MMEX Resources Corp (MMEX)

[jmjjw]

MMEX is a classic share-selling scheme - it is nothing more, nothing less. MMEX does not intend, and never intends to build anything.

Every share-selling scheme like MMEX involves common elements - one or more toxic lenders, and a company insider, usually desperate for cash. Sometimes the company insider is the CEO, like Jack, sometimes it is the CFO or COO, and in some cases one or two insiders, usually those with the controlling ownership interest are involved.

The “equity” structure of shell companies like MMEX is built from the ground up to support the company’s real business - running a share-selling scheme. MMEX is a super-dilutive “equity” issue, traded OTC, for ease of manipulation, and generally less scrutiny. The company’s huge number of authorized Class A and Class B shares - Class A: 3,000,000,000 shares authorized, 1,474,263,078 and 987,616,168 shares issued and outstanding as of October 31, 2017 and April 30, 2017, respectively, and Class B: 2,000,000,000 shares authorized, 1,500,000,000 shares issued and outstanding as of October 31, 2017. Shell companies like MMEX need billions of authorized shares to conduct the scheme of converting “debt” generated from thin air, into “equity,” and then into cash, by liquidating these shares in the market.

MMEX also documents its “reserved” common stock: as of October 31, 2017, 50,562,321 shares of the Company’s Class A common stock were reserved for issuance of outstanding warrants and 1,207,443,384 shares of the Company’s Class A common stock were reserved for convertible notes payable - that is 1.2-billion shares allocated to toxic debt conversion!

Every convertible note deal is worded nearly identically - they all contain a market-based, variable conversion rate to a fixed number of dollars - not shares - this is where the term “floorless” originates. These conversion formulas, or “ratchets” differ slightly, some are based on the average of the lowest trading price during the prior 3 days, some on the prior 10 days, in all cases, the "conversion formula" of the average of the lowest "x" number of days prior to conversion. There will always be a steep share discount.

These deals typically carry stiff pre-pay penalties - such as 150% of the face value of the note. Also, notice the amounts, and proceeds structure of the note. They are typically “sold” at a discount, netting cash to the “lender” and cash to the “borrower” - rarely more than $100K which is how the toxic lending firms protect their downside risk. Cash desperate companies like MMEX usually end up doing many of these deals, one after another- as in $100K with firm "X" and then $80K with toxic firm "Y" and then another $100K with firm "Z" to get a $100K more operating cash or to line the insider’s pockets - usually a quarter or less worth of operating cash.

MMEX, not counting its “deal” with Crown Bridge Partners, has nine of these toxic, convertible wrap-around notes in place. There is a “common core” of toxic lenders, including Crown Bridge, Eagle Equities, JSJ Investments, GS Capital Partners, Actus Fund, Power Up Lending, Vista, and so on that participate with companies like MMEX in share-selling schemes. It is straight-forward to use the SEC’s EDGAR full-text search to see the cross-connections between these “lenders” and scam companies like MMEX.

Here is the definitive list of toxic convertibles, amounts, and terms issued by MMEX to date:

April 19, 2017 - JSJ Investments, 12% convertible, $145,000 principle, net $138,00 after discount, ratchet: 40% discount on lowest trade 20 days prior to conversion. (note acquired by Vista on Oct. 19, 2017)

May 15, 2017 - Eagle Equities, 8% convertible, $115,000 principle, net $105,000 after discount, ratchet: 40% discount on average of three lowest trades 25 days prior to conversion.

May 16, 2017 - Crown Bridge Partners, 8% convertible, $60,000 principle, net $54,000 after discount, ratchet: 40% discount on average of three lowest trades 25 days prior to conversion.

May 24, 2017 - GS Capital Partners, 8% convertible, $173,000 principle, net $158,000 after discount, ratchet: 40% discount on lowest trade 20 days prior to conversion.

June 12, 2017 - Crown Bridge Partners, 8% promissory note, $80,000, ratchet: lesser of (i) the closing price of the Company’s Class A common stock on the issuance date of the note or (ii) 60% of the average of the three lowest trading prices during the 25-day period prior to the notice of conversion.

July 7, 2017 - JSJ Investments, 12% convertible, $125,000 principle, net $118,750 after discount, ratchet: 40% discount from the lowest trading prices during the 20 days prior to conversion

September 7, 2017 - Actus Fund, 12% convertible, $115,000 principle, net $105,000 after discount, ratchet: the lesser of (i) the lowest trading price during the previous 25 trading day period ending on the latest complete trading day prior to the date of the note and (ii) 55% of the average of the two lowest trading prices for the Company’s common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date.

September 18, 2017 - Power Up Lending Group, 12% convertible, $123,500 principle, $112,500 after discount, ratchet: 61% of the average of the two lowest trading prices for the Company’s common stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date.

October 16, 2017 - Vista Capital Investments, 12% convertible, tranched $550,000, net $160,000 after discounts and penalties, ratchet: 40% discount on average of three lowest trades 25 days prior to conversion. This note replaced the April 19 convertible to JSJ, and paid off the original toxic debt at a huge penalty of $65,000, proceeds to JSJ.

November 15, 2017, Power Up Lending Group, 8% convertible, $111,773 principle, net $100,000 after discount, ratchet: 40% discount on average of three lowest trades 25 days prior to conversion.

The Crown Bridge Partners “deal” MMEX structured is especially toxic - it contains an $80K up-front note, and a secondary issue that creates a $3-million debt overhang. When, and if MMEX creates the S-1 registration for the second part of the Crown Bridge deal, it is all over for MMEX’s retail investors.

It's staggering how a toxic lending firm can loan a company $100K, and with a dropping share price. the ratchet, and a 40% discount, the toxic lender might get 30-million shares of stock for a paltry $100K loan. When the stock drops to double zeroes, then triple zeroes, then it can be 50-million, or 100-million shares - staggering dilution. The toxic note holder then dumps those shares in "stair steps", driving the price lower as they sell, getting more shares on each leg down. This is happening to MMEX now.

Brutal, PPS crushing dilution is often so powerful, so overwhelming, that no amount of retail buying eventually can offset it. The "death spiral” is in full spin at that point. The next step is often a reverse split - 1000:1, 10,000:1 or worse. Then the scheme will attempt to repeat, until there is no longer any market for the issue. MMEX is in the initial phase of the death spiral now. The SEC uses exactly that term to describe these kind of "floorless" and "convertible" debt deals- also "ratchet" financing and some other terms. See the link below- the words "death spiral" are on the SEC site itself:

http://www.sec.gov/answers/convertibles.htm

From the SEC:

"By contrast, in less conventional convertible security financings, the conversion ratio may be based on fluctuating market prices to determine the number of shares of common stock to be issued on conversion. A market price based conversion formula protects the holders of the convertibles against price declines, while subjecting both the company and the holders of its common stock to certain risks. Because a market price based conversion formula can lead to dramatic stock price reductions and corresponding negative effects on both the company and its shareholders, convertible security financings with market price based conversion ratios have colloquially been called "floorless", "toxic," "death spiral," and "ratchet" convertibles."