Shell Summary for Oct. 11, 2018
THE TSX Venture Exchange lost 1.10 points to 691.46 Thursday. There are three new qualifying transactions to discuss. Two of them are straightforward: a Mexican mining deal and a Chinese oil and gas services deal. The third is a fintech deal.
For the first QT, Arturo Bonillas’s first capital pool shell, Magna Gold Corp. (MGR: halted), plans to acquire the 345-hectare Mercedes property in Sonora, Mexico, from a grandly named Sonora resident, Beatriz Delia Yepiz Fong. The shell, which has 27,075,000 shares issued, will issue 2,442,105 shares and pay $1.34-million (U.S.) to Ms. Yepiz Fong over four years. As of June 30, 2018, the shell had $2.17-million cash. Previous explorers at Mercedes performed drilling in 2008 and sampling in 2010. Samples returned gold, silver, copper and lead.
On closing of the QT, all three shell directors will remain on the board. Mr. Bonillas will continue as the chief executive officer. He is an engineer in Sonora and was the president of Timmins Gold Corp. from 2004 to 2017. Under his watch, Timmins brought its Mexican gold project to production in 2010. The stock peaked at $3.48 in 2012. He left Timmins Gold last year, when the company remade itself into Alio Gold Inc. (ALO: $1.09). In August, 2018, Mr. Bonillas listed Magna Gold with a $200,000 initial public offering at 10 cents.
Magna’s two other directors are Laura Diaz and Alex Tsakumis. Ms. Diaz is a lawyer in Mexico City and a director of Goldplay Exploration Ltd. (GPLY: $0.20), a Mexican mining junior. Mr. Tsakumis lives in Richmond, B.C., and was the vice-president of corporate development at Timmins Gold from 2007 to 2017.
For the second QT, Peter Chen’s first capital pool shell, Inceptus Capital Ltd. (ICI: halted), plans to acquire Rimpac Advanced Technology Development Ltd., an aspiring oil and gas services provider. The shell, which has 4,747,500 shares issued, will issue 20,274,370 shares to its target’s shareholders. To finance Rimpac’s business, the
shell plans to sell a $2-million private placement at 20 cents. Rimpac is working on technology for finding and evaluating oil and gas reservoirs. Its primary market is China. It has tested its technology at state-owned oil fields, specifically the Shengli, Changqing and Yanchang oil fields. Not much else is known about Rimpac, but we should find out who its insiders are when Inceptus Capital submits its QT filing statement.
Inceptus listed in November, 2017, with a $214,750 IPO at 10 cents. Its founder, Mr. Chen, is a management consultant and accountant in Richmond. He offers his services through Proterra Management Group Inc. He is also a director and the chief financial officer of Eastwood Bio-Medical Canada Inc. (EBM: $6.40), a distributor of natural health supplements. Three months ago, Eastwood was trading firmly under 30 cents on typical daily volumes below 100,000 shares. It has since been asked three times by the Investment Industry Regulatory Organization of Canada (imagine squeezing that letterhead onto a piece of paper) to explain the increase in its share price and trading activity (daily volumes above 600,000 shares). Each time, Eastwood replied that it had nothing to explain. Eastwood’s president and CEO, Yunji Kim of Vancouver, holds 47,855,000 (or 69.47 per cent) of the company’s shares.
For the third QT, John Travaglini’s second capital pool shell, Platform 9 Capital Corp. (PN: halted), plans to acquire Uptempo Inc., a financial technology company with offices in New York and Florida. The terms are not yet available, but Uptempo plans to raise $13-million. Uptempo has a mobile app that enables U.S. borrowers to manage their bill payments. Its target borrowers are those who need help with organizing their financial schedules, for instance, those who need to make car loan payments on a fixed date each month but who receive their wages biweekly. Uptempo explains, “You pay us on your schedule; we facilitate payment of your loans when they are due.” This way, Uptempo adds, the borrower would not fall behind on his payments and ruin his credit history.
There are many bill payment management apps that are avail able for free . Uptempo’s app is not free. This is probably why the company is pushing the app not primarily to borrowers but to lenders. Uptempo says there are over 370 lenders, mostly car dealerships, that are making their customers use Uptempo’s app. The lenders receive a fee for this sort of referral. They also gain access to Uptempo’s database of user information, specifically which users are good at keeping up with their payments. In other words, Uptempo is offering its users’ data to lenders, allowing them to find potential new customers from among the app users. Uptempo counts “tens of thousands” of borrowers who are using its app. It is unclear how many of these users understand that Uptempo is making money off them in two ways. First, they pay to use the app. Then, their data are being used by Uptempo to attract more lender partners. Usually, you are either a paying user or a saleable data provider, not both. For example, people do not pay to use Facebook, but Facebook collects its users’ personal data and uses those data to attract paying advertisers. Anyway, we should find out whether Uptempo is profitable when Platform 9 Capital submits its QT filing statement.
On closing of the QT, the resulting issuer will have five directors: Mr. Travaglini, Michael Hilmer, Jason Ewart, Art Mannarn and William Ross. Mr. Hilmer is the chairman and CEO of Uptempo. Long ago, from 1989 to 1996, he was a manager with CIBC Wood Gundy. Afterward, he moved on to the tech sector. From 1998 to 2005, he ran an IT services firm in Toronto called Millennium Care Inc. Then from 2005 to 2012, he was the CEO of One Contact Inc., a customer service outsourcing company (a call centre). From April, 2015, to October, 2017, he was the CEO of DealNet Capital Corp. (DLS: $0.08), which offers financing for home improvement projects and equipment. DealNet peaked at $1.08 in late 2015. When Mr. Hilmer left, the stock was trading around 15 cents.
The next director nominee, Mr. Ewart, is an analyst and the executive vice-president of capital markets for Uptempo. For 14 years to October, 2017, he was the CEO of Fountain Asset Corp. (FA: $0.60), formerly called GC-Global Capital Corp. Fountain is an investment and financial advisory firm in Toronto. Its stock peaked at $1.45 in 2006.
The next director nominee, Mr. Mannarn, worked for more than 20 years at Canadian Imperial Bank of Commerce (CM: $115.70) in positions including managing director of CIBC World Markets and deputy head of CIBC Wood Gundy. The final director nominee, Mr. Ross, is senior counsel with WeirFoulds LLP in Toronto. He is also a director of the Royal Canadian Mint.
Platform 9 Capital listed in June with a $335,300 IPO at 10 cents. It is Mr. Travaglini’s second shell. He runs an investment firm in Toronto called 4Front Capital Partners Inc. He is also a partner at Platform 8 Inc., which advises first nations groups on casino development. Mr. Travaglini listed his first shell, Platform Eight Capital Corp. (PEC: halted), in February with a $334,700 IPO at 10 cents. Platform Eight is working on a potential QT with GrowForce Holdings Inc., a licensed marijuana grower in Brampton, Ont.