Dragni Dragnev

GulfSlope Energy Inc. (OTCBB:GSPE) Back In The Red

by Dragni Dragnev May 29, 2014

GulfSlope Energy Inc. (OTCBB:GSPE, GSPE message board) had an good run a few days back, but predictably failed to keep its impressive 47.54% gain.

It wasn't really a surprise when GSPE continued the descent that was kicked off by the filing of its latest financial report, for the period ended March 31, 2014. It is well known that GSPE is a development-stage OTC mining company, and low expectations are in order in light of this fact. However the numbers in the report that the company gave its investors are disconcerting to say the least:

  • Cash - $6.7 million
  • Total Current Assets – $9.2 million
  • Total Current Liabilities – 17.9 million
  • Revenues since inception, 12 Dec 2003 – $9 THOUSAND
  • Net Loss for the quarter ended march 31 - $1.9 million
  • Net Loss for the six months ended march 31 - $4 million
  • Net loss since inception - $23 million

As it is now, the company has some serious cash on hand, which is always good. However, GSPE is not making any revenues and its liabilities total at twice the amount of its assets. A quarterly net loss of $2 million seems bearable, especially by the standards of the OTC Markets, but the fact that the company has lost eleven times that amount over the years is simply ridiculous. And that's not all.

As the aforementioned 10-Q clearly shows, GSPE is in the habit of funding itself through issuance of shares. Page 10 of the report is full of clear examples of that happening, and since the company currently has 625 million shares outstanding and 750 million authorized, there is clearly still room for dilution. It may be a good idea for investors to watch out for that.

On that note, it turns out that in the end of 2013, GSPE has issued a ten-year option of purchase for 2,000,000 shares of the Company’s common stock at an exercise price of $0.12 per share to its vice president. For comparison, GSPE was traded at $0.710 when yesterday's session's final bell caught it.

Once all these red flags are taken into account, it becomes clear why the company is currently continuing its decline.

Another company with disappointing financials that fell yesterday is Microelectronics Technology Co. (OTCMKTS:MELY), who slid no less than 16.13% down the charts in just one market session.

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