses to answer simple questions about its business.


Blucora (i.e. Infospace): Worse Than Blinkx plc & Babylon Ltd

Gotham City Research initiates coverage on Blucora, Inc (a.k.a. Infospace).

“Google’s first step is easy: Fire InfoSpace (a.k.a. Blucora). Google doesn’t need InfoSpace, and there’s zero reason for this relationship to continue in light of InfoSpace’s repeated failings.”

– Harvard Business School Professor Benjamin Edelman, author of The Darker Side of Blinkx, and the “Doogie Howser of online investigative work” according to former federal prosecutor Richard Boscovich


  • +60% of BCOR’s revenue will evaporate in coming quarters, as Google realizes it is better off without BCOR. Google and Yahoo can walk away from Blucora any time.
  • At least 50% of BCOR’s traffic is derived from malware, click fraud, illicit traffic (e.g. child pornography), and otherwise suspect traffic.
  • Blucora and its partners’ practices will receive scrutiny from Google, advertisers, FTC, DOJ, FBI, IRS, &/or the SEC.
  • BCOR shares are worth no more than $5.00/share, and <$1.00/share if BCOR compensates affected parties.


  • 94.81% of visitors go to, a known redirect virus/browser hijacker.
  • generate clicks via cloaking, a practice forbidden per Google’s Webmaster Guidelines.
  • 3 of dogpile’s Top 10 search words are child porn-related. Webcrawler aggressively purchased child porn search traffic in recent quarters.
  • Google prohibits advertising related to child pornography.
  • 80+% of webcrawler’s visitors originate from outside the US, yet only ~1% of BCOR’s revenues are international.
  • Ads displayed in Blucora-branded search results violate requirements set in their 2011 Amended Agreement.
  • Metacrawler is the 3,301st most visited site, yet is defunct.
  • ~10% decline in Google revenues wipes ~50% of BCOR EPS.
  • BCOR has a storied history of defrauding investors, customers, and vendors over the last 15+ years.
  • Free cash flow has gone negative over the last 9 months.
  • ~50% of recent cash flow from operations consists of increases in accrued liabilities.
  • Non-GAAP reporting, not seen since 2003, is back.
  • Audit fees declined sharply, after changing auditors in ‘12.
  • Gotham City Research contacted Blucora on several
  • occasions and did not hear back from the Company.

The full report:

The Tile Shop: Like Crazy Eddie’s, But With An Undisclosed Related Party and A Chinese Twist

Gotham City Research initiates coverage on Tile Shop Holdings, Inc.  Summary of Gotham City Research’s findings:

  • Tile Shop’s 2013 LTM earnings are overstated by over 200%. TTS’s actual 2013 LTM EPS is closer to $0.18/share.
  • TTS will restate several years’ historical results as a result of the issues covered in this report.
  • The company has used its China-based undisclosed related party and improper accounting to overstate profits.
  • Gross margins will continue to decline through 2014, as TTS must reverse prior years’ accounting overstatements.
  • Tile Shop’s shares are worth no more than $1.54-$3.34/share, implying 84%-93% downside.
  • TTS’s creditors will likely restrict additional indebtedness & capital expenditures until TTS’s accounting is corrected.

Summary of the Bases of Opinions:

  • TTS’s largest supplier, Beijing Pingxiu, is an undisclosed related company, and accounts for 20-30+% of TTS’s COGs.
  • Beijing Pingxiu is secretly controlled by Fumitake Nishi. Mr. Nishi is the CEO’s brother-in-law and a TTS employee.
  • Beijing Pingxiu invoices sent to the Tile Shop are directed to Fumitake Nishi. Beijing Pingxiu has no presence in one of its listed addresses, and a minimal presence in another.
  • Days sales’ inventory for FY2011 & LTM 2013 exceed 365 days, at 396 & 414 days respectively.
  • TTS inventory growth exceeds sales growth by 3x, as of 9/30/2013. Inventory growth has, on average, exceeded sales growth by 2.1x over the last 5 years.
  • The CEO believes TTS is worth somewhere between $83.6 and $180.4 million ($1.0-$2.2 million per store).
  • Free cash flow has gone negative over the last 9 months.
  • Tile Shop has had 3 different auditors in the last 2 years.
  • TTS has missed EPS guidance 4 out of the last 5 quarters.
  • Color Tile, Inc., the only other national specialty tile retailer in US history, filed for Ch. 11 bankruptcy in 1996. CEO Bob Rucker worked for Color Tile.
  • Gotham City Research contacted the Tile Shop on several occasions and did not hear back from the Company.

Link to the full report: 2013 11 14 – TTS FINAL


Ebix: New Problems Emerge in Singapore, Sweden, and India

Based on new information we’ve obtained, Gotham City Research believes:
  • Ebix improperly financed $100+ million of acquisitions and stock buybacks, tax free, under the guise of a bogus intercompany asset sale, between Singapore & India.
  • Ebix Inc. & its subsidiaries’ filings are materially incorrect. Newly identified accounting irregularities, in sum, exceed 42% of Ebix’s market capitalization ($169+ million in irregularities).
  • Swedish pre-tax income is less than %1 of the amounts claimed in the SEC filings, according to Swedish filings.
  • BDO Sweden was unable to confirm that any of the dealings between Ebix’s Swedish subsidiary, Ebix Singapore and Ebix Australia, ever actually occurred.
  • Ebix meets the requirements for an “Event of Default”, per Article VII (c) of the Credit Agreement.
  • Current shareholders are likely to recover little to no value, once the USA & Ebix’s creditors enforce their rightful claims.

Ebix Shares are worth no more than $8.00 per share, and likely headed to $0.00 per share

Goldman Sachs Group Inc. terminated an agreement to acquire Ebix last night, after the insurance software maker said it was told that federal prosecutors had opened an investigation.
We believe Ebix is worth no more than $8 per share, and likely headed to $0.00 per share. See the below note for more details.



EBIX: All Distraction, No Clarity

In this follow-up report, we discuss how:

  • Ebix Singapore & Ebix Australia’s financial statements for 2009 do not support CEO Robin Raina’s claim that an intercompany loan to Australia was moved to Singapore in 2009.
  • The 2010 Singapore long-lived asset numbers are misstated by at least $67 million (94% of 2011 earnings), contrary to Robin Raina’s claim that the “numbers did not change.”
  • CEO Raina completely ignored some our more serious claims, e.g. organic growth is negative, Ebix’s tax strategy is a sham, and the Robin Raina Foundation’s IRS filings are full of material accounting irregularities.
  • Ebix’s stock should be halted immediately, as (i) the financial statements remain materially unreliable, inaccurate, and incomplete and (ii) Ebix’s CEO appears to be intentionally misleading investors, rather than addressing the issues we and others have identified.


In the report shown below, we discuss why we believe:

  • Ebix’s Accounting is Unreliable, Inaccurate, and Incomplete (there’s a large undisclosed related party loan, for starters)
  • The Tax Strategy is a Sham in Fact or Sham in Substance
  • Ebix’s Stock Deserves to be Halted, until the SEC filings are Reliable, Accurate, and Complete (the 2010 & 2011 10Ks were submitted before the Singapore subsidiary’s 2010 financial statements were signed off)
  • Shares are Worth No More Than $5
  • The Robin Raina Foundation’s IRS Filings Are Not Reliable, Accurate, or Complete

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