MMEX Resources Corporation (OTCMKTS: MMEX) Looking For Bagholders

Today, we are bring you an update on an old ticker that we've covered in the past. My colleague Alex Carlson has covered the company previously and today I'm taking a fresh look. The company's name is MMEX Resources Corporation (OTCMKTS: MMEX), and is said to be operating in the oil, gas refining and electric power business in the U.S. and Latin America. The company released lately a new 8-k filing and many traders made a lot of money trading it. In this article we explain new information, and we also give some more interesting information about the company that long shareholders may not like. Have a look at the chart:SourceThe company, its developments and the new 8-KMMEX Resources Corporation used to be focused on the exploration, extraction and distribution of coal, but in April 12, 2016 the company changed its business activity to the the exploration, extraction, refining, distribution of oil, gas, petroleum products and electric power. The name of the company was also changed from MMEX Mining Corporation to MMEX Resources Corporation.The most relevant announcement made since the change in the business objective is the announcement of plans to build a crude oil refinery in the Permian Basin near Fort Stockton, Texas. These new plans were subject to the receipt of required governmental permits as well as the receipt of the financing. Additionally, the new project was said to create 400 new local jobs during the construction and 100 permanent jobs once the refinery is fully operational.On March 25, 2017, it signed an agreement with KP Engineering, LP. This company is in charge of studying the scope of the project and after providing a more detailed FEED study, which will provide MMEX Resources with cost numbers and production estimates. It should be noted that the announcement of this agreement was extremely celebrated by investors since the share prices and the volume increased dramatically after the news.After the news the share price increased in a few days form $0.01 to almost $0.06 in three days. Obviously this was very good news, but we believe that traders overreacted to the information. The company does not have the financing yet and the project is also subject to the approval of the government.The share price went back to $0.02 after investors had time to read all the documents of the project and understood all the information. This is what we expected and we were right. However, very recently traders received some information that created again massive volatility in the share price with the last 8-k.According to this new document, on April 13, 2017 MMEX Resources entered into a services agreement with Trinity Consultants, Inc. Under this new agreement the hired company will file all the documents necessary for the crude oil refinery to be approved by the authorities. It is important to remark that the construction of the plant is subject to this approval. Thus, it is a key matter and we understand that investors become bullish on the stock. The share price went from $0.01 to $0.0285 in the same day. This is again an illogical return that we do not understand since the fact that the company hires a consultant to help with the documents does not mean that the project will be approved by the government. Therefore, we believe that again the share price may go up and then once traders fully understand the new information the price will go down again.The fact that the company's share price is moving so much made us believe that someone or the company may be manipulating the share price. We've take a closer look at the company and we found a lot of suspicious facts. Be sure to understand them all if you invest in this company.The company, no employees and only two non-independent directorsThe following is a list of assets that any company is supposed to own. First of all, you expect a company to employ someone. In this case, although the the entity was founded on May 19, 2005, this company does not have any employee. This is from the annual report:

"EmployeesAs of April 30, 2016, we had no employees and our executive officer and our two directors currently do not receive compensation. We contract for all professional services when needed." Source

Additionally, you expect from a 12 year old company to have a proper office in some remarkable area. We used Google Maps to find out the location of the office and we found out the following business where the company was supposed to be: "Austin TX Tanning salon offering UV tanning, spray on sunless tanning." We looked around with Google Maps, trying to find something that may look like an office, but we could not find anything. You can yourself have a look:SourceAlso, knowing that the company is so old, we expected to see that the company had earned its history. The oil and gas business is not a research and development company that expenses in R&D or salaries until it can show revenue. Oil and Gas companies own assets that produce revenues. However, we found out the following in the last 10-k:

"Results of Operations: We recorded a net loss of $2,523,853, or $0.02 per share, for the fiscal year ended April 30, 2016, compared to a net loss of $1,328,445, or $0.02 per share, for the fiscal year ended April 30, 2015.Revenues: We have not yet begun to generate revenues." Source

