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Valmie Resources Inc (OTCMKTS:VMRI): Run For Cover

Valmie Resources Inc (OTCMKTS:VMRI): Run For Cover
Written by
Aaron Smith
Published on
October 2, 2016
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Valmie Resources (OTCMKTS:VMRI) was incorporated in August 2011. If you read no further than this, run, don't walk, but scamper away as fast as you can from VMRI. Anyone buying and especially holding shares in VMRI is embarking on a reckless, thoughtless, unwise decision that leaves himself wide open to a catastrophe. Why? We'll there are so many reasons. I'm not sure where to start, but here it goes...In 2014 VMRI decided to go into the drone business. They have one subsidiary, Vertitek Inc. (Vertitek), and a 50% interest in a joint venture entity, AeroLift eXpress, LLC (AeroLift). Personally, I love drones, in fact, I'm an instrument rated pilot myself. In my humble opinion, UAVs have the potential to change the world, even more so than they already have. The problem is that VMRI really isn't in the drone business, at all, as evidenced by their own SEC filings.

"To date, we have not generated any revenue through the sales of UAVs or the provision of software, hardware or cloud-based services. As we are still developing our technologies, we have not yet launched our manufacturing, sales or marketing operations and have not yet identified any customers for our systems or solutions."

It seems the only thing VMRI has accomplished is obtaining a 333 Exemption from the FAA that allows its drones to fly the skies of the American airspace whereas others must adhere to the strict policies of the FAA (fly under 400ft, stay in the line of site of the drone, etc).VMRI has recently issued a series of predominantly, preposterous promotional press releases which resulted in its stock price increasing. But, that's not the worst part.Their SEC filings reflect multiple, continuing violations of the securities laws. VMRI's accounting treatment was reversed for its technology and company acquisitions after recent SEC comments - demonstrating the lack of value of VMRI's business. VMRI's SEC disclosure raises significant concerns over $286,000 in "professional fees". And, perhaps, most importantly, VMRI has recently registered shares for selling shareholders and for an equity line offering. Trading volume has recently soared and additional selling is probably on the horizon.Until August 2014, VMRI was exploring for precious metals until their option to acquire an interest in their property was terminated and had been sold to a third party. Note that in its Form 10-K filed with the SEC on March 17, 2015, that VMRI checked the "Yes" box in response to the question of whether VMRI was a shell company as defined in Rule 12b-2 of the Exchange Act (a company with no or nominal operations and no or nominal assets).Under Rule 405 of Regulation C, an "ineligible issuer" is defined to include a "shell company" that is or was a shell company in the past three years. The date to be used in determining the commencement of the three-year lookback is the date of the offering. As a result of VMRI admitting its shell status on March 17, 2015; VMRI is an "ineligible issuer" under Rule 405 during 2016 and 2015.It is illegal for an ineligible issuer to use a "free writing prospectus" ("FWP") as defined under Rule 405. The FWP is defined as "any written communication that constitutes an offer to sell or a solicitation of an offer to buy the securities relating to a registered offering that is used after the registration statement in respect of the offering is filed..."As of May 31, 2016, VMRI had a whopping $13,000 in cash. Really? Total Assets - Total Liabilities leave the stockholder with a loss of $28,000 for the quarter. It's not surprising because, again, in accordance with their SEC filing.

"We have not generated any revenue since our inception. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenue during the next 12 months continues to be uncertain."

In VMRI's April 25 press release, they stated,

"We are pleased to announce that funding is now active and available to us through an equity investment agreement."

That agreement is with Tuverga Finance Ltd., a company headed by Antoine Ratsaphong, Mr. Ratsaphong was previously listed as the Chief Accountant of EHT Corporate Services SA, a Swiss corporate services and wealth management firm. As of today, EHT's website (ehtcorpservices.com) was not functioning.

To top it off, during the three months ended May 31, 2016, VMRI incurred a $266,146 loss on the settlement of debt, all of which was related to issuances of common stock to one creditor below market value. VMRI incurred a $10,404,422 loss on the settlement of debt during the same period in fiscal 2016. That loss was entirely due to issuances of common stock to various creditors that were completed on April 6, 2015, including 3,500,000 shares pursuant to the settlement of various promissory notes at a deemed price of $0.10 per share, which was well below the market price of VMRI's common stock on that day.

This is known in the industry as "death spiral financing" where a company such as VMRI receives money and is forced to issue stock at a significantly discounted price if they are unable to pay back the loan. VMRI was most likely aware that the deal would be likely to be bad for their shareholders.

The stock is presently trading at $1.08. Duck! We will be updating our subscribers as soon as we know more. For the latest updates on VMRI, sign up below!

Disclosure: We have no position in VMRI and have not been compensated for this article.

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