Indocan Resources Inc. (IDCN)

[Cassandra]

SEC halts Indocan Resources

2012-05-25 14:04 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-IDCN) Indocan Resources Inc


by Mike Caswell

The U.S. Securities and Exchange Commission has halted Indocan Resources Inc., the pink sheets listing formerly headed by Vancouver promoter Jeffrey Bruhjell. The regulator cites questions about the "adequacy of publicly available information about the company." The SEC has not made any specific allegations against the company or Mr. Bruhjell, but there is much history.

Over the last 12 years, the company's promotions have included one of the "hottest revitalized oil patches in the country," learning software that would "dominate the North American market," as well as many mining projects. Despite a complete lack of financial statements or any other regulatory filings, as well as a stock total that has ballooned to over 7.4 billion shares, the stock has been up and down many times through these promotions (although it has been mostly below a penny). The only regulatory attention it had attracted before Thursday's halt was a cease and desist order from the Pennsylvania Securities Commission in 2005.

One of the company's first promotions was the Isaac's Harbour gold property in Nova Scotia. Indocan acquired the claims in January, 1999, and Mr. Bruhjell was optimistic early, projecting an "economical small mill site for years to come." The company expected to have a crusher operating at 70 to 80 tonnes per day. The stock hit a 52-week high of 12 cents days after the company initially announced the acquisition, but fizzled after Indocan later reported an "excellent assay" of five grams per tonne. Despite the existence of "many great intersections" Indocan had little else to report from Isaac's Harbor.

Around the end of the tech boom in 2000, the company briefly entered the software development business. In April, 2000, it acquired ILASOFT Inc., a Montreal company that made training software. It was not entirely clear what the software did (a news release stated that it allowed "true collaboration between desktop systems and traditional textbooks"), but at the time investors were still enamoured with tech, and the stock reached a 52-week high of 13 cents. The company never mentioned the software again after announcing the acquisition, and the stock was under three cents within weeks.

From then Indocan remained mostly inactive until July, 2005, when it announced that it was buying an interest in an oil and gas project in Texas. Again, the company was heavily optimistic, projecting initial production of up to 300 barrels of oil per day and later up to 750 bopd. While the stock had hit subpenny status by this time, it still managed a 52-week high of 0.39 cent on June 2, up from 0.08 cent days earlier. (By this time the company was trading as many as 20 million shares a day.)

The project suffered a setback in June, 2006, when the U.S. Securities and Exchange Commission launched a civil fraud case against Sunray Oil Co., the vendor of the property. The SEC claimed that Sunray had improperly raised $1.14-million from 52 investors and that the company's owner, Texas resident Larry Stiles, had used some of the money for personal items, including $57,500 worth of cars. (Mr. Stiles recently settled the case, agreeing to fines that the judge will determine. He did not admit to any wrongdoing. There were no allegations against Indocan.) In the wake of the suit Indocan assured investors that all was well with the property, but the company subsequently reported little else with the ground and the stock trailed off again, falling to 0.03 of a cent.

The company also had the misfortune of attracting a cease trade order from the Pennsylvania Securities Commission around the same time. On Oct. 12, 2005, the regulator issued a news release citing Indocan for a preferred share offering, at $2.50 per unit. At least one investor had received an e-mail from Mr. Bruhjell which stated that Indocan was a "low risk investment" with returns expected within 30 days. The e-mail also stated that the investor would "get over 40% APR on [his] investment and likely a triple in the market once we trade the preferred [stock]." Indocan never publicly responded to the cease trade, but Mr. Bruhjell later told Stockwatch that "anybody could get cease traded in Pennsylvania."

Indocan's final promotion came in 2010, when it and a partner committed to a $12-million program at eight mine sites in South America. The company touted a resource of 1.4 million ounces of gold, with a net present value of $233-million (U.S.). The stock managed a 0.31 cent high that year, but was at a 0.01-cent low by year-end.

The company did little else of note until March 5, 2012, when a judge in Wyoming removed the entire board of directors. A shareholder had filed a suit against the company, complaining that there was no proper notice of its annual general meeting. The judge agreed and appointed a custodian to manage the company until a new board could be elected. It appears the matter was not resolved before Thursday's halt.

Although the SEC's halt only lasts for 10 days, it is effectively a permanent suspension. Once the 10 days have passed, brokers wishing to trade the company will face an onerous burden. They must keep up-to-date information on the company's financial status and on its insiders. They must also have copies of the company's prospectus, its most recent annual report and any subsequent quarterly reports (none of which Indocan has filed for over 10 years). In addition, brokers must maintain current information on the company's name, address, state of incorporation, number of shares outstanding, the name of its transfer agent and the nature of its products. Brokers must also know if a price quotation is from another broker or from an insider. They must provide this information to anyone interested in trading the company.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-1962621&symbol=*SEC&news_region=C