Lessons to Learn.
Still no Nevada filing and to my surprise we did see a 10Q filing. Thank you very much. We have $402,581 of stockholders equity. That number keeps going down; maybe that is KR’s plan. Just me but I think those numbers will get worse, but let’s look at the current numbers.
To get to that $402K equity number, it includes assets of $1.8 million in unproven oil and gas properties (SEC loves to review these numbers) and the $159K in Intellectual property rights (Another area that can get you in trouble with the SEC.) Do your own DD regarding the IP, just look at the SEC filing. It is amazing how some IP can have no value one year, and then when it is discovered the IP that represents value in the filings was lost, that no value IP now carries value. I don’t think the SEC likes creative accounting.
And my favorite, the $160K advanced for the purchase of oil and gas properties dating back to 2010. (Doesn’t make sense to have a deposit for 2 plus years) There is something else going on here! With unaudited financials who verifies the deposit. Would you or anyone give someone a deposit of $160K and let them hold those funds for over two years. I smell something that really stinks!
OK, now take the $1.8 million, the $159K and the questionable $160K deposit out of the assets listed in the 10Q, you now have a negative stockholders equity position of -$1.7 million. Then throw in the reported balances of accrued and unpaid salaries of $198K, that doesn’t paint a very pretty picture does it.
Just think, as a future investor in those unregistered securities KR plans to sell, the first $198K management raises will go to paying that $198K in unpaid salaries. In stock that means, at $.10 cents a share, 1.9 million shares would need to be issued just to pay the unpaid salaries. But we all know KR will discount that $.10 a share value to $.05 a share and that number doubles to roughly 3.8 million shares. What is our current outstanding, 3.19 million shares? Add another 3.8 million; do you think the current holders of Avalon common shares will be real happy about that dilution just to pay management back salaries?
And of course, throw in KR’s preferred shares he claims he owns, of course he gave himself these shares without a vote of the common stock holders, that means another dilution. I know it is amazing that KR finds investors to buy these unregistered securities. And now we find KR just might be selling / pledging unregistered securities, as reported in the 10Q.
“Our financing activities for the six months ended September 30, 2012 provided cash of $65,000 as compared to $167,712 for the six months ended September 30, 2011. We plan to raise additional capital during the coming fiscal year. Cash generated by financing activities represented two note payable of $65,000 from a private investor.”Do you think these notes are convertible?
I had in interesting conversation with one of the two 2012 Avalon IR firms hired. It appears this guy helped raise some money for KR in 2012 and I was told the private investor was not real happy. With 3.19 million issued of the 3.333 million authorized, leaves around 140,000 shares. Do you think that $65K, when converted will push the issued over 3.333 million. My bet, it will!
Also take a look at all of the other convertible notes outstanding, my bet those numbers are not calculated into the issued / pledged numbers, which would be restricted by our authorized at 3.333 million. Selling / pledging shares in a contract, which violates security laws, I would think, would be a No No. Giving yourself 40% of the company, without out a vote of the common stock holders, one would also think, would be a No No. And the icing on the cake, management doesn’t respond to your emails and letters of concern, or at least mine.
So let’s roll the dice, will current common stock holders do anything about it? Now would be a good time for others to contact the Nevada Secretary of State, Securities Division. If you are a resident of Nevada make the call.
