Falconridge Oil Technologies Corp (OTCMKTS:FROT) Submerges Below $1 Per Share

Imagine the scene: you are roaming around the internet, looking for the next solid investment opportunity. You accidentally end up on a landing page where a man by the name of Charles Moskowitz tells you that he’s got exactly what you’re looking for. He says that if you buy Falconridge Oil Technologies Corp (OTCMKTS:FROT) today, “the profit surge might not stop”. “Sounds good enough”, you’re thinking, but you’re a diligent investor and you know that putting any money on the line before doing the proper amount of research is never a good call.

So you open FROT‘s latest 10-Q and you find out that on August 31, the company had less than $1 thousand in the bank and a working capital deficit of nearly $1.8 million. You also notice that your local gas station is registering more revenues than FROT.

What do you do? Do you walk away? Or do you disregard the terrible financials and jump in just because Mr. Moskowitz told you that you should?

The first option seems like the more obvious choice, but unfortunately, logic isn’t always the governing factor in Pennyland. That’s how FROT appeared on the radar.

The hype and excitement created by the aforementioned landing page prompted many people to start buying. The volumes picked up in mid-October and although FROT kept things quiet on the PR front, the stock embarked on a relentless climb. In a matter of exactly twenty days, the ticker managed to surge from just $0.80 per share all the way to $1.22.

At this point, we should note that some people probably knew what was going on and, provided they timed their trades well, they managed to exit their positions with some healthy profits. Others, however, put too much trust in Mr. Moskowitz promises of wealth and fortune and they ended up badly burned.

The rather horrific crash started during last Thursday’s session when FROT slipped by around 2%. Friday saw it wipe out about a tenth of its value and yesterday, another 28% was annihilated which means that the ticker is currently sitting at $0.76 per share. Judging by early trading today, it might take some more hits.

In other words, some unlucky people saw more than a third of their investments go down the drain after just three trading sessions. The question that we always ask when something like this happens is: “Was all this avoidable?”.

Of course it was. As we noted at the beginning of the article, the aforementioned unlucky people had the opportunity to open the latest financial report and see that FROT isn’t really the company Mr. Moskowitz is presenting in his colorful landing page. Some more digging around would have revealed that back in 2008, a few investors bought a total of 19.5 million common shares for just $65 thousand (which, by the way, is something we touched upon nearly two weeks ago).

There’s no shortage of angry investors around the message boards who are now arguing that it was the SEC’s job to put an end to the whole fiasco before it’s too late. We’ll leave it up to you to decide whether that’s true or not, but the fact remains that FROT wasn’t suspended and the same goes for other blatantly pumped penny stocks like Virtus Oil and Gas Corp. f/k/a Curry Gold Corp. (OTCBB:VOIL). And this means that it’s up to the regular investor to carefully consider all the potential underwater stones before jumping in.