Golden Edge Entertainment Inc (OTCBB:GDEE) Stalls After the Pump

Golden Edge Entertainment Inc (OTCBB:GDEE)’s history is an interesting one. The company was born after another OTC enterprise, Spicy Gourmet Manufacturing Inc (OTCMKTS:BNBI), filed for Chapter 11 bankruptcy. Initially, GDEE was supposed to inherit Spicy Gourmet’s rather unsuccessful business, but in 2013, the people in charge came up with a better idea.

They decided that instead of selling condiments, they’ll try to make an impact on the entertainment industry. Sadly, while their idea might still sound interesting to some people, we can safely say that they haven’t done enough to put it into motion. Two full years after deciding on their new business plan, GDEE had the following financial statement to show:

  • total assets: $20,000 held in an attorney’s trust account
  • total liabilities: $8,553
  • NO revenue
  • quarterly net loss: $7,860

The fact that they’ve spent the past couple of years doing virtually nothing doesn’t mean that this will continue in the future, however. On Sunday, GDEE announced that due to the shift in consumers’ tastes and preferences, they’re forced to think of new ways of catering to the entertainment industry which is why they’ve established an augmented reality division. Apparently, it will deal with the production of interactive billboards and magazine ads.

The dismal financial statement and the fact that the press release was suspiciously well-timed with a few promotional emails from newsletters tied to Elite Penny Stocks didn’t deter investors one iota. On Monday, they pushed GDEE on a run that will be remembered for quite some time. Although the volume was not too substantial, the ticker managed to gain an astonishing 90% and it finished the first session of the week with a price of $1.18 per share. Sadly, just twenty-four hours later, it stopped at $0.99 (16% down). Time to see why it lost its footing.

We all know that the pumpers aren’t really experts when it comes to supporting a penny stock for long, so the drop isn’t really that much of a surprise. Promotions have another nasty side effect – they attract short sellers. There was at least one person with a short position and he decided to make his life easier by writing a negative article about the company on one of the popular financial websites which probably had an effect on yesterday’s stock performance.

Just as pumpers can’t keep the stock up for long, however, short sellers can’t keep it down forever (provided that the company is solid, of course). Discounted shares, on the other hand, can cause permanent damage and sadly, this is exactly what might be flying out of GDEE‘s printing press at the moment.

Several years ago GDEE issued 5 million warrants which were initially exercisable at prices ranging from $3 to $6. For reasons that are not particularly clear, their terms were modified in March which means that the warrant holders can now turn their warrants into shares at $0.05 apiece. The warrants will expire on November 19 so the warrant holders might be in a hurry to book their amazing profits. Some of them are, by the way. On March 24, about 400 thousand shares were issued at $0.05 per share as an exercise of warrants.

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