Just like an option with the exception if you exercise the warrant you get a newly minted share of stock.

Yes, Vringo warrants are openly traded on AMEX. Ameritrade has a symbol VRNG+. Other platforms have VRNG.WS.

Vringo warrants have a strike price of $5.06 and expire around June 15, 2015.

Here's an informative link:
http://quotes.wsj.com/VRNGWS

Warrant Value & I/P Proffer

Folks the warrants are trading well below fair value. Using Black-Scholes and 100% volatility (between 90 - 100% volatility has been accurately modeling the warrants for months) I get the following warrant fair values (WFV) vs. stock price:

$2.50: WFV = $1.09

$2.60: WFV = $1.15

$2.70: WFV = $1.22

$2.80: WFV = $1.29

$2.90: WFV = $1.35

$3.00: WFV = $1.42

At the stock price at the time of this post ($2.80), the warrants are trading at $1.06 or over 20% discount. This morning there has been extreme manipulation in the warrants with a seller constantly hitting the bid with 100 share lots. They were successful in driving the warrants down to $0.70 for a short time when the stock was well over $2.50. It appears someone wants to incite a panic to cover cheaply.

If anyone wants to get a copy of my Excel spreadsheet with the warrant calculator, please email me at tobinator00@yahoo.com.

The other part of this post. I have been unable to open the I/P Poffer concerning the latches arguements Vringo made. Can anyone post it in full here?

No way do I have everything on the line with Vringo but I do have exposure to 16,000 shares via options and warrants. What we will likely see is a huge surge when trade begins (assuming a $500 million + win). Then, a pull back of $2 - $3 dollars intraday trade as profits have been taken and shorts pounce on the spike.

A pull back of that magnitude after the initial surge is very significant for me in terms of paying the bills. I also want to do some early shopping during the initial surge for value anomalies in options etc.

Post on target, I'm inquiring for guesses on how long the deliberation will take. It seems that a Friday afternoon verdict could be most likely but I wanted others to weigh in.

Board Help...Verdict

Vringo offers a tremendous opportunity for me as I have not had a pay check since May when my employer ran out of money. I've done a ton of DD on this and like very much where we are headed for a Vringo win. I'm long warrants, Nov and Feb calls hoping to put on some downside protection if a window is opened.

I have a job interview Monday from 9:30 - 12:30 EST, which is the first 3 open hours of trade. The job isn't real close to my engineering professional background but it offers a good proximity to my home and a pay check.

What I don't want to happen is have a verdict late Friday after market and then miss the fireworks on the open Monday. Does anyone know how many days Apple v. Samsung deliberated? I have an opportunity without damaging my job chances to move the interview, same time, to Tuesday. Apple v. Samsung was a real harry court battle with them suing each other. So I figure that would collar the longest time Vringo v. Google will go.

My gut says motion fighting all morning today. Four hours worth of closing arguments tomorrow, followed by jury instructions. This would leave a full day Thursday and Friday, enough time to deliberate?

Any opinions welcome to help me decide. Thanks

The name you have is correct. Ticker VHC and their trial with Apple begins this week.

Earlier shorts were playing for pennies and got roasted for dollars. Here's an updated chart with short interest for the last few months:

http://stockcharts.com/h-sc/ui?s=VRNG&p=D&yr=0&mn=6&dy=0&id=p47160507742&a=274722983&listNum=3

$5.55 is the key price level

Shorts are going to defend it to the bitter end. But the enormous volume should punch through their resistance to force a mini-squeeze to $6.

http://stockcharts.com/h-sc/ui?s=VRNG&p=D&yr=0&mn=6&dy=0&id=p47160507742&a=274722983&listNum=3

Most Shares Hit Market

In my opinion, the 5 existing institutions shorted most of the shares they bought. It is near a safe bet for profit as you can get. Thus short at $5 and cover with newly minted shares at $4.35. The only requirement is to have the liquidity to cover the margin requirements in case the stock zooms up strongly before the shares are transferred to your account.

The FINRA short data shows the following as short volume.

Wednesday = 5.085 million, Stock closed at $4.30

Thursday = 6.649 million, Stock Closed at $5.25

Friday = 2.956 million, Stock closed at $4.54

Finra short data link: http://regsho.finra.org/regsho-Index.html

What is quite interesting is that not more shorts were piled on Friday. The stock did get up to around $5 and traded above $4.75 for quite a while. Perhaps shorts are getting wise?

Financing Thoughts

I disagree with the notion that it is bullish 5 institutions funded Vringo. They likely shorted those 10.3 million shares above $5 and are going to use the newly minted shares to cover. They cleaned up $6 - $8 million in profit in a single day.

