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MGX Minerals (MXG.C) boardroom spat is high comedy, but is it time to feast on the bones?

Lorks o’ lordy, the ongoing boardoom feud at MGX Minerals (MXG.C) continues to play out in the law courts with a story published on Stockwatch today laying out the latest in that company’s directorial kerfuffles, which have taken the company from a roundly pumped vehicle of investor profits to a steaming pile of horse pucky and allegations that go well beyond the usual disagreements on corporate strategy and who’ll foot the bill at Hy’s.

Stockwatch’s Mike Caswell reports:

MGX Minerals Inc. directors Lyndon Patrick and Michael Reimann say that they fired the company’s chief executive officer, Jared Lazerson, for self-dealing and for misusing company money. Among other things, he transferred $500,000 of MGX’s money to a numbered company for no legitimate purpose and used $1.6-million of MGX’s money to pay for a personal bodyguard, the men claim. As they see things, his actions amounted to a breach of duty.

To paraphrase the great author, F. Scott Fitzgerald… ‘fuck a duck.’

Such accusations are not a great look to be hung out in public like ones just-rinsed dungarees, but let’s be clear on the matter; Lazerson invited this public bout of fisticuffs when he took the two aforementioned board members to court, complaining about earlier news releases issued by the pair on behalf of MGX, that claimed Lazerson had been fired by the board.

MGX claimed that the news releases were not authorized and that Mr. Patrick and Mr. Reimann had breached their duty to the company. MGX also made it clear that Mr. Lazerson remained CEO.

Quick rewind for folks who are new to this Faustian farce; Several months back, Patrick and Reimann attended an MGX board meeting looking to remove Lazerson from his position for, among other things, blowing through loads of money on his own security detail, personal drivers, and a home-based security office. The malodourous condition of MGX’s stock price over the previous 18 months probably wasn’t far from the argument, if we’re being honest.

The unspoken reason for this spending on footmen and Praetorian guards was that Lazerson had been reportedly bounced off his bonce in a hotel restroom by someone who hadn’t appreciated his business acumen. Turning up around town with a pair of shiners and the world’s shortest bodyguard, Lazerson leaned into his security detail, not hiding out but rather turning out, all over the usual Howe Street haunts, buying steak and drink for anyone who showed up not looking for fisticuffs, and seeming more than a little proud that he required a team of assistants talking into wristwatches, saying thinks like ’10-4′ and ‘over’ a lot.

Lazerson has never been short on confidence, nor on his position in the world, but that was fine as long as the share price on MGX was tilting skyward in an algorithm that saw him raise money for promo fast enough that his market cap rose in increments higher than his financing totals. But when profit-taking sent things the other way, regardless of promotional spending budgets, MGX quickly shifted from dealmaker to ditherer.

Others may have laid low as bloodhounds sought to catch one at the restroom stall with fists akimbo, but not Lazerson. He’d started with nothing and made himself a wealthy man and, by gum, he was not about to be denied his victory lap by aggression in the water closet.

So he rented a posse, as the kids say, going nowhere without two strapping lads that ensured all who came close were of good intent.

This action did not come without cost.

The board of Lazerson’s company voted on the matter and came up 2-2 in a motion to fire the CEO who appeared to be firing company money in all directions like a teenager with a potato cannon.

Patrick and Reimann considered that to actually be a 2-1 vote, because one of the dissenting board members was Lazerson himself, an individual they considered to be conflicted, due to the vote being about his job, and thus ineligible to be heard on the matter.

At this point, the meeting was abandoned, and Patrick and Reimann sent out a news release announcing the firing, while Lazerson responded with one of his own, claiming he was not fired at all, that it was just a flesh wound, and that Patrick’s and Reimann’s mothers smelled of elderberries.

What followed in subsequent weeks was folly of the highest order. Vaudeville wishes it had comedy troupes with this much ability to make an entire city weep with giggles.

Read from the bottom:

I mean, Christ the Redeemer, the only thing funnier than the judge’s headline punchline is the dropping stock price at every step of the way.

