Jayhawk Energy, Inc. (fka JYHW)

[petermic]

=DJ IN THE MONEY: With JayHawk Energy, It's What You Don't Know...


By Carol S. Remond
A Dow Jones Newswires Column

What JayHawk Energy Inc. (JYHW) does, owns and earns may be known,
but it's the whole load of unknowns about the oil and gas explorer
that warrant caution.

In its short corporate life, JayHawk has issued millions of
unregistered securities to help it buy some mineral leases and
projects in Kansas and North Dakota. As of Dec. 31, the company had
$292,615 in cash and $2.5 million in total assets, including $2.2
million in unproved mineral properties and $543 in equipment. Its
corporate office is located in a virtual suite in a Colorado suburb.

But here are reasons investors should be cautious:
It's not clear who is behind promotional reports suggesting
investors should load up on JayHawk Energy stock. One mysterious
entity paid almost half a million dollars to finance glossy reports
and emails touting the company's stock. The identity of offshore
investors who financed the company's purchases of oil and gas leases
is also a mystery.

And who is behind Berigan Portfolio Inc., an entity that extended a
$550,000 credit line to JayHawk Energy just seven days after it said
it would become a mining company and ended up with 1.2 million shares
and warrants?

JayHawk Energy came to life as a mineral exploration company a year
ago after a Colorado-based jewelry-making public shell named Bella
Trading Company Inc. changed its corporate aspirations.

Sara Preston, the 29-year old sole executive of the company,
resigned her positions as president and chief executive in April and
as director in July. At that time, Idaho-based mining executive
Lindsay Gorrill took the helm of JayHawk Energy as president, CEO,
secretary and a director. Meanwhile, Colorado local Joseph Young, who
had stood in as CEO and president from April to early July, was named
chief financial officer. The two executives also serve in various
corporate positions for other publicly traded companies.

With all of its pawns in place, JayHawk Energy started issuing stock
and purchasing mineral properties that same month. So far, the company
has made three acquisitions in Kansas and one in North Dakota.

Most of that stock was issued under Regulation S, a Securities and
Exchange Commission regulation that permits companies to not register
stock they sell outside the U.S. to foreign investors. Stock issued
under Reg S exemption is typically restricted for six months during
which investors cannot sell it.

CEO Gorrill said in an email that the company is in the process of
"commencing our drilling program." He said rain has been a problem but
that "this week has been better and we should have a number of wells
completed."

Asked about JayHawk Mineral's corporate office, Gorrill first said
that it shared offices with other companies and that its CFO and a
secretary occupied space there. When told that this reporter visited
the location and found nothing but empty offices, Gorrill said that
"almost all our office is in Kansas right now." He later described the
Colorado office in an email as a "satellite office" and said that
"most of the work in done out of our field office in Gerard, Kansas."

Gorrill said he has no idea who is paying for newsletters and emails
promoting JayHawk Energy's stock. He ventured that a shareholder might
be behind the effort.

Paid For Touting Sheets

Earlier this year, a promotional newsletter called Scott Fraser's
Elite Stock-Market Advisory started touting JayHawk Energy's stock as
the greatest thing since sliced bread.

Fraser, a former stockbroker with a long track record promoting
penny stocks, said in a disclaimer attached to a recent newsletter
that Mass Media Advertising paid publisher Natural Contrarian Inc.
$450,000 to enhance public awareness of JayHawk Energy.

The newsletter, and emails mimicking it, are typical of many touting
sheets, extolling the merits of the stocks they feature without going
into too many details about their shortcomings.
"I Offer You 6000% on Your Money - Right Now. Buy, Jayhawk Energy
(JYHW) at $2.50 - You'll be Thanking Me for Your Next $100 Oil-Stock,"
the newsletter screams in bold letters, predicting the stock could
move to $100 "within a 90 day period."

In 2003, the Securities and Exchange Commission issued a
cease-and-desist order against Fraser, alleging he disseminated false
and misleading statements relating to the performance of some previous
stock picks in emails sent to attract new subscribers. Fraser
consented to the order without admitting or denying the SEC findings.

CEO Gorrill said he doesn't know who is behind Mass Media
Advertising and that the entity isn't listed on the company's most
recent shareholders list.

Gorrill said he had read the Fraser report and liked it although he
"might not have been as aggressive."

Various online searches yielded no information about Mass Media
Advertising.

Same goes for Davis Jones Research, another outfit sweet on JayHawk
Energy. The Web site www.davisjonesresearch.com was registered
anonymously on Jan. 30, just 15 days before it published a report
listing the "Top 5 Reasons Investors Are Buying JayHawk Energy."

Gorrill said neither he nor the company financed any part of the
reports.

Promotional activity aside, there is very little information about
JayHawk Energy shareholders.

Gorrill is the largest single shareholder with four million shares,
which he said are restricted. According to JayHawk Energy's latest
quarterly filing, there were 36.9 million shares outstanding on Feb.
13. The company issued another 599,939 shares on April 15 to two
shareholders who exercised warrants to purchase shares at $1 each.

In an email, JayHawk Energy CEO Gorrill said he doesn't know who
controls Berigan Portfolio, which he identified as a European fund.

Berigan received 562,679 units of stock issued under Reg S exemption
last July in repayment for a credit line extended to the company in
April. Each unit consisted of one share and a warrant to purchase
another share for $1.

There is no information available online about Berigan. Asked about
the entity, Gorrill said in a telephone conversation that Berigan came
into play last year before the company became a mining concern.

"I knew one of the people involved and said, 'I'm in the oil and gas
business, let me take over the company.' But I wanted all the debt
gone, which is where Berigan came in," Gorrill told Dow Jones
Newswires.

But it's unclear what debt the CEO is referring to. SEC filings show
that while it purported to function as a jewelry business, the company
was a corporate shell with virtually no debt. As of September 2006,
six months before it reinvented itself as JayHawk Energy, the company
had liabilities of $5,750 and cash and inventories of $49,461.

In July, Berigan also received 20,000 units of stock issued under
Reg S in repayment for $20,000 it spent on behalf of JayHawk Energy.

It's unclear what the $20,000 paid for but that's the exact amount
received by former CEO Preston in exchange for her agreeing to cancel
56 million shares and exit the company.

Heavy promotional activity and shadowy offshore shareholders aren't
always the best signs, and investors might want to tread cautiously
when it comes to JayHawk Energy.

JayHawk Energy stock was recently trading at $2.22 a share, up 2
cents, on the OTC Bulletin Board.

(Carol S. Remond is an award-winning columnist who won a Gerald Loeb
Award in 2005 for best news service content with "Exposing Small-Cap
fraud," a series of articles that described how three small companies
unscrupulously pumped up their stocks.)

-By Carol S. Remond, Dow Jones Newswires; 303-997-5783;
[e-mail]

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(END) Dow Jones Newswires
04-18-08 1151ET
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