Focus Gold Corp (OTCMKTS:FGLD) Jumps on Rumors
After months of failing to register any significant dollar volumes, Focus Gold Corp (OTCMKTS:FGLD) logged its first active session on Friday. And it was quite an interesting one. Nearly 250 million shares changed hands in just six and a half hours, resulting in a trade value of more than $475 thousand. The price jumped from $0.0009 per share and ran all the way up to $0.0023.
There’s no doubt that 187% in daily gains sound nice enough, but unfortunately, when you do a bit of digging around, you’ll see that the surge was caused by nothing more than rumors about FGLD‘s entrance into the marijuana industry. As you probably know, the hype and excitement around the cannabis business is extremely strong at the moment and it’s clear that even a bit of speculation around message boards is enough to cause quite a stir on the market. Bear in mind, however, that FGLD have not issued an official announcement about a change in the plan and they may decide to stick with the mineral exploration industry.
But let’s assume for a moment that they do, in fact, decide to enter the pot sector. What are their chances of success?
Things don’t look too bright when you open the latest 10-Q. The figures in it cover the period ended November 30, 2013 and we reckon that they speak for themselves:
- current assets: $5,025
- current liabilities: $2.2 million
- no revenues since inception
- quarterly operating expenses: $319 thousand
- accumulated deficit: $18.5 million
There are some other problems as well. During the reported quarter, FGLD issued nearly 200 million shares of common stock as a conversion of just $132 thousand worth of debt. In the “subsequent events” section we read that a further $22 thousand in notes got turned into a whopping 171 million new common shares.
At the same time, their website appears to be “under construction” and when you check out the address of their company headquarters, you’ll see that the same exact suite is used by Crown City Pictures (OTCMKTS:CCPI) and Adama Technologies Corp (OTCMKTS:ADAC).
This brings us on to FGLD‘s CEO, Michael Gelmon. According to the official filings, he is still at the helm of ADAC and he is (or has been) involved with numerous other penny stock companies. Mr. Gelmon is listed as the President of Safeguard Security (OTCMKTS:SSHSQ) and as the CEO of Novation Holdings Inc (OTCMKTS:NOHO), Solar Energy Initiatives Inc (OTCMKTS:SNRY), and Banyan Corporation (OTCMKTS:BNYN).
He was also the CEO and Chairman of the Board of a heavily traded pot stock called Alternative Energy Partners Inc (OTCBB:AEGY). AEGY recently received a Cease Trade order from the Alberta Securities Commission and, according to the document, it was issued due to reporting problems. AEGY‘s management team, however, reckon that the sole reason for the action is Mr. Gelmon’s previous involvement with the company and they seem insistent on pointing out that he is no longer a part of it.
What does that mean for FGLD? We don’t know, but it would appear that Mr. Gelmon is quite a controversial figure in Pennyland. In any case, investing in a company whose stock is propelled by nothing more than speculations and one that has so many red flags around it should be accompanied with a lot of due diligence and a careful consideration of all the risks.