I actually do like that management raised this money during a speculative mania. The $45 million just put a floor under the valuation of the stock should the lawsuit not go as planned. No one not Google or Vringo knows EXACTLY what the outcome of this is going to be. Risk management is one of the top priorities for management teams and this financing shored up their cash balances for easily another year and removed a Google bargaining chip of dragging this thing out forever.

At the moment, things look quite favorable for Vringo to win a settlement, trial or get bought out. The stock understandably got hit but is recovering strongly. More than likely the 5 institutions tipped off others and/or shorted much more shares than they needed to cover the financing. Now without downside follow through, those shares are getting covered along side investors adding to or initiating long positions.

I adamantly disagree with Rainmaker about insiders getting rich off of this public offering. There was no secondary offering i.e. no large blocks were being sold by insiders to the institutions. Insiders have 3 days to post filing on their sales with the SEC. We crossed $4.25, the minimum point for their insider sales threshhold yesterday. So we should know by Tuesday if and how much insiders unloaded into the market. A few million or less shares would be no big deal. If they unloaded the majority of their positions, then that is a whole different story.

It's nice to say that the stock is ONLY up 22%. The warrants have had to do some playing catch up. Still trading 10% below fair value.

kickask - Warrant Value

At $5.20 VRNG, the warrants are worth $2.87.

Huge volatility much higher than my 90% in the model, means the warrant should be higher than $2.87.

Anyone can email me at tobinator00@yahoo.com and I will send you the calculator by this evening.

Excellent Value Discrepancy

I own 70% of my position in Vringo warrants. Yesterday the stock closed at $3.09. I use the Black-Scholes model to determine warrant and option values. With my standard inputs of 0.75% risk free interest rate, $5.06 strike price, 90% volatility and 32.5 months until expiry, I calculated the value of the warrant yesterday was $1.33. That is exactly the price the warrant closed at yesterday.

Today we saw a massive surge in the share price closing at $4.30. February 2013 $5 calls are trading at bid $1.65, ask $1.75. Call it $1.70 fair value.

Here is where the value dislocation is that makes for a low risk entry point. Today the warrants closed at $1.80. These warrants have 28 more months of time than the Feb $5 call options. My Black-Scholes model that was dead nuts on in determining value relative to market shows the warrants are worth $2.19. Hence, fair value is 22% higher than today's close. Actually the increase in volatility from yesterday to today makes the warrants even more valuable.

Once the market exploits this discrepancy, the market and calculated prices should once again close.

More info on the warrants:
http://quotes.wsj.com/VRNGWS

Gunning for $4 already.

That was fast, buying blew past four resistance levels. Now $4 is clearly in sight. FYI, Vringo warrants are very good value right now at $1.65. Ticker is VRNG+ on Ameritrade. Other tickers for it is VRNG.WS.

The warrants have $5.06 strike price, expire June 2015 and are more liquid than options.

Shorts Trying to Hold 100 DMA

It looks like a healthy short squeeze here. The parasitic short funds were gaming this stock since July for pennies and now they can get their head handed to them for dimes, quarters or dollars. We need a solid close over $3.65 to flush these shorts.

Vringo Chart:
http://stockcharts.com/h-sc/ui?s=VRNG&p=D&yr=0&mn=6&dy=0&id=p47160507742&a=274722983&listNum=3

Personally, I've had a terrible summer so this is just a nice boost to morale.

I haven't posted in a while but Rainmaker, Red Angus, USMC et al much appreciate your contributions.

Place Bets on Short Interest

Tomorrow the short interest is due out from Nasdaq:

http://www.nasdaqtrader.com/Trader.aspx?id=ShortIntPubSch

I believe it will come in around 9 million shares or almost 20% of the 48 million float. The reason is the daily trade has repeated itself for the last 6 weeks, where there is determined pressure, despite positive net money flow, to push the stock down. Since they did not cover but actually increased shares short by 2 million, from the last two pieces of data there is a strong likelihood the number has grown substantially. Utopia would be a doubling of short interest to over 12 million.

Here's a chart with short interest listed:
http://stockcharts.com/h-sc/ui?s=VRNG&p=D&yr=0&mn=6&dy=0&id=p47160507742&a=274722983&listNum=3

Better Play: Vringo Warrants

A warrant is nearly identical to an option with the exception when exercised the converted share comes from the company and generally have much longer time duration. I have had tremendous success with warrants in the precious metal sector.

Generally, most companies don't have open tradeable warrants listed on an exchange. Only until a few weeks ago did I find Vringo has warrants. Their warrants are $5.06 strike price with expiry of June 15, 2015. Hence, they have about 33 months left on them.

