MARKET SCAMS

[salmonslayer]

Stocklemon Reports on Eden Energy (EDNE)



Stocklemon Reports on Eden Energy (OTC:EDNE)

CAN YOU SMELL A MINI-ENRON HERE ??????

Outstanding Shares- 34,943,886

Market Cap- $200 million +

Revenues- 0

Mailboxes around the country have been stuffed with glossy mailers promoting Eden Energy Corp. (OTCBB:EDNE) These cheery promo pieces paint a rosy picture of huge oil and gas finds … but they will never disclose the self-dealings of its insiders, their track record with a similarly-promoted company they hyped less than two years ago, and the deceptions of which stock promotions are made.

The breathless prose describing the next great oil find in the US reminds us of a stock 2 years ago that portended the next great Natural Gas find in the US : that stock was Heartland Oil and Gas -- Wait, wait, don’t tell me -- these two companies share the same office !

Eden Energy and Heartland Oil and Gas

Eden Energy shares offices with another Vancouver stock promotion called Heartland Oil and Gas (HOGC) at 200 Burrard Street, Suite 1925 Vancouver, B.C. But these companies have a lot more in common than their address. HOGC had a similar trading pattern to Eden Energy back in late 2003. Much like Eden Energy, Heartland put out a slew of announcements that discussed the potential of great finds of natural gas in America’s heartland, and follow-on PR boasted of huge financial backing. A sampling of the releases can be found here:

http://www.heartlandoilandgas.com/news.html

Heartland stock currently trades at 45 cents on the OTC – down over 90% from where it was when its glossy mailers were bulk-mailed out -- and its revenues for last quarter were 0.

Meet “The Smartest Guys in the Room” -- The Sequel

The President and CEO of Heartland is Richard Coglon:

http://www.heartlandoilandgas.com/manage.html

Mr. Coglon has a “colorful” past -- he has been reprimanded for conflict of interest breaches in shady offshore dealings with public companies:

http://www.lawsociety.bc.ca/media/news/body_news_01-10-09(coglan).html

Mr. Coglon is also on the board of dormant OTCBB stock BNVLF:

http://www.otcbb.com/profiles/BNVLF.htm



The CEO of Eden Energy is Donald Sharpe. Mr. Sharpe was also the president of Nation Energy (OTCBB:NEGY), currently trading at .20 cents. (It was once $2.00.) He is also a director of Heartland.

But these two men are connected in more than just offices and penny stock oil companies as you will read below.

Eden Energy is supposed to be a company that is drilling for oil in the “fertile” oil fields on Nevada. They own the rights to drill on over 200,000 acres. How did they get these rights? They bought a company called Frontier Exploration that was owned by Fort Scott Energy. As stated in the last 10Q:

“The Company entered into an Assignment Agreement with Fort Scott Energy Corp. (“Fort Scott”) dated August 5, 2004 in which the Company acquired Fort Scott’s interest in a Participation Agreement dated April 26, 2004 with Cedar Strat Corporation (“Cedar Strat”). The Participation Agreement provides for the acquisition of certain oil and gas leases and rights located in eastern Nevada, USA, held by Frontier Exploration Ltd. ("Frontier”), which at the time was a wholly-owned subsidiary of Fort Scott.”

Here is a copy of the news release

http://www.edenenergycorp.com/news083104.htm

How much did the company pay for this assignment agreement?

The Company issued a Promissory Note and Convertible Debenture (“Debenture”) to Fort Scott in the principal amount of $500,000. The Debenture bears interest at a rate of 7% per annum, matures on August 31, 2006, and will entitle Fort Scott to convert the principal and accrued interest into units at $0.25 per unit. Each unit will consist of one share of common stock and one-half of one warrant. Each whole warrant will be exercisable into one additional common share at $0.50 per share on or before the later of August 31.

The company also issued 500,000 shares of EDNE stock to Fort Scott.

Wow, seems like quite a deal … In fact, at today’s prices it amounts to over $25 million worth of EDNE stock, which can be sold into the market at any time whether any oil is ever found on the property or not! We wonder who they gave such a good deal to??????? Answer:



THEMSELVES !

