Galenfeha Inc (OTCBB:GLFH) Makes its First Steps on the OTC Markets
A quick look at a recent series of Form 4’s reveals that between September 26 and October 9, a few members of Galenfeha Inc (OTCBB:GLFH)’s management team and Board of Directors, including the company CEO, James Ketner, sold quite a lot of stock on the open market. They’re probably not too happy about their decision at the moment.
When they were unloading their shares, GLFH‘s price was hovering around $0.40. Right now, just a couple of weeks later, it’s sitting at $2 per share despite the fact that it managed to wipe out a fifth of its value during Friday’s session. Still, Mr. Ketner and the rest of the insiders have some shares left which means that if the ticker manages to hold on to the current levels, they might be able to take their profits later on. The question is: “Will GLFH stay where it is today and can it go higher?”.
The stock is just a few months old and predictions based on its historical performance are impossible. Having gone through the fundamentals of the company, however, we can immediately spot a few problems with the current share price. At Friday’s close, for example, the market cap is sitting at well over $150 million and this sort of valuation isn’t really in line with what GLFH have to show us in their latest 10-Q. Here’s what they had at the end of the second quarter:
- cash: $183 thousand
- current assets: $516 thousand
- current liabilities: $26 thousand
- quarterly revenues: $8 thousand
- quarterly net loss: $110 thousand
The fact that they started generating revenue during Q2 is commendable. We’ve seen many penny stock companies who spend years and sometimes even decades in the development stage. GLFH‘s sales, on the other hand, started in June 2014 – just one year and three months after the company was incorporated. What’s more, we read in the Subsequent Events section of the 10-Q that some manufacturing efforts have also begun in July.
All in all, we won’t be too shocked if we see the company solidify its financial statements in the future, but even so, at present, the market cap seems a bit overblown. This is where the next problem comes in.
GLFH‘s management team aren’t the only ones who can profit from the current share price. The Shareholders’ Equity section of the latest report tells us that the company has managed to sell a total of 26,160,000 shares of common stock to some private investors at a fixed price of $0.025 per share. The 10-Q doesn’t say whether the shares are restricted or not, but if they aren’t, the aforementioned investors can unleash them on the open market and cash in on some healthy profits. If this happens, the ticker will be put under tremendous pressure which, we reckon, should warrant a little bit of extra caution.