I used Black-Scholes to model options and warrants to establish rough fair value. The $5 February 2013 call options trade for $1.10. They have about 5 months until expiry. With 90% volatility, 0.75% risk free rate, and a Vringo $3.15 share price, the fair value for the Feb options is $0.27. Hence, they trade at a very hefty premium.

Now look at the Vringo warrant. Strike is changed to $5.06 and the time duration is 33 months. Fair value is calculated to $1.39 thanks in large part to the long time frame. The open market trade is $1.52. Thus, warrants are trading near fair value.

Investors can buy Feb $5 calls for $1.10 today or buy warrants for $1.52 and you get another 28 months of time. This will allow the Nokia patent portfolio mature to take advantage of that if the Google suit gets shot down.

With the very large premium being paid for the options on bullish call option leaps, if the Google suit fails, those calls will collapse in value. The warrant will get dinged but will still hold some value due to the increase in volatility and the long time duration until expiry.

The ticker for the Vringo warrants is VRNG.WS or on Ameritrade it is VRNG+. My position in Vringo is 2/3 warrants and 1/3 Feb $2 call options.

If anyone would like an Excel copy of the Black-Scholes modeling tool, just email me at tobinator00@yahoo.com.

Just Option Expiry Shenanigans

The open interest of over 14,000 contracts in $3 strike calls is still very high. Call writers trying to push the calls to be worthless Friday so they can keep all the premium.

It will be very interesting when short interest is posted for September 15th. I'm anticipating between 9 - 12 million shares short. The higher the better as a crowded short trade only means good things for longs.

Pushing for $3?

I have to think that a major reason for price weakness this week is due to option expiry Friday. There are 16,090 open interest in $3 strike calls. This represents 1,609,000 shares which is quite sizeable.

The call writers have a vested interest in pushing the stock lower to try and get all of those calls they sold out of the money by Friday. Even if they can't push it below $3, getting it down there allows them to keep more of the money they sold the calls for in the first place.

Many people scoff at price manipulation but for some "odd" reason a stock, future or index finds its way to the desired price point to enrich option holders.

Odd Message from Interactive Brokers

On my options page for VRNG, it says that market data for VRNG has been halted. Option trade appears to be halted but it looks like the common stock is still trading along.

Anyone else have anything similar on their trading platforms?

Right now they are playing for pennies but as time goes forward, I would expect the potential loss of dollars may considerably weaken their resolve. No Summary Judgement may get the ball rolling in their playing less with the stock and more getting out or buying up a massive amount of calls to protect their downside.

Speaking of calls there are 16,000 Sept $3 strike calls and 5,800 Sept $3.50 calls expiring in a week. That is an equivalent of 2.2 million shares or a real big open interest. Call writers like to push the calls they have written out of the money. It will be interesting if they can get any downward traction with the large short interest in the stock.

Short Sellers Diminishing Returns

It is quite clear that the stock is being played by agressive short sellers. The routine is to short in the morning, grind the stock price all day and cover some shares at the end of the day.

Look at the following chart. Shorts booked profits by covering (buying) 1 million shares from mid-July to late July. Scoring a handsome profit as the price declined peak to valley of $1.50.

Chart with Short Interest:
http://stockcharts.com/h-sc/ui?s=VRNG&p=D&yr=0&mn=6&dy=0&id=p47160507742&a=274722983&listNum=3

From the 1st of August to August 7th, the price surged and the shorts reloaded their positions. By August 15th the stock had undergone a decline from 4.10 down to $3.05. If anything, we should have seen short interest go unchanged from the July 31st report but what we saw was an increase of 1.23 million for a total of 4.03 million shares short August 15th.

VRNG went from $3.05 to $3.85 then to $3.20 by the end of August, which is the last report of short interest. Did shorts cover to book profits? No, they piled on more shorts to the tune of 2.4 million shares short. Since the end of August, the stock price has increased to the $3.50 level. Daily trade action is nearly identical to what it has been for the last couple of months.

There is a strong liklihood that in order to pin the stock price under the downtrend line in force since mid-July, shorts have had to sell even more shares short. We could see in the next report of Sept. 15th the short interest to be 8 - 10 million shares short.

I believe that short sellers are being trapped by the steady long buying and the continuance of selling shares short to protect their position. My suspicion is they have been expecting Summary Judgement or some other negative news element to cover at a much lower price. As the number of shares short continues to grow, these shorts are going to find themselves in a very crowded space of people wanting to cover, limiting thier downward price profit potential.

This is all good news for long shareholders. The more short interest grows the greater the potential for a significant price surge on bullish news for Vringo and a softer blow for negative news. The ardent defence of the downtrend line (also 50 and 100 day moving averages) leads me to believe that this large short interest will become very nervous with a stock close and hold over $3.70.