Today’s court activity went into more detail than had previously been exposed.

They claim that prior to the meeting, they learned that Mr. Lazerson had been misusing the company’s money. In particular, he paid $500,000 to a numbered company, 558396 B.C. Ltd., for no legitimate purpose, they claim.

Yours truly can confirm that company is attached to a local financier/stock promoter who has been providing market awareness services for several years through that company. While the company may charge exhorbitant fees for what it does, there’s nothing obvious to suggest anything fraudulent in money being moved to that organization.

The board members, however, may be privy to more information than we. And they’re accusing Lazerson of far worse.

Mr. Lazerson also engaged in self-dealing through a $5.55-million payment, the men claim. According to the response, he transferred MGX shares to his spouse, Lisa Woykin, and then spent $5.55-million of MGX’s money on promoting the stock. The money allegedly went to Charged Investments LLC of Arizona, doing business as “Bull Market Picks.” The promotional effort allowed his wife to sell the shares at a higher price, the response states.

To quoth the parlance of the times…. ‘Oof.’

That Bull Market Picks was paid by the company is confirmed by OTC documentation. What they received in return was… well… negligible, since neither the BMP website nor Twitter account has published anything since mid 2018.

The BMP website vows it’s not just another scam:

If the Stock Market were the United States, there is no doubt that the Penny Stock Market would be considered the Wild West. There is no doubt the Penny Stock Market has turned average investors into millionaires. However, many Investors have fallen prey to the bad newsletters, irresponsible companies, manipulative market makers and more. Well….Its time to FIGHT BACK!

And you know that’s real because look at all of these… logos… from companies they have nothing to do with…?

Look, it has the Google and everything!

And they just can’t help but find winners!

Such gains!

RushNet Inc. (RSHN)!

OMG wins!

PotNetwork (POTN):

Back to Stockwatch!

Another misuse of company money, as set out in the response, involved the hiring of a personal bodyguard for Mr. Lazerson. The response does not provide any details of the service, but it does say that it cost the company $1.6-million. In addition, Mr. Lazerson allegedly used MGX’s corporate credit card for $15,000 per month in personal expenses, without seeking approval of the board.

Mother Mary on an inflatable boat, if there’s even half a truth to these accusations there’s not just reason to dispose of the CEO, but also questions to be asked as to how it took the board so long to spot the pilfering.

Here at Robber Baron Industries, we have nothing bad to say about an executive who feathers his own nest as his company burns, especially if the board of directors don’t spot it for 18 months and several AGMs pass without any investor showing up to question the custom Jackson Pollock portrait of the CEO in the lobby and the copy room filled with Faberge eggs.

I’ve never been an investor in MXG but I’ve existed in Vancouver for a hundred years and, as such, am aware of Lazerson by virtue of countless stories shared by friends of his and otherwise.

MGX has never been a secret. What it has been, is a long fuse on a short stick of dynamite, one that currently is, like a certain executive on a Friday night, ‘mid-blow.’

As vulture capitalists of corporations in their death throes, MGX is worth considering in as much as, it’s likely there’ll be either evidence of fraud and self dealing exposed soon at the company, which will see the CEO frogmarched out of the office by authorities, or there won’t be such evidence, but the share price will find its way low enough to warrant a fire sale of assets.

And there is a long list of assets to be rifled through, at least if you believe the investor presentation.

Geothermal, petrolithium, gold, magnesium, silicon, gasification, zinc-air batteries, wastewater treatment, lithium.. why it almost looks like a company that grabbed at anything it could find that might run the stock a little.

Is any of this worth money in a fire sale right now?

Nah. Looking through the deck, it’s resplendent with phrases like, “has the technology to” and “will soon” and “has the potential to”.. we like to see something actually doing business, especially at a time like now, when there’s so much old rope for sale elsewhere.

Today, at $0.11, MGX holds a market cap of $15.4 million. That’s down from $100 million earlier this year.

My assessment it you’ll get it cheaper in a month. And the CEO will happily sell it to you.

Yours faithfully,

Dogsworth J. Taint, Esq.

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