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Global Resource Corporation: Needed Technology; Unanswered Questions About Management

On July 3, The Energy Blog told us about a process of turning old tires back into valuable oil and gasses.  Given the problems of Peak Oil and plastic waste which can mimic almost anything in the environment, I was intrigued, and I had the feeling that other watchers of the alternative energy space would be, too.  After a quick review to make sure that the technology was based on sound science (I believe it is, although that is no guarantee that it can be commercialized), and a search for information about their governance policies and a board list (which I did not find), I noted that they have all their SEC filings available on their website, which I took to be a good sign.  I bought small amounts of the Global Resource Corporation (GBRC.pk) stock for several of my more speculative clients (at prices between $2.20 and $2.35), based on the intuition that I would not be the only one to see the potential for this technology, and that others would write about it.  I expected that the favorable press would drive up the price of the stock.   

Phone Tag

I then began more in-depth research.  If the company turned out to have a quality management team, who I felt would be able to realize the true potential of the technology, I fully intended to take substantial positions in all my managed accounts for which the company would be appropriate.  I began reading through their SEC filings, and sent an email to their general inquiry line, asking for management bios and any governance documents they had adopted.

Two days later, I heard back from Jeff Andrews, Global Resource's CFO, but not with the list of the Board of Directors and bios I had requested, but rather with a request to call him "next week."  "Next week" passed with a game of phone tag, and eventually I set up (by email) a phone appointment with him the following Tuesday, the 17th.

Cause for Concern

In the meantime, I had had a chance to review the SEC filings (the most interesting reading is their most recent 10K), and gleaned the following information:

  1. Global Resource was the product of a reverse merger between blank-check company Advance Medical Technologies Inc. (formerly Email Mortgage.com Inc.) and Carbon Recovery Corporation, a company which inventor and current CEO Frank Pringle had created in the hope of commercializing the technology he had invented while at Mobilstream Oil.  
  2. The only members of the board of directors of GBRC were Frank Pringle, the CEO; Jeff Andrews, the CFO, and Frederick A. Clark.  Since Mr. Clark is "representing the company in Pennsylvania for matters with respect to the proposed tire disposal facility," there are no independent board members.
  3. The list of related party transactions is quite long, with a complex web of interrelationships between GBRC, Molbilstream Oil, and Careful Sell / PSO Enterprises, all of which seem to be controlled at least in part by Mr. Pringle.
  4. The company had been negotiating an acquisition of some unknown company, but the deal had fallen through, and GBRC had terminated a private offering (at some expense to themselves) with which they had been planning to fund the acquisition.  This deal could possibly have been the reason I had been having so much difficulty speaking with Mr. Andrews.
  5. GBRC had retained the services of QualityStocks.net, a somewhat spammy internet promoter and purveyor of stock newsletters.  While this may be a smart move for a company hoping to pump up its stock price in anticipation of a secondary offering, it is not something I would expect of a company planning to preserve its long term reputation.

Missed Appointments

On Tuesday, I called Mr. Andrews at the appointed time, and was put directly through to him by Global Resource's front desk without having to identify myself.  He claimed to be pressed for time, and asked if we could reschedule for the next day.  Due to my calendar constraints, we settled on Thursday.

His continued unavailability, along with the unaddressed concerns raised by my research made me decide to sell GBRC in all accounts.  Fortunately, my prediction of a small flurry of interest in the blogosphere had been accurate, and I was able to sell at prices near $5.  I reasoned that if Mr. Andrews were able to adequately address my concerns, I would be able to buy the stock at lower prices when interest inevitably shifted to the next hot technology.  If he could not, there was no reason to hold the stock now that it had already received the expected media attention.

On Thursday, I again called at the appointed time, and was again passed through to Mr. Andrews without difficulty.  He asked if I could call back in two hours when he "had more time."  I asked, "How much time do you have now?" to which he replied, "Two seconds, I'm with my accountants, and trying to get them out of here."  The line then went dead, as did any remaining interest I had in the company.  I decided to write this article without speaking to management.

Further Concerns

Later, when I had time to read through Global Resource's most recent 10K more thoroughly, I found several other worrysome items.

  1. The company dismissed its accountants in November 2006.  The auditors had questioned the company's ability to continue as a going concern.
  2. In their Sarbanes-Oxley compliance statement, Mr. Pringle and Mr. Andrews had raised concerns over the lack of sufficient written
    policies and procedures to insure the correct application of accounting and financial reporting requirements, as well as a deficiency in internal controls relating to a lack of segregation of duties.  While they have hired an accounting firm to help them remedy these weaknesses, Mr. Andrews had not provided me with any information in this regard in response to my initial request asking for governance documents.
  3. The company does not currently have a code of ethics.
  4. The company is the subject of a lawsuit arising from its former incarnation as Advanced Healthcare Technologies, alleging the company "fraudulently induced the plaintiffs to convert certain debt to equity in the Company, which equity has subsequently become valueless."  While this lawsuit does not concern the actions of current management, it raises concerns about the level of diligence of current management in their planning for the reverse merger.  There are also obviously concerns that the lawsuit might be successful, although management "does not believe that any judgment, or any settlement of the litigation, will have a material effect on the profit or loss of the Company."
gbrc.png

Perhaps, if I had spoken with Mr. Andrews at length, he could have allayed my concerns.  However, I am also concerned about his lack of availability in itself.  

