Shell Summary for Dec. 7, 2017
THE TSX Venture Exchange gained 3.96 points to 787.62 Thursday. Robert Hall’s capital pool shell, Abcana Capital Inc., has closed its qualifying transaction, which was the acquisition of a British Columbia mining junior. The shell, which had four million issued shares, issued another 21,487,301 shares to its target’s shareholders. Abcana also sold a $183,000 private placement of 1.02 million flow-through units at 10 cents and 1.2 million non-flowthrough units at 6.75 cents. Today, the resulting issuer listed as Casa Minerals Inc. (CASA: $0.10). It did not trade.
Casa owns a mineral exploration property near Terrace, B.C. It also holds an option to acquire a 75-per-cent interest in another property near Swift River, close to the Yukon border. The company’s president and chief executive officer is Farshad Shirvani, a geologist in West Vancouver. He is also Casa’s largest shareholder, with 8,199,000 shares or 29.6 per cent on closing of the QT. Mr. Shirvani is also the president and CEO of another B.C. mining junior, Doubleview Capital Corp. (DBV: $0.065).
Abcana Capital listed in November, 2011, with a $200,000 initial public offering at 10 cents. It was founded not by Mr. Hall but by one-time shell-maker Shaun Maskerine. The shell’s IPO shareholders were made to wait six years for a QT, which should normally take only two or three years to arrive, so they might well consider Abcana a failure. As well, the closing of the QT has not yet given them an opportunity to get out of their investment with a profit. These days, Mr. Maskerine is one of two corporate secretaries at Strata-X Energy Ltd. (SXE: $0.025), an oil and gas junior with properties in Botswana, Illinois and California.
Mr. Hall took over Abcana Capital from Mr. Maskerine in 2014. First-time shell promoter Mr. Hall arranged Abcana’s QT and remains a director of Casa Minerals. From May, 2013, to July, 2017, he was the chief financial officer, the secretary and a director of Mr. Shirvani’s Doubleview Capital. Currently, Mr. Hall is also a director of an inactive Namibian oil and gas junior, Letho Resources Corp. (LET: $0.22).
Praveen Varshney has filed a final prospectus to list his third capital pool shell, AAJ Capital 1 Corp. The shell plans to sell a $250,000 IPO at 10 cents, through Canaccord Genuity Corp. We discussed AAJ Capital in more detail in the Shell Summary for Nov. 6, 2017. We also discussed in that summary Mr. Varshney’s shell-making record. In April, 2016, he closed a hemp QT for his first shell. He managed to close a QT for his second shell much earlier; that QT was a medical device deal, which closed in 2011. Mr. Varshney’s first two shells yielded one success and one failure for their IPO shareholders. We consider a shell to have been a success if its IPO shareholders had sufficient opportunity to get out of their investment with a profit, reasonably soon after the shell closed its QT, and the shell should not have taken too long to close a QT. The IPO shareholders of Mr. Varshney’s first shell waited eight long years.
Mr. Varshney is the president of two other shells. One is a capital pool shell called Bluerock Ventures Corp. (BCR: $0.18), which he did not list himself and which does not have a QT in progress. The other is an NEX shell, Westbay Ventures Inc. (WEST), which is halted pending a recently announced deal. Westbay plans to acquire a Colorado software company called ChargaCard Inc. The shell, which has 7,006,669 shares issued, will issue 38,754,000 shares to its target’s shareholders.
ChargaCard has a payment processing platform that enables lawyers to collect legal fees from clients. Actually, lawyers already have a mechanism for collecting legal fees from clients. They will not release a client’s file until he has paid. ChargaCard launched its payment processing platform last month. It is working on another product, a payment processing and fund transfer app, like PayPal but for the lat est in b uzzwords, cryptocurrencies. ChargaCard’s promotional materials from the last few months have referred to the app by different names, including Cryptonite, Cryptanite and CryptaCash. If the company has not yet settled on a name, then it will probably do so before February. It expects to launch the app in beta mode that month, and then the general launch will follow in March. (There is an existing app calle d Cryptonite, but it is a data encryption app developed by Germans.)
According to Westbay, the resulting issuer will have five directors. It has identified one so far: John Eagleton, a co-founder of ChargaCard. Mr. Eagleton will also be the CEO of the resulting issuer. Previously, he was a fixed-income trader with BNP Paribas. In 1999, he co-founded the Investars website, which offers investment research and analytics to brokers and investors. In an investor presentation released by ChargaCard on Oct. 31, it listed the following five directors: Mr. Eagleton, Mr. Varshney, Maria Nosikova, Jason Searfoss and Jose Vieitez. Ms. Nosikova is an information technology project manager. She will be the chief product officer of the resulting issuer. Mr. Searfoss is the CFO of a Colorado health and tech start-up financier called Boomtown Accelerator. From 2008 to 2013, he worked at Royal Bank of Scotland in Connecticut, managing technology infrastructure in the Americas. From 2012 to 2016, he was the CFO of a Chicago private equity fund, Longford Capital Management LP. The fifth director, Mr. Vieitez, is a software designer who worked at Google for eight months from September, 2012, to May, 2013. These days, he is a director and portfolio manager at Boomtown.
Mr. Varshney has been the
president of Westbay since 1995. At the time, the company was a Colombian oil promotion called Afrasia Mineral Fields Inc. The stock peaked at $1.30 in 1996. Three years later, as Internet stocks became the fad, the company began searching for an Internet deal. By 2001, it had found none, and its stock had fallen to 15 cents. Mr. Varshney later sought to use Afrasia to launch an Alberta natural gas explorer, an Arizona copper promotion, a B.C. senior care home operator and a Calgary mobile app developer. After a long and sorry history on the exchange, Afrasia rolled back 1 for 4 in January, 2017, and changed its name to Westbay Ventures. Before halting to announce the deal with ChargaCard, Westbay last closed at 47 cents. In connection with the acquisition, Westbay plans to sell a $3-million private placement at 45 cents.