Vancouver stock promoters have decades of experience spinning stories of riches in mineral resources that never seem to materialize. As uranium prices increase, promoters have a fresh opportunity to sell the blue sky and dreams of easy money those unwary enough to buy unknown stocks without doing their homework.
Uranium Energy Corp (URME.OB) is just that stock. With a shareholders list that looks like a who’s who of the Vancouver penny stock market, URME has spent almost as much money of stock promotion as they have on exploration property acquisitions. Uranium Energy has zero revenues and zero proven mineral reserves. This report focuses on management, stock ownership, and an evaluation of the assets of the company.
There are penny stocks associated with numerous officers and directors of URME; it would take pages to list them all. For focus, lets begin with the founders and organizers of the company as stated in their filings.
Who are the major officers?
Alan Lindsay – Chairman of the Board, URME
Amir Adnani — CEO
The corporate office address for URME is 320-111 W. Hastings St, Vancouver. That is also the address of CEO Amir Adnani’s other business: Blender Media.
In our experience, whenever a company shares its office with an IR Firm and the CEO of the company is also CEO of the IR firm, a stock promotion looks to be in place.
Grant Atkins — Former CFO and one of URME’s initial founders
What do these five companies – three resource companies, and two biotechs, have in common?
Answer: They all used to have share prices quoted in dollars, and now in pennies.
Who are the Major Shareholders ?
In URME’s most recent 10-K we read about the influence of Golden West Investments, a control shareholder with its 3,250,000 shares of stock (9.2%). Golden West owns enough stock to affect the board of directors and control the business affairs of URME …. yet investors do not know who Golden West is.
Golden West is a Belize Corp. with an address in Turks & Caicos Islands. It principal owner is Rising Sun Capital, another Turks & Caicos company. Both companies have ties to Vancouver and ties to many failed resource deals that all trade in the pennies.
The other major shareholder is Isaiah Capital Trust, which owns 2.7 million shares (7.7%). Isaiah is a company based out of the Channel Islands. The signer for Isaiah is Equity Trust out of Jersey Island. Yet, back in older filings you will see that Isaiah is for the benefit of Sandra Corin. We have discovered that Sandra Corin is the sister of Chairman Alan Lindsay.
So we are supposed to believe that the chairman’s sister owns more stock than he does and she keeps it in a tax haven offshore account. It is our opinion that this is an intentional omission, left out of every single company filling, and a glaring Sarbanes Oxley violation. It goes right to the credibility of the company. All this while Mr. Lindsay certified to the SEC that he does not control any other stock of the company.
Who Are The Promoters?
On March 1, 2006, URME entered into a “corporate relations consulting agreement” with Michael Bayback. Mr. Bayback is paid $5,000 a month and was granted 500,000 warrants exercisable at $1.00 – currently valued at over $3,000,000. Michael Bayback has a history. It is best for readers to see for themselves from the pages of Time Magazine, the relationship between Bayback and previous resource deals.
Uranium Energy also has a consulting services agreement with International Market Trend AG [IMT]. IMT received 1.3 million options at .50 cents – current value over $8,500,000 — plus $10,000 per month in cash. These are they guys who get those buyers in Germany. IMT is the operation of Brent Pierce. Mr. Pierce is currently banned by the British Columbia Securities Commission.
Pierce’s wing man on these deals has been former URME director and control person Grant Atkins. Pierce was also involved in a slew of other penny stocks that are all trading less than 50 cents.
In a press release dated April 2, 2007 the company welcomes “veteran Wall St. Investment Banker Ivan Obolensky to its board of directors.”
Obolensky has not done a great job picking his board seats. He is also on the board of highly controversial Hienergy Tech (OTCBB:HIET) (.005c), which was sued for fraud by its shareholders.
What are the assets of the company?
Above all, URME has zero proven reserves. They put out press releases that discuss historical reserves, but that is nothing but jargon, words on a paper that hold no value in the company’s financials.
Their premiere exploration project is in Goliad County, Texas, for which the company paid $50,000 down, and a further $150,000 cash after they had time to raise the cash. They also paid 1,000,000 shares of restricted stock to Moore Energy, even though this property has no significant operating history to be so valued.
On April 2, the company announced the acquisition of yet another uranium exploration tract. Terms were not released. If past pattern holds, it will be for very little cash and yet more restricted stock. We read that in the vicinity are or were operations of “Kerr McGee (now Anadarko Petroleum (NYSE:APC)), Homestake Mining (now Barrick Gold (NYSE:ABX)), Phillips Petroleum (now Conoco Phillips (NYSE:COP))…” Yet these highly competitive resource investment companies all let this nugget slip through their fingers for years…?
For all the acquisitions and press releases, the company has paid out just over $5 million since inception for resource properties. The vast majority of that has been in restricted stock, rather than cash.
This barely exceeds the sum the company has laid out for stock promotion services!
Meanwhile the outstanding share count has nearly doubled in the last 15 months. With a market cap currently exceeding $260 million, that translates to an investor receiving .02c of resource rights – at the prices the company paid — for each dollar of stock purchased. (See the URME Stock Table)
So if they don’t have Uranium producing properties, what do they have?
The company touts the value of its “secret sauce”: “one of the largest historical uranium exploration and development databases in the US.“
Their first, the “Knupke” database, was acquired for $2,000 per month plus 18,750 restricted shares, plus an additional 12.500 shares each quarter for the subsequent 3 years. This is presumably their big strategic advantage.
The database is “so valuable” that they sold it off to another small company for $500,000 — in stock.
We could go on for pages about this one, but it is always best to leave some for Part 2. When will stock promoters ever choose a company that has some accountability to its financials? Whether it be biotech, mining, or energy exploration, Vancouver seems to have an endless supply of dreams to sell to unsuspecting shareholders.
Disclosure: Author is short URME.OB