Short Interest Link for Vringo:
http://www.nasdaq.com/symbol/vrng/short-interest

Key short term resistance at $3.56


Here's a chart on Vringo.

http://stockcharts.com/h-sc/ui?s=VRNG&p=D&yr=0&mn=6&dy=0&id=p47160507742&a=274722983&listNum=3

Short term technicals are what everyone is playing at the moment, the step function higher or lower is soley dependent upon the Google litigation. Shorts who have been walking the stock down on 100 share orders and applying continuous pressure despite positive money flow are going to be tested. They have rebuffed any movement through the downtrend line beginning in July six times. A successful close and a few day hold above the trendline will be quite bullish. We may even see a short covering rally but I expect the $4 mark to be even more heavily defended. What I think is important is to have slow grinding upward stock movement through tese important resistance points as opposed to news driving price spikes, which only ring the short seller dinner bell to crush the price.

Yesterday I noticed that Vringo warrant volume surged as it has again today. So it has appeared to me seasoned traders are expecting a higher share price in the short term. I wound down February call options in preference to the much longer duration, bettter valued warrant (per Black-Scholes calculations). Ameritrade has it as VRNG+. Wall Street Journal has VRNG.WS and a good link for more info: http://quotes.wsj.com/VRNGWS

Mart Resources - Heavy Volume Breakout

It looks like Mart is experiencing a heavy volume breakout. It needs to close over 33 cents to confirm. Next major resistance level is around 41-42 cents.

Mart - Short Term,
http://stockcharts.com/h-sc/ui?s=MMT.V&p=D&yr=0&mn=6&dy=0&id=p93777541920&a=197000463&listNum=4

Interestingly from a longer term view, the chart indicated price objective corresponds to another significant resistance point at 41 cents. Price objectives and resistances usually don't cleanly line up as good as we see here.

Mart - Long Term,
http://stockcharts.com/h-sc/ui?s=MMT.V&p=W&yr=3&mn=0&dy=0&id=p13479841069&a=197215845&listNum=4


www.heavymetalinvestor.com

Mart Price Targets

Realize this is one man's opinion but it can be useful to generate a consensus.

From the charts: Mart reached its pennant pattern price objective of 32 cents, which also corresponded to first major resistance at the 38% Fibonacci line. We may be seeing the development of another bullish flag or pennant formation. Preliminarily we're looking at a price target of 42 cents.

Mart - Short Term,
http://stockcharts.com/h-sc/ui?s=MMT.V&p=D&yr=0&mn=6&dy=0&id=p93777541920&a=197000463&listNum=4

Interestingly from a longer term view, the chart indicated price objective corresponds to another significant resistance point at 41 cents. Price objectives and resistances usually don't cleanly line up as good as we see here.

Mart - Long Term,
http://stockcharts.com/h-sc/ui?s=MMT.V&p=W&yr=3&mn=0&dy=0&id=p13479841069&a=197215845&listNum=4

From fundamentals: The Mart peer group gets a 4-6 X cash flow multiple. Mart is essentially a one trick pony in terms of geopolitical risk. If they produced oil from several locations, I'd think a 5 or 6 multiple would apply. They still have debt and are without a long period of reporting quarter's of positive cash flow. My guess is the market will reward mart with a 2 - 3 cash flow multiple near term. That should expand more later on as consistently good results are reported and organic development of more wells shows the market they are achieving growth.

ATPG & Mart

I'm the Hansen version, LOL. I have met two other Tobys' in my lifetime. One in high school and one in collegue. I've known of many dogs with that name. For some reason, there seems to be several Toby's in investing. The most famous is Tobin Smith who signs his newsletters at Toby.

I do like ATPG and Mart because of their steeply discounted valuations. It will be interesting when Mart posts its Q4 numbers. In essence, they have two quarters yet to be disclosed from which we should see the debt dramatically reduced.

The big qualifier for O&G, Base Metal or Precious Metal stocks is how long the broad market rally continues. Commodities tend to be a magnifying glass relative to the broad market. A 10% correction in the Dow will likely hit resource stocks 2 - 3 times harder. The nice aspect of both ATPG and Mart being undervalued is a decline should be less pronounced.

Mart Resources Breakout & Resistance

Mart yesterday broke out to the upside and looks poised to challenge it first major resistance at 32 cents. The high volume nature of the breakout to new 52 week highs probably has attracted momentum players. What's best for the stock is for it to reach the price objective quickly and chop sideways for a week or two to set up a platform for a jump higher.

Mart - Short Term,
http://stockcharts.com/h-sc/ui?s=MMT.V&p=D&yr=0&mn=6&dy=0&id=p93777541920&a=197000463&listNum=4

Mart - Long Term,
http://stockcharts.com/h-sc/ui?s=MMT.V&p=W&yr=3&mn=0&dy=0&id=p13479841069&a=197215845&listNum=4

Mart Technical breakout if...

