XRAYMEDIA (xrmd)

[Tootz12]

XRMD __ VERY UGLY ARTICLE Unless you short :)

http://www.canada.com/search/story.aspx?id=64596a2f-d2fe-4ef8-9744-caad6c062b71

Anonymous customers drive up dot-com stock

David Baines
Vancouver Sun


Friday, July 18, 2003
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Dot-com stock promotions are not dead, as evidenced by Vancouver-based XRAYMEDIA.COM Inc.

The company has seen its stock price skyrocket in recent weeks after announcing a series of contracts to broker the purchase and sale of more than $100 million US worth of media advertising through its Internet site.

The company's shares, which are quoted on the OTC Bulletin Board, were languishing at eight cents US in early June, but have since jumped to 81 cents US.

With 87 million shares outstanding, the company's total stock market is now $70 million US.

Trading volume has been very heavy. On Wednesday, investors traded more than four million shares. On Thursday, another 2.4 million shares changed hands.

The company is based in Vancouver and falls under the jurisdiction of the B.C. Securities Commission. But it has largely escaped public notice because it trades in the U.S.

The president and chief executive officer of XRAYMEDIA.COM is Ray Dabney, 38, a native of Montreal who grew up in Los Angeles and Vancouver. Asked about his education, he says he attended "the school of hard knocks."

During the past decade, he has been working on Howe Street promoting a series of go-nowhere juniors. Like many of his counterparts, he wears a gold necklace, gold bracelet, gold watch and three gold rings.

He joined the company in October 1999 when it was called E-BIDD.COM and was developing a Web site, called Live Media Marketplace, to buy and sell media advertising time and public relations services.

In early 2000, the company agreed to issue him a whopping 20 million shares for the "extended business model" (his plan to further develop the Web site) and another 7.5 million shares at a deemed price of three cents each for services rendered. That gave him majority control.

In following months, Dabney issued a series of releases that were long on rhetoric and short on facts. For example, in March 2001, he announced a revenue-sharing agreement with American Media Services Inc.

"The terms of the agreement are for the companies to pool collective resources to create $100 million in cash flow revenues for XRAYMEDIA.COM through related media sales in the [company's] Web site and other areas of expanded media services."

It was not clear how this deal would impact the company's bottom line. Financial statements later showed the company didn't generate a single cent of revenues that year, and suffered a net loss of $1.6 million US.

In June 2002, the company said it had completed its first transaction. No details were provided, but Dabney was ecstatic: "We're enjoying great acceptance from the media industry and the general business community, but after you close your first transaction you really feel like you're on your way," he said in a release.

The following month, there was more good news. Dabney reported that "its newest client has signed for a maximum $500,000 full agency representation agreement." The name of the client was not divulged, and once again it was not clear how the contract would impact the company's financial results.

Financial statements show the company generated only $431 US in revenues that year and suffered a net loss of $1.7 million.

The pattern continued during the first quarter of this year, with zero revenues and and a net loss of $203,000.

The company's share price moved laterally at the five-cent level until June, when Dabney stepped up his releases.

On June 19, he announced the company had closed $1.1 million in media transactions during the week. Gross profits were estimated at $255,000 (23 per cent of revenues).

On June 26, he announced the completion of another $1.6 million worth of deals with gross profits exceeding $300,000 (19 per cent of revenues). The identities of the buyers and sellers were not revealed.

On June 30, he announced the company was "processing one of the largest and most comprehensive TV Media inventory packages it has received to date, with the initial projected value in excess of $100 million."

The deal reportedly came from a consortium of U.S. cable TV operators, but the participants were not named.

There was also no indication how much gross revenue the deal would generate for the company. Previous deals suggest a gross margin of at least 15 per cent, or $15 million in gross revenues, but whether this is a reasonable assumption remains to be seen.

On July 10, Dabney reported that the company expected to close a total of $20 million worth of business during the third quarter, but this figure may already be obsolete.

On Wednesday, he made another blockbuster announcement: the company had received a $50-million media contract from a joint venture partner. Once again, the partner was not identified, but investors were excited. They bid up the stock to a year high of 87 cents US.

Interviewed Thursday at his office on the 15 floor of Harbour Centre, Dabney said the company's policy is not to disclose the names of its customers to maintain their privacy, but he insisted they are all arm's-length to the company. He also said the company's gross margins are not revealed for competitive reasons.

How then could shareholders confirm the veracity of the company's announcements and assess the value of the stock? "When they get the next quarterly report, they will see the numbers," he replied.

He added: "I'm doing our thing with our people. I'm not asking them [the public] for anything. Whether or not they want to believe it, that's their prerogative."

He said he has not paid anybody to promote the stock, but there are "investors who seem to have a vested interest and tell people about the stock. It seems to work beautifully."

He insisted that neither he nor any related party have sold any shares during the recent run-up.

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X-RAYS ARE FOR SEEING THROUGH:

Announcements of mega-deals with unidentified customers coincide with recent surge in XRAYMEDIA.COM share price:

1. June 19: Company closes $1.1 million in media transactions during week. Gross profits estimated at $255,000.

2. June 26: Company completes another $1.6 million in media transactions. Gross profits reportedly exceed $300,000.

3. June 30: Company processing TV media package potentially worth more than $100 million.

4. July 9: Company closes $2 million in media transactions. No gross profit mentioned.

5. July 10: Company expects to close another $5 million in media transactions, raising projected value of transaction for third quarter to $20 million.

6. July 16: Company announces $50-million media contract with unidentified partner.

Ran with fact box "X-Rays are for Seeing Through", which has been appended to the end of the story.