A simple search on Nevada Corporate Records show the sole officer of Fort Scott as none other than Richard Coglon, the CEO of Heartland Oil and Gas.

https://esos.state.nv.us/SOSServices/AnonymousAccess/CorpSearch/CorpDetails.aspx?CorpID=503912

The same search show the sole officer of Frontier Exploration as Donald Sharpe, the CEO of Eden Energy:

https://esos.state.nv.us/SOSServices/AnonymousAccess/CorpSearch/CorpDetails.aspx?CorpID=517445

So, it looks to Stocklemon as if the company bought the drilling rights from themselves in a sweetheart deal, issued a convertible debenture to themselves and NEVER DISCLOSED THAT INFORMATION TO SHAREHOLDERS. To convert that paper (EDNE shares) to greenbacks.

To add insult to injury, if they do happen to find any oil, it says on the Eden Website:

“For each 10 million barrels of proved reserves found, the company is obligated to issue 1 million shares to Fort Scott Energy, to a maximum of 10 million shares”

http://www.edenenergycorp.com/investor.html



…All this without disclosing that true beneficial sellers of the drilling rights are a the CEO of the company and a related party.

This is Fraud. This is an SEC Enforcement issue that must be addressed. Failure to disclose self-dealing violates every principle of corporate governance. It also intentionally misleads the public about the true value of this drilling prospect, which is essentially Eden’s only asset, because there is no process by which the fair value of the asset in this transaction was established.

Is there anything to show there might be oil in Nevada?

The company bases much of their credibility on the words of Dr. Alan Chamberlain. Chamberlain believes there is oil in them thar hills and he has become Eden’s “independent” expert – essentially their credibility. But he isn’t independent either. Eden is partners with Chamberlain through his Cedar Strat operation.

ARE WE SUPPOSED TO BE IMPRESSED ??

On June 14, 2005, the Company, through a newly formed Nevada subsidiary Southern Frontier Explorations Ltd., acquired 50,000 acres of ten-year federal BLM oil and gas leases located in the Great Basin of Nevada, at an average cost of $2.25 per acre. A prospect fee of $750,000 was paid to Cedar Strat in connection with the acquisition of the leases.

So lets get this straight, the company paid $125,000 to acquire the lease and then they paid Cedar Strat (Chamberlain) $750,000 in prospecting fees. And Chamberlain is supposed to be an “independent” expert. It does not take a genius to figure this one out.

Chamberlain also has experience with penny stocks. He is associated with pink sheet issue CLWXF that is trading at .09 cents. http://biz.yahoo.com/bw/050823/235304.html?.v=1

The Promotion

Eden Energy is currently the subject of many newsletter writers. The (in)famous Scott Fraser of the “Natural Contrarian” has sent out a glossy piece recommending Eden Energy. For those of you who do no know, here is Scott Fraser’s experience with SEC Enforcement:

http://www.sec.gov/litigation/admin/34-48544.htm

Meanwhile, the rest of the cast of characters running Eden’s stock promotion was best described in the August 20th article by David Baines of the Vancouver Sun, in which he identifies the other nefarious characters involved in this “scheme”:

http://www.stocklemon.com/files/824200531728PMedne.rtf


Conclusion

Stocklemon has covered numerous Vancouver-based natural resource stock promotions over the years. They all seem to have the same destiny. Stocklemon believes the best predictor of EDNE’s future is the performance of its roommate HOGC. Undisclosed self-dealings, newsletter writers, stock promoters, and 4-color “too-good-to-be-true” brochures of oil and gas finds are the bread and butter, rather than the heart, of Vancouver’s Burrard Street. If the pattern holds true, Stocklemon believes EDNE will separate unwary investors from 90% of their investment dollars.

Cautious investing to all.


Disclaimer:
Stocklemon.com does not guarantee in any way that it is providing all of the information that may be available. We recommend that you do your own due diligence before buying or selling any security. At any times the principals of Stocklemon.com might hold a position in any of the securities profiled on the site. Stocklemon.com will not report when a position is initiated or covered. Each investor must make that decision based on his/her judgment of the market.


| HOME | ARCHIVE | YOUR LEMON | REGISTER | DISCLAIMER | LINKS | CONTACT US |
© 2002 StockLemon.com All Rights Reserved.


http://www.stocklemon.com/report_view.asp?ReportID=43