Mart can close over 23 cents. Ideally we want 24 cent+ on heavy volume. The day is still young and we'll have to see how it ends. Next stiff resistance exists at 30 cents.

http://stockcharts.com/h-sc/ui?s=MMT.V&p=D&yr=0&mn=6&dy=0&id=p93777541920&a=197000463&listNum=4

Website Info

www.heavymetalinvestor.com

You can email me to request a copy and receive future quarterly Newsletters at tobinator00@yahoo.com (that's a zero zero).

Will keep in touch.

oryx please send me an email when something of note comes up. After today, I will likely not be visiting this board for sometime though SFMI will be on my watch list.

I am going to be recommending a new company from the .OB space where the CEO came into a failed business and got painted with a bad brush. Perhaps that is what Pierre ran into as well? Solid operating performance may in the end outweigh the $1 million annual payments to Goldcorp objection I have. Best wishes to you.

Oryx & TMSOCHA Reply

First Oryx,

You bring about the compelling case for investment here and is why I became interested in forming an opinion. You are probably correct that I should have called first, but the questions I posed have probably been asked dozens of times over the last two years. At this time I have decided not to bring Silver Falcon to my Newsletter for the prior reasons I posted. Silver Falcon will remain on my watch list and I may reconsider it based upon how it performs and management's performance. Thank you for your professional even tempered post, it is an example of quality of the information being exchanged here.

Perhaps some of my bare knuckles questions stem from uncovering several land mines in the OTC space. Over the last year, I have investigated several that turned out to be outright scams or companies with the sole purpose of enriching insiders: Quest Mining, Heartland Oil & Gas, Nitro Petroleum, Luxe Energy and Spongetech. In four of the five listed, they had either public or private sister companies controlled by the same people. You can find those relationships through the public filings.


TMSOCHA, obviously you are long both Goldcorp and Silver Falcon. It seems my DD has struck a chord and you feel I'm here to harm investors. My answer is quite simply: no. I deleted my link to this board upon conclusion of my DD. If my intent were to harm your position, I would repeatedly post negative findings for weeks or months on end.

You asked why I didn't post a link between Pierre Quilliam and Marc Hazout. The answer is simple, I did not know of their past connection. I did not think to do a scan of the 17 other companies I follow trying to link Pierre to other officers of those companies. When I recommended Silver Dragon it had fallen from $2.80 (April 2007) to around $1 (July 2007), not around the high as you suggested. Unfortuately, the next year the stock price plunged.

I have several reasons for keeping Silver Dragon as a stock I follow these include being a junior partner to the largest private silver miner in China for what could be the most prolific silver district in China. I would be deeply indebted to you to send me a link of how Marc has formed a shell or lender to which he controls both. Should we be able to find a link then it would imply both Marc Hazout and Pierre Quilliam are following the same playbook. I will most certainly inform my readers if you are certain that Pierre Quilliam is a crook and has had questionable dealings with Marc Hazout that show he is also.

What I found is not hearsay. The information posted is supported by the links and filings I posted. What can be questioned is my assumptions/conclusions of the data presented and that is fair game. That is what these boards are all about, presenting information and personal conclusions. Readers of posts can either agree or disagree.

As I said before, best of luck to the longs here but please don't put your all life savings into it. There are plenty of other stocks around to diversify your portfolio. Stocks such as Silver Falcon can be big winners but they can also go the other way.

About Tape Recordings

You can certainly tape record any conversation. The problem is it is illegal unless you get permission from the person for who you are speaking. That is why I want answers in writing. Should IR or Pierre respond, I will post it.

Some Due Diligence Findings

I wanted to look into the background of the management team. A web search pulled up a few items relating to the CEO of Silver Falcon, Pierre Quilliam. Not much pulled up for Alan Breitkreuz. One 2004 article I found was concerning the sale of a San Diego sports team called the Sockers. The link is below but here’s an excerpt of the part of the article relating to Pierre Quilliam:

Kalra and his partner, Pierre Quilliam, put the Sockers up for sale last week, Willmott said.

It's the latest in a string of troubled deals for Kalra and Quilliam. In December 2001, Kalra took over DICUT Inc., a security company in Georgia. Early in his tenure as CEO, the company accumulated net losses of $54,000, according to filings with the Securities and Exchange Commission. By September 2003, the company's operating net losses had grown to $7.75 million.

DICUT also was hit with a series of lawsuits and judgments, including payroll issues in small claims court and two breach of contract judgments of at least $400,000, according to court records. In 2002, DICUT was sued for $556,000 by Fifth Third Bank, which claimed the company made an improper business transaction to meet payroll, according to SEC filings. In December 2002, DICUT owed about $432,000 in delinquent payroll taxes, only about half of which was paid nine months later.

