Dragni Dragnev

Gold Lakes Corp. (OTCMKTS:GLLK) Blasts Off

by Dragni Dragnev July 14, 2016

Gold Lakes Corp. (OTCMKTS:GLLK, GLLK message board) announced yesterday that it has assured that investor value is safe from dilution in the near future, and promptly went up.

The news of the Share Lock-Up Agreement was universally taken as excellent news... But was it really? A closer look reveals that the only people this agreement affects are the “company officers, and advisory board”. Every other note-holder will remain free to convert notes and dump the resulting shares on the market at any time they see fit.

So while GLLK's boastful announcement was indeed well received, there's no guarantee that the company's latest move has actually done a lot to keep investor value safe.

Additionally, even if GLLK's officers refrain from converting and dumping their shares on the market, this doesn't change the fact that the company has $539 thousand worth of convertible notes that can eventually be turned into shares of GLLK common stock “at a rate of 50% of the lowest trading price of the shares over the previous 20-day trading period”. Even if that threat has been postponed by 120 days, it has not been completely erased from existence. What's worse is that debt currently outstanding is not the only thing threatening investor value – the last reported quarter has seen millions of GLLK shares issued at a rate of $0.001 a pop. Those shares are still unaccounted for, and for all we know, their holders may dump them on the market at any moment.

That's something investors should definitely keep that in mind.

And speaking of things that investors should keep in mind, at this point it would probably be wise to address the elephant in the room. We are, naturally, talking about the gross discrepancy between GLLK's absurdly bloated $46 MILLION market cap, and the company's lack of actual achievements to justify it.

Suffice it to say that GLLK's latest financial report looked like this:

  • Cash - $14 thousand
  • Total Current Assets - $78 thousand
  • Total Current Liabilities - $1 million
  • Quarterly Net Loss - $654 thousand

So let's recap. Suspicious OTC Markets underachiever jumps on a rather unconvincing announcement that it is going to try and stall the flooding of the market with cheap shares of its common stock. It seems like there is but one way that this state of developments could unfold – and the most likely outcome is not a pretty one.

Let the buyer beware.

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