History
A Nevada mining shell that never explored became a Florida beverage distributor in 2010, burned through its $2.09 million raising, then went quiet under SEC pressure.
2009-2010: From mining shell to beverage plan
Blue Gem Enterprise began as a Nevada mineral-exploration company, incorporated in 2006, whose only asset was the Golden Prince mining claim. It never started exploration work. On July 29, 2009, Belmont Partners, a firm that specialises in taking control of dormant shell companies, bought 76.63% of the shares. The founders resigned, which effectively ended the mining plan.
Belmont did not hold the stake for long. On October 15, 2009, it sold its 82,236,850 shares (76.68%) for $235,000 to Allan Sepe, a career cruise-line beverage buyer, who became CEO and Chairman. Anthony Dervali became CFO. A 16.44737-for-1 forward share split was approved, and the company turned to non-alcoholic Direct Store Beverage Distribution, meaning delivering drinks straight to retail stores.
On December 15, 2009, Blue Gem signed a non-binding letter of intent to merge with Title Beverage Distribution, the exclusive South Florida distributor of Title Sports Drink to more than 1,500 stores. A press release called it an acquisition, though it was not yet one. Losses jumped to $252,768 for the quarter ended February 28, 2010, from $7,463 a year earlier.
2010-2011: Title, cash burn and SEC pressure
Blue Gem raised $2.09 million from 11 accredited investors between April and July 2010. By its annual report in September 2010, most of that was spent and only about three months of cash remained. The annual report confirmed Title had become a wholly-owned subsidiary and that the mining claim was being allowed to lapse rather than pay the roughly $140 annual fee. Blue Gem's own loss for the year to May 31, 2010 was $175,292, while Title lost $475,017 in its first eight months. Walgreens and Publix were its main retail customers.
An amended report described Title's supply deal with Electric Beverage Company: $1,015,000 in product pre-payments plus roughly $800,000 in further advances. Blue Gem forgave $100,000 of Title's debt in return for eased minimum-purchase terms and a longer distribution term.
The share exchange agreement was signed August 13 and closed September 14, 2010. On September 24, Blue Gem corrected about eight months of press releases that had presented Title's deals as its own. Its quarter ended August 31, 2010 already included Title's results, showing a loss of $311,559 and total assets of $1,122,425.
Then the filings stopped. In March 2011 the SEC noted that the quarterly report due January 14, 2011 had not been filed. It also flagged an industry code still reading metal mining and a share split not restated in the accounts. On June 14, 2011, the SEC said Blue Gem had never substantively responded, set a June 28, 2011 deadline and warned it could release the correspondence publicly. That was the company's position at the latest record.
Written from the 10 story beats below (2009 to 14 June 2011), which come from the company's own announcements and filings.