Link: http://legacy.signonsandiego.com/sports/soccer/20041202-9999-1s2sockers.html

What it tells us is more about Dicut: it was a failed business run by Kalra who appears to have questionable integrity. Nothing is directly tied to Pierre but Dicut ended losing several million dollars while Quilliam was director and later CEO.

I wanted to investigate why Pierre and Allan formed Goldcorp Holdings and how it relates to Silver Falcon. In a 2003 10K report, there was something very interesting. Here’s the legal proceeding section:

March 6, 2003 10KSB/A

ITEM 3. LEGAL PROCEEDINGS.

On November 19, 2001, a legal proceeding was commenced in United States District Court, Southern New York, against the Company and Pierre Quilliam, President of the Company by Deborah Donoghue. Ms. Donoghue alleges that she is a shareholder in the Company, and seeks recovery on behalf of the Company of short swing profits allegedly realized by Mr. Quilliam from purchases and sales of common stock in the Company by a company that Mr. Quilliam controls. Ms. Donoghue also asserts a claim against the Company for attorney's fees incurred in the case. The Company elected not to respond to appear in the case on the grounds that applicable law indicated that the Company was not subject to the jurisdiction of the court in which the case was filed.

Link: http://www.secinfo.com/d13hfj.2e.htm

I did not find out the conclusion of the suit. However, the accusations can give us a clue to why Goldcorp Holdings was formed: for Quilliam to use it as platform to trade against Silver Falcon stock?

Other filings by Dicut can be found via this link:
Dicut SEC Filings: http://www.secinfo.com/$/SEC/Registrant.asp?CIK=1110505

From the Goldcorp Holdings website (http://www.goldcorpholdings.com/) we see their executive team is exactly the same as Silver Falcon’s:

Executive Team
Pierre Quilliam
Chief Executive Officer

GoldCorp Holdings, Co.
Allan Breitkreuz
Vice President Finance & Development
GoldCorp Holdings, Co.

After plenty of time to consider my questions, neither Pierre Quilliam or Investor Relations have responded. Phone calls relating to the type of questions I posed are rather worthless, IMO. You can be told anything on the phone that can be denied later.

My biggest concern was the nature of Goldcorp Holdings relative to Silver Falcon. Many OTC listed stocks that I have found to be scams involve two separate companies with officers/major shareholders involved with and controlling both.

Since there has been no response by Pierre Quilliam to my questions to say otherwise, I have no other information but what’s available on the web. What Goldcorp Holdings sounds like is a great way for Pierre and Allan to earn $1 million per year at the expense of Silver Falcon. Basically, the left hand (Goldcorp) tells the right hand (Silver Falcon), “you owe me $1 million”. The left hand also has the power to enforce default of the right hand. In a worst case scenario, Pierre and Allan, don’t pay the left hand therefore, the left hand takes back the right hand’s mining rights and Silver Falcon assets for pennies on the dollar.

There is nothing in the public record that proves to me that Pierre has run a successful public company that I have found. According to pinksheets.com Silver Falcon was formerly Dicut. Silver Falcon’s inability for over two years to move from the pink to the OTC market is a yellow flag. Fortunately, they are now reporting enough to have earned an OTC listing. Pierre is paying himself $125,000 per year to run Silver Falcon, which is on the high end of being acceptable, IMO. However, why is he paying his wife (or daughter) $85,000 per year? That kind of salary is on the level of a seasoned professional engineer. What value is she adding to Silver Falcon to earn this high level of salary?

I see no other solid purpose for Goldcorp Holdings to exist separately from Silver Falcon except to extract $1 million per year for the owners of Goldcorp. More than likely Pierre and Allan are paying themselves handsomely for their “service” to Goldcorp; I have not checked what their salary is. If Pierre and Allan wanted to bring value for shareholders, Goldcorp would not exist and all assets would be owned by Silver Falcon. This would make Silver Falcon more than a one trick pony and keep $1 million in cash flow to pay debt or grow production instead of going into a black hole for property “rent”.

For me, I will not be investing in or recommending Silver Falcon mainly because of Pierre and Allan being senior management of Silver Falcon and Goldcorp Holdings. I wish the best of luck to longs here; please only put at risk capital in Silver Falcon. Many investors get caught up in these types of stocks thinking they are going to retire early and ignore warning signs. Unfortunately, all too often the investment goes south and end up wiping out the investor who put his last dollar into the stock.

Just FYI, I have a pre-recorded segment on the nationally broadcast Korelin Economics Report this weekend (http://www.kereport.com/index.html). It's a good site having several audio tapings of scores of market commentators.

