On a related note, I received a "magazine" called "Journal of American Finance" (JAMFIN) in the mail today. It was included as an insert with the grocery store ad, pizza coupons, etc. The cover says "Crude oil will run to $94 a barrel in less than two years." "Immediate access to the right information could easily turn your $500 into $12,000 or $1,000 into $24,000 over the next nine months."
Red flags went up immediately, but it piqued my curiosity so I scanned the magazine it to see what they had to say. Basically they were plugging a company named New Century Energy (NCEY:OTCBB). Just for the heck of it, I looked at the company's SEC filings and financial statements. Here are some excerpts.
Strike 1:
Effective November 12, 2004, the client auditor relationship between New Century Energy, Corp. (the "Company") and Randolph Scott and Company, Certified Public Accountants ("Randolph") ceased as the former accountant was dismissed. Effective November 12, 2004, the Company engaged Malone & Bailey, PLLC, Certified Public Accountants ("Malone") as its principal independent public accountant for the fiscal year ended December 31, 2004. The decision to change accountants was recommended and approved by the Company's Board of Directors on November 12, 2004.
Randolph's report on the financial statements of the Company for the fiscal years ended December 31, 2002 and December 31, 2003, and any later interim period, including the interim period up to and including the date the relationship with Randolph ceased, did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles except for concerns about the Company's ability to continue as a going concern.
Strike 2:
In December 2004, the Company issued 1,099,107 shares of the Company's restricted common stock to 148 investors, in connection with Offshore Subscription Agreements, in a transaction not registered under the Securities Act of 1933 (the "Act"). This issuance included 21,929 shares of the Company's restricted common stock which the Company had previously agreed to issue to six investors in connection with Offshore Subscription Agreements which were entered into in November 2004.
In January 2005, the Company issued 422,408 shares of the Company's restricted common stock to 45 investors, in connection with Offshore Subscription Agreements, in a transaction not registered under the Act.
Strike 3:
New Century Energy Corp., (OTCBB:NCEY - News), an oil and gas exploration company, is pleased to announce that it has reached an agreement to convert $400,000 of debt into NCEY common stock. Under the terms of the agreement, Blackcap Diamond Fidelity LP LLLP forgave a promissory note for $400,000 in exchange for the issuance of 856,000 restricted shares of the Company's common stock.
If Diamond could sell the 856,000 shares that they received for 46.7 cents each about two months ago at today's closing price of $1.68, they would gross $1,438,080. How nice of them to "forgive" their $400,000 debt.
Strike 4:
The Company had negative net working capital of $1,132,913 as of December 31, 2004 and said that they will require approximately $5 million in 2005.
Strike 5:
Edward R. DeStefano, the sole director of the Company and the Company's Chief Executive Officer, holds 37,500,000 shares of the Company's Common Stock, representing approximately 78.2% of the outstanding shares of our Common Stock.
One has to wonder if Mr. DeStefano is selling any of his fortune, which was valued at $63 million at today's closing price. I found it amusing that the decision to change accountants was recommended and approved by "the Company's Board of Directors" when it appears that Mr. DeStefano is the ONLY director.
Strike 6:
Quoting from the JAMFIN magazine, "Buy it at the market, TODAY!"
New Century Energy might end up being the next ExxonMobil, but I'll pass. Thanks anyway, JAMFIN. This deal smells worse than crude oil. |