On the top of it, the company only has two directors on the Board, whereas companies normally have about five to ten directors. Could they only find two directors to sign the documents? But, there is also another thing. We will see that the balance sheet shows no assets at all, but the salaries of the executives are quite generous. Have a look:

• Jack W. Hanks' Salary in 2015: $360,000
• Jack W. Hanks: 1 million options
• Bruce N. Lemons: 500,000 options

In addition, the percentage ownership of the directors in the company is astonishing:

• Jack W. Hanks: 44.02%
• Bruce N. Lemons: 15.21%
• Total directors: 58.01%

These directors are doing every single trick to enrich themselves. Here are some examples:- Creating consulting agreements with themselves:

"On September 4, 2010, MCCH entered a consulting agreement with Bruce N. Lemons, one of the Company's two directors, for a two-year term, automatically renewable for one-year terms thereafter, at an annual compensation of $170,000 per year. The agreement was cancelled effective May 1, 2015." Source

- Employment agreements:

"On September 4, 2010, MCCH entered into an employment agreement with the Company's CEO, Jack W. Hanks, for a two-years term, automatically renewable for one-year term thereafter, at an annual compensation of $300,000 per year. The agreement was cancelled effective May 1, 2015." Source

It is obviously impossible that the Board of Directors remains independent, given the existence of these contracts. Therefore following is noted in the annual report:

"The Board of Directors has determined that Mr. Lemons is not "independent" as such term is defined by the listing standards of Nasdaq and the rules of the SEC since he is a major shareholder and a consultant to the Company. Mr. Hanks is not "independent" since he is an employee of the Company." Source

What does it mean? Is the Board of Directors not independent? It means that these directors have failed to represent the interests of the shareholders. They are not truly working for the interests of shareholders, but for their own interests. If you want to be clear, the fact is that these people founded the company with only one purpose; get money from retail investors.Balance sheet and tax haven locationOther interesting thing that we found in this company is the balance sheet. This company is mainly used to manipulate other subsidiaries located in tax havens. Thus, the amount of assets is close to zero to pay very little taxes and the amount of liabilities is very high in order to reduce the final net income. This is a list of the assets and liabilities as of April 30, 2016:

• Cash: $1,030
• Total Assets: $1,416
• Total liabilities: $2,803,115

Here is the list of subsidiaries that include two companies located in the British Virgin Isles, which is a fantastic location if you want to disclose any positive net income:MCC Merger, Inc. (“MCCM”)100%CorporationDelawareHolding SubsidiaryMaple Carpenter Creek Holdings, Inc. (“MCCH”)100%CorporationDelawareSubsidiaryMaple Carpenter Creek, LLC (“MCC”)80%LLCNevadaSubsidiaryCarpenter Creek, LLC (“CC”)95%LLCDelawareSubsidiaryArmadillo Holdings Group Corp. (“AHGC”)100%CorporationBritish Virgin IslesSubsidiaryArmadillo Mining Corp. (“AMC”)98.6%CorporationBritish Virgin IslesSubsidiary

Source

Have a look at the fantastic amount of money that Armadillo Holdings Group and Armadillo Mining Corp pay in this location, I give you a hint; zero:

• no capital gains tax,
• no gift tax,
• no sales tax or value added tax,
• no profit tax,
• no inheritance tax or estate duty, and
• no corporation tax. Source

ConclusionWhile many were excited by the 8-K, we saw nothing but caution. The 8-K was crafted by some very good lawyers. Here are some highlights:

There can be no assurance that the Company will be successful in its efforts to obtain the requisite permits.The Company has entered into confidential discussions.On February 27, 2017 the Company entered into a confidential engagement letter.The Company has entered into confidential discussions with investment banks.There can be no assurance that the Company will be successful in its efforts to complete any or all of these engagements.

To read our prior coverage of MMEX, click here. Our last article on MMEX came out when the stock hit its highs. Our opinion remains the same - MMEX is nothing more than a share issuance scheme designed to enrich insiders and that no refinery will ever be built. Buyer beware!We will be updating our subscribers as soon as we know more. For the latest updates on MMEX, sign up below!Disclosure: We have no position in MMEX and have not been compensated for this article.