About my questions.

A couple of people have suggested that I call the company. While always a good idea, the serious nature of the questions I am posing need to be answered in writing. You can be told anything on a phone, which cannot be used reliably in court. My intent is to get solid, truthful answers that do not rely on recollection and cannot be easily denied.

Submitted Questions to Silver Falcon

I submitted the following questions to Rich Kaiser and Pierre Quilliam. Both were sent the questions independently early this week. There has been no response from either gentleman.

This weekend I hope to post some links to past filings by Dicut, a San Diego news article and offer a reason for Goldcorp Holding being formed.

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Hello Mr. Quilliam,

I am a Newsletter writer with a following of approximately 1500 readers world wide (www.heavymetalinvestor.com). I came across Silver Falcon based upon a performance scan recently as there has been an upsurge in the stock. If you don't mind, I would like to share some comments and ask questions as I perform due diligence on Silver Falcon to determine if it would be suitable for my March or June Newsletter.

I was very interested to see Goldcorp had done measurements indicating 5 g/ton grades in the tailing's. However, it was not THE Goldcorp (NYSE - GG) but a shell holding company that you are also CEO. The problem I have with the grades is they were performed by parties interested in reporting high values. A company I invested in a few years back, UC Resources, had a business plan of building a mil and processing tailing's. Their property to this day is not producing because the grade was over reported (high graded). I read that Goldcorp Holdings had spot checked five sample spots to determine the grade. This is not broad and independent enough of a sampling, IMO. Question: Why should investors believe the spot check results and have their measurements been certified by a 43-101 geologist?

I read several of Silver Falcon's news releases since 2008. A common theme was production and a bulletin board listing were around the corner. The recent company interview has you quoting 30 days, which means there should be announced listing within the next two weeks. I'd like to see this come as promised. Question: OTC listing is not terribly difficult to do. What has been the problem(s) for Silver Falcon to achieve the listing over the past 18 months?

Pink sheet and bulletin board listed companies are rife with pump/dump and scams. I don't see Silver Falcon as an outright scam but the perennial over promise and not delivering is a problem.

Here are some questions:
1) Why did you form Goldcorp Holdings? Goldcorp's listed assets are the same as those of Silver Falcon's. What percentage of SFMI does Goldcorp hold?

2) I understand building a mil to crush the tailing's. There's no mention of a heap leach field to get the gold. Is Silver Falcon going to be sending crushed ore to Kinross?

3) There are 2 million shares of Class B shares. Are these ordinary common (1 class B = 1 common) or are they 1 class B = 100 or 1000 common? These little hooks in the share structure are very typical of this type of pink/.OB companies and are ways that investors can be fleeced. Who owns the Class B shares?

4) Who are the counter parties to the debt? Is it yourself and other insiders?

5) What functions does your wife Denise perform for the corporation? A recent filing showed she is paid $85,000 per year.

6) A message board rumor has stated one of the insiders is a felon. Has any person working for Goldcorp Holdings or Silver Falcon ever been convicted of a Felony?

The investment case is quite intriguing to me. Historical high grade ore of an area know to produce is a giant step towards having a profitable mine. I must admit I am quite spooked by Goldcorp Holdings being formed and trading separately from Silver Falcon; possessing the same asset base. Many pink and .OB companies form a sister holding shell company to enrich insiders. I hope this is not the case here. It is absolutely essential that I have a full understanding as to why Goldcorp Holdings was formed in relation to Silver Falcon.

I most certainly appreciate your time in answering these questions and look forward to them with great interest.

Thank You,
Toby Hansen

Will try contacting company.

Hopefully I'll get some good, clean responses to my questions. If Silver Falcon desires to have a legion of investors, they have to be absolutely transparent on share capital, conflict of interests etc.

Dagg, How about you independently send in your like questions.

Thoughts & Questions Concerning Silver Falcon

I found this stock on stock scan of a 2010 stock picking contest of the Investor Village Precious Metals board. Intraday it showed a gain of 100% YTD Friday. Wondering what was behind the move I started poking around looking at the shares outstanding, management and investment case as presented by the company. It looks to me that the rapid rise is related to an anticipated bulletin board listing instead of production.

Looking over the past stock performance, there are several stock spikes followed by a slow grinding decline. The peaks are progressively lower, which means stale longs are using the rise to sell into. If there are shorts, they may be playing these moves. The strongest upmove last fall was due to imminent bulletin board listing.

http://stockcharts.com/h-sc/ui?s=SFMI&p=W&yr=2&mn=3&dy=0&id=p98771782742&a=192628255&listNum=4

I was very interested to see Golcorp had done measurements indicating 5 g/ton grades in the tailings. However, it was not THE Goldcorp (NYSE - GG) but a shell holding company with Silver Falcon management. The problem I have with the grades is they were performed by parties interested in reporting high values. A company I invested in a few years back, UC Resources, had a business plan of building a mil and processing tailings. Their property to this day is not producing because the grade was over reported (high graded). I read that Goldcorp Holdings had spot checked five sample spots to determine the grade. This is not broad and independent enough of a sampling, IMO.

