(Kitco News) – Nilam Resources (NILA) is wading into the crypto waters as the investment holding company announced it has signed a letter of intent with Xyberdata Ltd to acquire 100% of the common stock of a special purpose entity that will hold 24,800 Bitcoin (BTC).
The special purpose entity will be established under the name MindWave, and Nilam Resources plans to issue a newly authorized Preferred Class of Series C Stock in exchange for the Bitcoins, which will be offered at a discounted rate relative to current market prices.
Nilam Resources will control 100% of the capital stock of MindWave and will hold the 24,800 Bitcoins, along with “other assets,” as collateral to raise capital for investment in high-yield generating projects.
The shareholders of MindWave will exchange their equity interest in the company for the newly issued Preferred Shares of Class C stock authorized and issued by NILA.
“The new class of Preferred Stock (Class C) is expected to comprise a number of preferred shares of the Company, entitling holders to conversion rights upon listing on NASDAQ or another national exchange or other defined liquidity events,” the release said. “These shares will be issued pro rata to the shareholders. All shares of Preferred Stock Class C issued pursuant to the transactions contemplated hereby shall be considered ‘restricted securities,’ as defined in Rule 144 under the Securities Act of 1933, as amended.”
“The Company and team have been working diligently over the last several months to finalize all agreements and due diligence necessary to proceed to a legally binding Letter of Intent,” said Pranjali More, CEO of Nilam Resources.
3/27 Update:
After this story was originally posted, concerns related to this announcement were identified, with the OTC Markets Group flagging the announcement as a “public interest concern” after its share price increased 1,700% on Tuesday.
OTC Markets Group runs OTC Pink, the platform for over-the-counter stock trading where NILA trades, currently labels Nilam Resources (NILA) as “Caveat Emptor” — a designation it hands down to companies it deems worthy of “buyer beware.”
A further explanation said this “public interest concern” may stem from a spam campaign, questionable stock promotion, any known investigation of the company, regulatory suspensions, or any other disruptive corporate actions.
NILA has also been labeled as a “Shell Risk,” which is a term given to companies that are identified as potential shell companies based on annual financial data and other income-related metrics.
Data from OTCMarkets shows that in the wake of the announcement, NILA’s price surged 1,700% to hit a high of 33 cents, up from 1.8 cents last week, but fell back to Earth on Wednesday and trades at a price of 0.0125 at the time of writing.
