Borislav Tonev

Blue Fire Equipment Corp (OTCMKTS:BLFR) Descends Gradually

by Borislav Tonev August 27, 2013
0BLFR.pngWe last wrote about Blue Fire Equipment Corp (OTCMKTS:BLFR, BLFR message board) a couple of weeks ago and it's safe to say that things haven't been going quite according to plan since then. On August 14 the ticker was trading around $0.70 per share while yesterday, it closed the session at just $0.55 which means that the losses in just under two weeks amount to around a fifth of the value. What's more, out of the nine sessions since our first coverage, just three ended in the green and yesterday saw BLFR breaking the daily trading volume record when the number of shares changing hands exceeded 1 million.

This could suggest that more and more people are trying to abandon ship while their losses aren't that painful, which is somewhat odd since, at first glance at least, the slow but steady descend seems a bit illogical.

Shortly after our first coverage went online, BLFR published their financial statement covering the second quarter of 2013. While it's by no means perfect, we should point out that the figures in it look much better than the ones found in the report for the first three months of 2013. Here's what we mean:

  • cash Q1: $3 thousand
  • cash Q2: $18 thousand
  • current assets Q1: $36 thousand
  • current assets Q2: $55 thousand
  • current liabilities Q1: $241 thousand
  • current liabilities Q2: $179 thousand
  • revenue Q1: $0
  • revenue Q2: $4,454
  • net loss Q1: $89 thousand
  • net loss Q2: $56 thousand

It's pretty clear that they have managed to improve virtually every aspect of their financial situation over the past three months and even the revenue generation has been renewed. If we have to be fastidious, we would probably point out that they fail to explain why the sales suddenly stopped at the beginning of 2013, but if they turn out to be correct in their predictions about the revenues increasing in the future, everything should be fine.

In addition to this, BLFR entered into a line of credit on July 1 with an entity called Levantera SA and the facility could allow up to $1 million. It's obvious that the cash reserves are rather modest so this sum should give them some room to breathe, but our biggest worry is the creditor itself. The 10-Q tells us that Levantera is a venture incorporated under the laws of the Republic of the Marshall Islands but it would appear that the enterprise has virtually no internet presence outside BLFR's SEC filings and press releases. Even so, we doubt that this was enough to depress the ticker.

Especially considering the steady stream of press releases coming out of the company HQ. Over the last two weeks BLFR made a total of four optimistic announcements. Some of them don't have much to do with the immediate developments around the ticker while others do sound genuinely exciting, but they should have all given the stock a boost.

They didn't and right now, the only reasonable explanation that we can find for this sort of performance is the paid pump that has been going on for quite a while now. The newsletters have kept it pretty quiet over the last couple of weeks, but the $50 thousand landing page designed by Financial Digest is still pretty much alive and kicking. Having in mind the compensations 2AAGC.pngthat some of the email pumpers disclosed, we wouldn't be at all surprised if they start alerting people once again.

On the bright side, BLFR has managed to avoid painful drops such as the one displayed by All American Gold Corp (OTCMKTS:AAGC) but, unfortunately, the ticker's performance is not exactly picture perfect either.

On the whole, unlike a lot of other pumped penny stocks, BLFR do genuinely appear to show some signs of a solid business plan and a management team that is determined to carry it out. The fact that someone is paying money to get people excited in the stock, however, could put a spoke in the wheel. Make sure you have this in mind while making your investment decision.

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