I read several of their news releases since 2008. A common theme of production and a bulletin board listing being around the corner. The recent company interview has the CEO quoting 30 days, which means there should be announced listing within the next two weeks. I'd like to see this come as promised.

Pink sheet and bulletin board listing companies are rife with pump/dump and scams. I don't see Silver Falcon as an outright scam but the perenial over promise and not delivering is a problem.

Here are some questions for board members:
1) Why did Quilliam form Goldcorp Holdings? How many shares of SFMI do they have? Goldcorp's claim to fame are the same assets as those of Silver Falcon's.

2) I understand building a mil to crush the tailings. There's no mention of a heap leach field to get the gold. Is Silver Falcon going to be sending crushed ore to Kinross?

3) There are 2 million shares of Class B shares. Are these ordinary common (1 class B = 1 common) or are they 1 class B = 100 or 1000 common? These little hooks in the share structure are very typical of this type of pink/.OB companies and are ways that investors can be fleeced.

4) Who are the counterparties to the debt? Is it Quilliam and other insiders? If it is, they would have a tremendous amount of incentive to drag their feet and get more cheap convertible shares.

I certainly thank anyone that takes the time to respond. I have no equity interest either long or short at this time. My intent is to get answered the most serious questions before applying capital in the stock. The tailings are going to be ore bearing but probably not 5 g/ton. There exists plenty of blue sky potential at War Eagle and for the making of a profitable mining company.

Semafo Buyer?

I've been watching Semafo the last six weeks and something out of the ordinary appears to be going on. As I type, Semafo is up 12 cents to C$4.62 while the HUI is down 8 points. The price is going parabolic, which is unusual for a company with a market cap over C$1 Billion. It appears to me there could be a buyer lurking on the near horizon. My top two candidates would be Randgold Resources (GOLD) or Red Back Mining (RBI.TO). Should the price of Semafo continue to show a large divergence from the rest of the sector, a suitor might be in the wings. Hopefully, the strong price isn't a prelude to a financing exercise.

cl invited me to this board awhile ago. I need to work more stock opportunities into my conversation and this seems to be a nice board to do that.

Preferred A Impact

The share price weakness is presently due to concern about future dilution to the stock. When this topic is always brought up it is with the maximum share count possible to maximize its negative psychological effect. The biggest wild card is the Preferred A shares as with those, when they are exercised does nothing for the Company or share holder. Whereas, when debt holders convert their debt to shares, the share count goes up but the Company and the share holder benefit.

The recent DEF 14C as of July 25th stated there was 114,220 Preferred A shares outstanding. The conversion into common is based upon multiplying the shares by $3, then dividing it by (0.40 * closing share price). This formula works until the absolute maximum of 342.7 million shares. I have put this into an excel spread sheet to show the sliding rule of how the number of shares outstanding increases or decreases with share price. As of July 25th when the share price was roughly 2 cents the DEF 14C stated that 40.79 million shares was the maximum possible shares the Preferred A's could convert into the common. My spread sheet shows 42.8 million, which is close enough for this exercise. While several have latched on to the maximum possible, you can see that presently the Pref A common is much less. I highlighted in bold July 25th and present day calculations. All of this assumes the Pref A crowd has not exercised any between July 25th and today.

Now many longs are wondering why there is this slow drip in price? Rest assured the Preferred A holders want the stock price to sink as low as humanly possible to convert into shares. If some solid production numbers or some other very bullish news release comes out, the Preferred A holders may scramble to lock in their common shares by exercising quickly. In essence Longs, if you want to minimize dilution you have to step up to the plate and prevent the stock from sliding further.

Anyone wanting the spread sheet can email me at tobinator00@yahoo.com (tobinator zero zero @ yahoo.com).


Inputs:
Preferred A: 114220
X $3 each = 342,660

Share Price..Max. Shares
....(cents)....(millions)
----2.60-----32.9
----2.40-----35.7
----2.20-----38.9
----2.00-----42.8 <==
----1.80-----47.6
----1.60-----53.5
----1.40-----61.2
----1.20-----71.4
----1.00-----85.7
----0.90-----95.2
----0.80-----107.1 <==
----0.70-----122.4
----0.60-----142.8
----0.50-----171.3
----0.40-----214.2
----0.30-----285.6
----0.20-----342.7
----0.10-----342.7
----0.00-----342.7