One of my audience members has indicated that he received the “John Bell” research on 4th December 2012 and that that research report indicated that the “magic stock pick” is involved in mining graphite. That company is, most likely, USA Graphite (OTC: USGT).
Not surprisingly, USA Graphite claims graphite mines in … where else for a “John Bell” pick but … Nevada. So, we can simply interchange USGT for TFER and immediately see where this stock pick is going to end.
Before 9th November 2012, this company saw no trading activity and its shares were listed at a price of 67¢ per share. On 12th November, 2500 shares were traded and the closing price was 60¢ per share. By 21st November, the share price had dropped to 40¢ per share on trading volume of 32,900 shares. On 4th December, the trading volume was 13,200 and closing price was 49¢ per share. On 5th December, 2012, the trading volume exceeded 815,000 and the closing price was about 55¢ per share. It appears, then, that the earliest fools received the name of the company early on 5th December 2012 and decided that that day was a good day to start losing their money.
USA Grahite was, up until about 13th January 2012, Magnum Oil, Inc. and PTM Publications Incorporated before it was Magnum Oil. By 29th February 2012, the company had changed its name to USA Graphite, Inc. The company is organized in Nevada and has its principle place of business at 848 N. Rainbow Blvd., Suite 3550, Las Vegas, Nevada. The telephone number is 603.525.3380. In the annual report filed with the Securities and Exchange Commission, the company stated that:
Our management has decided to focus our business on acquiring or merging with one or more operating businesses. Our efforts to identify a target business are not limited to any particular industry. As of February 29, 2012, we have not yet identified a potential merger or acquisition target. There can be no assurance that our management will be successful in negotiating the merger or acquisition of this target business and as such we continue to search for opportunities for other mergers or acquisitions.
We intend to focus our search on businesses in North America, but we will also explore opportunities in international markets that are attractive to us. We will focus our efforts on seeking a business combination with a privately held business in the oil exploration sector. We believe that owners of privately held small or middle-market companies may seek to realize the value of their investments through a sale or recapitalization or through a merger with a public company to access capital to fund their growth.
There is no assurance that we will successfully identify a potential target business, enter into any definitive agreements with any target business, or finally consummate a business combination with any potential target business.
For the fiscal year ended 29th February 2012, the company reported a net loss of $54,722 and a working-capital deficit of $139,722. The total assets were valued at $8,847 and the total current liabilities were $148,619.
Also, the reported CEO, CFO, Treasurer, and one of the directors was Patrick DeBlois and the secretary of the company was Eden Clark. The biographies of each of these people is as follows:
Patrick DeBlois has been the president, chief executive officer, chief financial officer, treasurer and a director of our company since October 27, 2010. Since 1999, Mr. DeBlois has been a director and is the proprietor of the Minakwa Lodge located in Northern Ontario. Mr. DeBlois has grown his resort from a grassroots venture to a global success story. Mr. DeBlois holds a diploma in Wildlife Management and GIS mapping from Cambrian College. Mr. DeBlois devotes approximately 7-10 hours a week to our business.
Eden Clark has been our secretary since December 15, 2010. From 1997 to 2001, Ms. Clark was a founding team member of Onvia.com Inc., a publicly traded company on NASDAQ, assisting it in the growth from a small start-up to more than 300 employees and $140 million in revenue. From 2002 to 2008 she was founder and CEO of Be Jane, Inc., a media and web company focused on the niche segment of women’s home improvement and décor, leading breakthrough partnerships on new initiatives with such companies as MSN and Bank of America, and was featured in hundreds of national TV and print media such as TIME, Entrepreneur, People Magazine, Wall St Journal, CNN, The Today Show, and more. From 2008 until present, Ms. Clark became president of eDivvy.com Inc., a private payment technology company, leading the company’s strategic initiatives, branding, and business development efforts. Ms. Clark devotes approximately 3-5 hours a week to our business.
As at 29th February, Patrick DeBlois owned 77,000,000 shares of USA Graphite. Thus, if the share price rises from 65¢ per share to $1.65, and if he still owns the shares, he will have a capital gain of $77,000,000. Not bad for a few months worth of work.
