First Colombia Gold Corp (OTCMKTS:FCGD) Gets a Limited Information Stamp

First Colombia Gold Corp (OTCMKTS:FCGD) was supposed to publish its financial report for the third quarter of 2014 on November 15. For some reason, the management team failed to get the statement ready and instead, they filed a notification of late filing, saying that they expect to have the 10-Q out before the end of the extension period. Unfortunately, that didn’t happen either which means that FCGD now has a limited information symbol on its OTC Markets profile.

This might be a good enough reason for some people to stay away, but it would appear that many investors are unfazed. During yesterday’s session for example, they traded more than 2.8 million shares while the price went up by a healthy 21% and stopped at just under $0.10 per share. It’s clear that a lot of people are excited about the company, but the more skeptical among you are probably wondering right now: “What’s the reason for the impressive surge of interest?”.

It’s actually a combination of factors. It all started on November 19 when FCGD announced that they have hit oil while drilling a new well at their Clinton County property in Kentucky. Yesterday, they said that another well has yielded results.

This is undoubtedly good news and it came out just in time for the pumpers to pick it up. The latest in a long line of paid promotions for FCGD started on Sunday and the emails flew around until about an hour before yesterday’s opening bell. The total budget according to our database amounts to around $16 thousand which is not that much, but apparently, the pump did manage to contribute to yesterday’s jump.

Experience has taught us that especially when it comes to sporadically traded penny stocks, the combination of paid promotions and optimistic press releases can often lead to volatile swings and it could result in some losses for the regular investors. Nevertheless, we should not discard the possibility of FCGD being an exception to the rule.

The shareholders, for one, are hoping that this is indeed the case because if their company doesn’t start generating meaningful revenues really soon, they might be forced to say goodbye to a large portion of their investments. Although the figures in the latest 10-Q are now almost five months old, they do give us an idea of how huge FCGD‘s problems are:

• cash: $491
• total assets: $5,368
• current liabilities: $830,237
• NO quarterly revenues
• quarterly net loss: $1.1 million

The lack of financial stability is an obvious issue, but it’s not the only problem. Toxic debt and the subsequent dilution have also been crippling the share structure. During the first six months of the year, for example, FCGD printed more than 8 million shares (the number reflects the reverse split from April) at an undisclosed rate. On July 17, Asher Enterprises, one of the most famous toxic financing providers in Pennyland, received a further 1.4 million common shares as a conversion of just $4,225 worth of notes (the average conversion rate comes in at $0.003 per share).

If the management team want to bring any value to their shareholders, they’ll need to put the printing press on standby, but unfortunately, there’s not much to suggest that they’re trying to do this. On August 17, they decided to increase the number of authorized shares to 4 billion which virtually means that the sky is the limit now.

All in all, without the SEC filings that could tell you if something is being done about the heavy dilution, all you can do is take the management teams word for it and hope for the best. And we should note that not everybody is keen on trusting their money with the people running FCGD at the moment.

If you have a look at our previous article, you’ll see that a couple of months ago, the company was run by a certain Robert Gates who has been involved with numerous other less-than-successful penny stocks. He stepped down in October which might be perceived as a good sign.

Mr. Gates’ position, however, was taken by a man called Jason Castenir and a quick Google search reveals that his reputation is not exactly stellar either.

Carefully thinking through all the potential risks before putting any money on the line is absolutely essential.