On Friday, I tried to short the stock at $5.10, but was unable to do so.  It has not been above $5 long enough to be marginable.

UPDATE: I recently received an email from a UK citizen who feels his family has been the victim of a boiler-room scheme involving Mobilestream Oil and Global Resource Corp.

DISCLOSURE: Tom Konrad and/or his clients do not currently have positions in GBRC.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.



was posted on AltEnergyStocks.com.


       

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Comments

Hi Tom. I remember this gbrc showing up on thefrasierdomain's blog when the Dept of Energy supposedly included them in a study. I questioned microwaving metals as a remediation policy, but was rebuffed by another blogger who said the frequency could be tuned. I went humm and left it there. Then I saw their proof of concept video and there was one guy in a labcoat cooking black shreds of something in a beaker in some sort of square oven and extracting liquid after some minutes. I had forgotten about it until now. As if it was not hard enough for alt energy, with our investment banks spending billions on the like of Japanese corials makers instead of here on what matters. But that dig aside, we must really screen this flim flam with our own eyes carefully. There is tremendous promise for pyrolisis remediation, and I think startech may be on to something. I keep meaning to go up there and visit, since I'm in Connecticut, but I have seen them in the NYT, so I think they are legit.. if so, just grossly underfunded by the cheez whiz geniuses and the decider in chiefly stupid.

Best wishes.

I've recently been thinking that pink sheet stocks are the worst when it comes to governance... private equity investors do extensive due dilligence, and listed companies have the SEC and numerous analysts looking over their shoulders... but pink sheets and over the counter stocks are a no mans land: not big enough to draw the interest of analysts, but already public, so the private equity investors don't bother, either.

As GBRC and others show, careful due dilligence is called for, but this also means that there is the potential for massive gains for those willing to do their homework.... the best gains are always available where there ae the fewest eyes.

The ironic thing is that it's so easy to tell the good from the bad by just reading the SEC filings carefully.

I joe A Pringle invented the process that Frank Pringle claims he is using in 1976 and filed with the department of commerce for evaluation. I also published in 3 newspapers, I checked with the patent office and they tell me that the process is in the public domain as I did not file for a patent within 1 year of publication. I informed Frank Pringle and Hawk and thier attorney of this in 2006.My company has a patent #7101464 for whole tire processing.I experimented with coal, wood, oilshale, oil sands, and other hydrocarbon material.I have not gone public with my company until my research is complete. We have tested a unit in Missouri with sucess.I have informed the patent office with documents filed with DOC. Sincerely Joe A Pringle Tire Chef Inc.

Can you say DEPARTMENT OF ENERGY? If this is such a bogus company why would the U.S. Government have them listed on their Web site? Also, why would so many prestigious organisations choose their technology for their publication? Just visit http://finance.yahoo.com and look up gbrc.pk and have a look at all of the awardss.

The DOE does many things. Analysis of corporate governance is not one of them--- TK

I was researching info on Michael Pol, mentioned in today's NYTimes as working for GRC: "Michael Pol, a labor recruiter in Mississippi whose company is Global Resources," etc. (Source:"Workers on Hunger Strike Say They Were Misled on Visas," NYT online, 6-7-08).
Your site provides some of the most important and useful available on this company -- thanks very much for your service and to all those who gave their input.

Your experience with GRC apparently reflects the company's predilection for deceptive business practices. This doesn't necessarily make them unique of course --
they just seem to have been quite unconscionably exploitative of their already impoverished employees.

Nina

PS: the link to the lawsuit (i.e. to the actual docket file) against Pol & friends:www.splcenter.org/legal/docket/files.jsp?cdrID=72&sortID=0

Perhaps the only thing GRC is interested in is selling their technology off to a real company?If their process is reliable and cost effective,you can bet many companies will be in contact with GRC.Mr.Pringle and Mr.Andrews might be more interested in marketing their product than running the company

The USPTO has issued an Office Action for Global Resource Corp patent
application 11/610,823

Instead of being threatened with a lawsuit for commenting, why don't
you investors read the Office Action for yourself. Go to
http://portal.uspto.gov/external/portal/pair Type in the verification
code, then type in 11/610,823 Under "Image File Wrapper" will be the
six page Office Action.


Why do investors invest in patent pending when there are plenty of
patented technologies in need of financing?

Since Mr Pringle who invented this process
has left or forced out of GRC what has happen to him has he gone to start a new
company.

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