Dragni Dragnev

Is Lithium Exploration Group Inc. (OTCMKTS:LEXG) Going To Recover Now?

by Dragni Dragnev May 18, 2016

Lithium Exploration Group Inc. (OTCMKTS:LEXG, LEXG message board) managed to regain some serious ground on Monday and more than keep its gains in the session that followed – but is this state of developments going to last much longer?

Well, there could be little doubt that this latest surge can be attributed to the hype caused by the company's latest announcement. The news that the company gave investors before the weekend was certainly good, as it proclaimed that the company had made a serious step with respect to becoming a commercially viable entity. Or at least, that's how it appears at first glance.

A more careful reading ascertains that the PR was actually filled with nothing but boasts and reassurances. Yes, the company claims to be making progress – but at the same time, it is still deep in the development stage, with nothing in the way of commercial results to show for all its efforts so far. And, judging by its announcements, this will probably be the case for a while yet.

Meanwhile, its actual financials for the last reported period look positively horrid:

  • Cash and cash equivalents - $14 thousand
  • Total Assets - $40 thousand
  • Total Current Liabilities - $3 million
  • Net loss from continuing operations - $78t thousand

And if you think that's bad, wait until you take a look at the company's share structure statistic:

  • As of February 17, 2015 the company has 686 million common shares issued and outstanding
  • February 25 2015, LEXG performs a 1 for 20 reverse split which brings the company's shares outstanding from1.5 billion to 78.6 million
  • September 30 2105 sees the company perform another 1 for 200 reverse split
  • As of March 22, 2016 11 million common shares issued and outstanding

Investors are also advised to note that those millions upon millions shares were issued at discounts of up to 35% “of the lower of lowest closing bid price of our common shares during the prior 20 trading days prior to 1) the date of the purchase agreement or 2) the day of the notice for conversion”.

This is why investors would do well to be more careful and less hyped up when dealing with LEXG.

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