The Pump for Helmer Directional Drilling Corp (OTC:EXLA) is Confusing

What got us perplexed is that the emails from Stock Mister and the other pumpers read that Helmer Directional Drilling Corp (OTC:EXLA) have quite a lot of mining claims in Washington and Montana. That’s not something new for a promoted penny stock venture, but the fact that those claims are not reflected in EXLA‘s financial statement certainly raised our eyebrows. We had to dig deep to uncover the truth.

Unlike other pumped ventures, EXLA are not big fans of press releases and that’s why the only way to know what really is going on with them is to closely follow the 8-K forms that they are filing every now and then. The one that is most important right now was published on March 20 and it discusses the share exchange agreement, dated March 14, between EXLA and a company called Excelsior Gold Corporation.

The agreement states that the latter will effectively become a subsidiary of EXLA and that Excelsior’s mining claims will be operated by EXLA from now on. That’s good news considering the inactive trading of the ticker so far and especially considering the fact that EXLA have not been able to commence any sort of operations for nearly seven years. Still, we decided to put the rose-tinted glasses aside for a moment and search a bit further to see if we will find something interesting around Excelsior and the people who are running the new subsidiary.

The first thing that we checked was the mines that, the pumpers claim, are the key to EXLA‘s future success. We read on Excelsior’s website that (as the name would suggest) their Great Excelsior Mine in Washington is their most prospective asset. That’s all well and good, but we still decided to search for some additional information about the mine and with the help of the almighty Google Search, we stumbled upon this document published by the Washington State Department of Natural Resources. As soon as you open it, you will see that the Great Excelsior Mine is qualified as “inactive and abandoned”. This would suggest that some time will pass and some money will be spent before any drilling can begin but then again, you never know, EXLA‘s management might just be able to pull off a miracle.

Speaking of management we’ve seen many mergers like the one from March 14 and most of them are followed by shifts in the principal officers’ positions as well as changes in the control of the whole venture. The case of EXLA is no exception.

Because EXLA didn’t have any money when the acquisition was negotiated, they had no choice but to issue some stock in order to complete the merger. The 8-K reveals that the Excelsior’s shareholders received over 1 million Series M preferred EXLA shares. You’re probably thinking: “What does that mean?”. So were we and after reading on, we found that this stock is actually convertible into 302 million common shares. As of the time of the filing (March 20) the number of authorized EXLA shares was just 250 million so they had to file an amendment to their articles of incorporation which would increase that number to 700 million. They are yet to tell us if the amendment has been approved, but they do disclose that as soon as it’s ready, the preferred stock will be converted automatically.

So far, we have quite a lot of red flags around EXLA – a company that has been sitting still for 7 years; “abandoned” and “inactive” mining claims; people having quite a lot of common shares; an increase in the number of authorized stock; promotion by a pumpers with appalling track records etc. Here’s another thing to worry about.

As we mentioned, there was a change in the management team, so it was only normal to see who will be running EXLA from now on. It’s a person called Douglas McFarland. He should be quite good at multitasking since he is also at the helm of another publicly traded entity called Alto Group Holdings Inc. (PINK:ALTO). A quick look at ALTO‘s chart reveals that they have been anchored to the bottom for quite a while and there is a very good reason for this – they were temporarily suspended by the SEC due to some doubts about the legitimacy of their press releases. This has also earned them a place in the Grey Market tier on the OTC Markets website and a skull and crossbones badge.

Both EXLA and ALTO are run from the same office as you would imagine and according to Google Maps, the “office” in question is a residential house in the city of East Wenatchee, Washington. Surely, this must be the best place for running the operations of not one, but two mining companies.