By 31st August, the total assets amounted to $2,003 and the total current liabilities amounted to $170,206. The company executed a share split and, as at 31st August, the authorized share position was as follows: (1) 10,000,000 preferred shares that had not yet been issued; and, (2) 800,000,000 shares, of which 169,400,000 had been issued and are now outstanding. As at 31st August, Patrick DeBlois still owned the 77,000,000 of the common shares, which he apparently purchased for 0.1¢ per share and the 92,400,000 were purchased for 0.1¢ per share: however, it is not at all clear as to who purchased the 92,400,000 shares.
On 8th November 2012, Patrick DeBlois and Eden Clark resigned from the company and Wayne Yamamoto was appointed as the President, CEO, CFO, Treasurer, Secretary, and Director of of the company. Wayne Yamamoto has no experience in mining, graphite, or materials science. The available biography states that:
Wayne Y. Yamamoto, brings over 30 years of successful leadership and innovation in the area of information technology, software development and corporate financing. Mr. Yamamoto was the President of Call/Recall which is the first company to develop and patent terabyte optical storage technology. As the CTO of W&W, Mr. Yamamoto led a team to create the first interactive television system for the cable industry. At Quark, Mr. Yamamoto was a member of a 5 man executive management team that led Quark to worldwide expansion, while maintaining industry high profit margins. Mr. Yamamoto has also held executive positions or served as a board member of several startups including ResTech, Sierra Medical, Photonic Storage Systems, Clareos, Arbor Software, and Solutions Technology.
It is not at all clear as to who currently owns the 169,400,000 issued and outstanding common shares of the company. However, it is probably a safe bet that Patrick DeBlois is currently empty handed.
As of the time of writing this blog, it is not clear that USA Graphite has removed the first shovel of soil to start a mine for graphite. The 8-K filed on 19th November 2012 states that:
On November 19, 2012, USA Graphite, Inc. (the “Company”) entered into a Property Option Agreement (the “Option Agreement”) with Nevada Mineralss Holdings, Inc. (“NV Minerals”). Pursuant to the terms and conditions of the Option Agreement, NV Minerals shall grant the Company with the right and option (the “Option”) to acquire one hundred percent (100%) of the mining interests in that certain Property known as the Blue Wing Mountains Graphite Project (the “Property”) which is comprised of a total of one-thousand nine-hundred and eighty-five acres (1985 acres) and is located in the Churchill, Elko, Pershing, and Washoe Counties of the State of Nevada. In order to exercise the Option, the Company shall be required to: (i) pay an initial cash payment of fifty thousand dollars ($50,000) to NV Minerals; (ii) issue an aggregate of five million (5,000,000) restricted shares of the Company’s common stock to NV Minerals; (iii) pay an additional aggregate payment of four hundred fifty thousand dollars ($450,000) over a three (3) year period; and (iv) pay a production royalty (the “Royalty”) to NV Minerals equal to two percent (2%) of the net smelter returns, per the terms and conditions of the Option Agreement. The Company will also provide funds for the conduct of a program of work to be undertaken by NV Minerals for the benefit of the Property of not less than $1,000,000 over four years. The Option Agreement also provides that the Company shall have a one-time right to purchase fifty percent (50%) of the Royalty in the Property for five hundred thousand dollars ($500,000). Pursuant to the Option Agreement, NV Minerals has agreed to enter into an eighteen month voluntary lock up agreement for the initial 1,000,000 shares it will receive upon execution of the Option Agreement.
The above description of the Option Agreement is intended as a summary only and which is qualified in its entirety by the terms and conditions set forth therein, and may not contain all information that is of interest to the reader. For further information regarding the terms and conditions of the Option Agreement, this reference is made to such agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by this reference.
This company is almost a carbon-copy of TFER.
Like Jammin Java, this company has a few pennies in assets, huge liabilities, which means that it is technically bankrupt, no business plan, and apparently no operational graphite mine.
Tesla has been in business since about 2003 and has been using graphite in the batteries for its automobiles since long before USA Graphite was Magnum Oil, Inc. Thus, absolutely no basis exists to conclude that USA Graphite is supplying the graphite for the batteries used by Tesla in its automobiles. Also, it is almost a given certainty that USA Graphite does not have a contract with Tesla to supply any graphite. This appears to be a pure “penny-stock” SCAM.
Of course, the fools of subhuman intellect over at Motley Fools are touting USA Graphite as an up and coming investment opportunity. See http://beta.fool.com/jdhutche/2012/11/30/tesla-motors-rally-mode-ev-buzz-grows/17585/.
I hope that this helps.
Nathan A. Busch