OTC Bulletin Board New Penny Stocks: USA Graphite USGT

Scanning the new penny stocks that are to begin trading Tuesday, we found that two 30 somethings are running the formerly Malaysian based Magnum Oil Inc. (OTC: MGNI) which has changed to USA Graphite Inc. (OTC: USGT). USGT stock will begin trading on the OTC Bulletin Board on Tuesday as one of the new penny stocks not that their symbol change is effective. USGT stock is currently priced at $0.6656 with a market capitalization of 112.75 million. Who is behind USGT and what do they do is what we’re looking to find out but we’re pretty sure there is a connection to Harry Lappa and North Springs Resources (OTC: NSRS) somewhere.

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What’s In A Name

Since 2009, PTM Publications Inc. (OTC:PTMZ) changed to Magnum Oil Inc. (OTC:MGNI) which has now changed to USA Graphite Inc. (OTC:USGT). All three symbols were listed on the OTC Bulletin Board. The name USA Graphite poses the question as to what is it that this Company actually does or intends to do. What we know is that Graphite is not mined in the U.S., but U.S. production of synthetic graphite in 2007 was valued at $1.18 billion. What we do know is who is behind the Company: Patrick DeBlois and Eden Clark, two 30 somethings.

Patrick was listed as the Chairman of the Board, President, CEO, Principal Executive Officer, CFO, Treasurer of Magnum Oil Inc., since October 27, 2010. He was President, CEO, Principal Executive Officer, Treasurer, CFO, Principal Accounting Officer, Treasurer and as Director of the company.  Patrick also has been the Director and Proprietor of the Minakwa Lodge in Northern Ontario since 1999. Note: On December 14, 2009 when Patrick took over PTM Publications Inc. (see here).  The next day, Patrick resigned as Secretary of the Company and appointed Eden Clark as its new Secretary. (see here)

From ’97 to ’01, Eden was a founding team member of Onvia.com Inc. (Nasdaq:ONVI), assisting it in the Company’s growth from a small start-up to more than 300 employees and $140 million in revenue.  From ‘o2 to ’08 Eden Clark was Eden Jarrin before she married, founder, CEO and the sexy half of BeJane.com Inc., a media and web company focused on the niche segment of women’s home improvement and décor, leading breakthrough partnerships on new initiatives with such companies as MSN and Bank of America, and was featured in hundreds of national TV and print media such as TIME, Entrepreneur, People Magazine, Wall St Journal, CNN, The Today Show, and more.  Currently, Eden is President of eDivvy.com Inc., a private payment technology company, leading the company’s strategic initiatives, branding, and business development efforts.

What’s a Resort Owner and a Start-up Guru Doing with USGT?

Since the two took over in December ’09, PTM Publications did a 22 : 1 forward stock split effective May 23, 2010. On July 15, 2010, they changed their name from PTM Publications to Magnum Oil Inc. by way of a merger with our wholly owned subsidiary Magnum Oil Inc., which was formed solely for the change of name. The name change became effective with the OTC Bulletin Board at the opening for trading on July 16, 2010 under the new stock symbol MGNI.

On March 26, 2012, MGNI merged into the Company’s wholly-owned subsidiary USA Graphite Inc., a Nevada corporation, to effect a name change from Magnum Oil Inc. to USA Graphite Inc. On top of that, they approved to effect a 3.5 : 1 forward stock split. So the authorized shares increased from 50 million to 175 million, and the issued and outstanding shares increased from 48.4 million to 169.4 million. Hence, we now have a Company with a resort owner and a start-up guru that has conducted no business for at least over 2 years yet reports timely with the SEC that has a market cap of $112.75 million and almost 170 million shares outstanding.

What We Found

It can’t be an obvious connection since if you ever played “Six Degrees of Separation from Kevin Bacon” it is virtually impossible not to connect him. Well there is only one degree of separation from USGT to NSRS. Yes, North Springs Resources Auditor is PLS CPA, A Professional Corp. (see page F-2), the same auditor who USGT used for their fiscal year ended February 28, 2011 10-K filings. (see here)

That’s the factual connection. The suspicious connection is when researching the new address for USGT (848 N. Rainbow Blvd., #3550, Las Vegas, Nevada, 89107), a connection to a 2005 pyramid scheme which used that same address, as well as various addresses in Malaysia, whereby PIPS offered to Texas residents various investment products including a “5 Year Trust Plan”. Investors pay $175 “for entry” and $25 per month for 5 years. At the end of 5 years, investors purportedly receive a lump sum of $87,017.47 and $9,323.30 per month “for the duration of their life”.

The offering of the investment products came from numerous hyper-linked websites such as www.pureinvestor.com, www.pipsinc.com, www.pipsaid.com, www.pipstrust.com, and www.picpay.com, and fax numbers +606-7981116 and +606-7981156. (see here) The addresses in Malaysia were not the exact same as that of PTM Publications in 2009 but it still raises the question as to why, since Patrick the resort owner took over, has there been two name changes, two forward splits, timely filings, no activity, and what does Eden Clark have to do with all this?

To view all the SEC filings for USA Graphite Inc, click here.

Bottom Line: USGT stock made it to the list of top 10 penny stocks with suspicious activity to watch alongside GTCP, STNT and AGRT. There is no indication anywhere as to what USGT plans to accomplish or focus on for an acquisition target that they mention in every 10-K filed. The name is raising the curiosity to think it all might be very structured to be a graphite fishing rod rental service for the Ontario resort, Minakwa Lodge, but then the USA in the name would be unmarketable for the Canucks. Hmmmmmm.

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